Facts of the Case

The petitioner, Deepak Talwar, was subjected to a search and seizure operation on 22.06.2016, following which statements were recorded and later retracted. Subsequently, notices were issued under Sections 142 and 153A of the Income Tax Act, 1961 for multiple assessment years (AY 2011–12 to AY 2017–18).

The petitioner raised objections regarding:

  • Expiry of limitation under Section 153B, and
  • Absence of incriminating material found during the search.

Despite this, the Assessing Officer passed assessment orders dated 31.12.2019 under Section 143(3) read with Section 153A, making substantial additions and raising significant tax demand.

The petitioner contended that relevant documents, including foreign information and materials collected by the Revenue, were not supplied, which adversely affected his right to defend the case in appeal proceedings pending before CIT(A).

Issues Involved

  1. Whether the assessee is entitled to access all documents and materials (including non-relied upon documents) in possession of the Revenue.
  2. Whether failure to provide such documents violates principles of natural justice.
  3. Whether the Revenue is legally obligated to disclose foreign-sourced information and investigation material.
  4. Scope of powers of CIT(A) in adjudicating disputes regarding disclosure of documents.

 

Petitioner’s Arguments

  • The petitioner argued that non-supply of documents and information, including foreign references and replies, deprived him of a fair opportunity to defend himself.
  • It was contended that even documents not relied upon by the Revenue may be relevant for effective adjudication in appeal.
  • Reliance was placed on:
    • T. Takano vs SEBI (2022) 8 SCC 162
    • Reliance Industries Ltd vs SEBI (2022 SCC OnLine SC 979)
      to assert the right to access material in possession of authorities.

Respondent’s Arguments

  • The Revenue submitted that:
    • Relied Upon Documents (RUDs) had already been provided or would be furnished within a stipulated time.
    • There is no legal obligation to furnish documents not relied upon in the assessment proceedings.
  • It was also argued that the judgments cited by the petitioner were distinguishable on facts.

Court Order / Findings

  • The appropriate course would be to allow CIT(A) to decide the issue of disclosure of documents, including those not relied upon by the Revenue.
  • The Revenue must place on record a list of documents in its possession, enabling the petitioner to argue their relevance.
  • The petitioner shall be given an opportunity to make submissions regarding relevance of such documents.
  • The CIT(A) shall pass a composite order, addressing both:
    • Disclosure-related issues, and
    • Merits of the appeal.

Accordingly, the writ petition was disposed of with directions, without granting immediate relief of stay.

Important Clarification

  • The Court did not conclusively decide the right to access non-relied documents, but delegated the issue to CIT(A).
  • It emphasized procedural fairness and opportunity of hearing before adjudication.
  • The decision reinforces that appellate authorities play a crucial role in balancing disclosure and confidentiality in tax proceedings.

Sections Involved

  • Section 142(1) – Inquiry before assessment
  • Section 143(3) – Assessment
  • Section 153A – Assessment in case of search
  • Section 153B – Time limit for completion of assessment

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/59027012023CW53152022_112649.pdf

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