Incomplete Disclosure of Seized Material and Statements: Karnataka HC quashes Income Tax Assessment Order u/s 147 [Read Order]

In a recent ruling, the Karnataka High Court quashed the assessment order under Section 147 of the Income Tax Act, 1961, due to incomplete disclosure of seized materials and statements by the department.

The petitioner, Thasil Babu, has challenged the assessment order dated March 24, 2024, along with consequent notices and proceedings.

In this case, the department relied on certain statements recorded from various individuals and seized materials during the assessment for the assessment year 2016-17. But, only selected portions of these statements were shared with the petitioner. Even though multiple requests were made, complete disclosure of these statements and seized materials was denied, leaving the petitioner unable to cross-examine witnesses or fully rebut the allegations against him.

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The court was of the opinion that the petitioner should be given access to the complete statements and materials relied upon by the assessing officer ( AO ). The bench directed that the petitioner must be given the right to cross-examine individuals whose statements were used against him.

The HC observed that ‘Insofar as the seized material, it is open for the petitioner to make a request during the assessment proceedings and the same may be considered appropriately. Keeping in mind that, if any material that is seized, is being used in the assessment proceedings against the petitioner, needless to state, same is to be shared with the petitioner.’

 Justice S. Sunil Dutt Yadav, set aside the assessment order and related proceedings and directed the AO to reconsider the case. The AO was directed by the court to provide complete disclosure of the statements and seized materials to the petitioner.

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The petitioner was represented by Mr. Venkatesh G and the respondent was represented by Mr. M Dilip.

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