An Assessing Officer who renews a cross-examination opportunity cannot later rely on the assessee’s earlier absence to deny it.

The Assessing Officer made an addition of ₹1 crore to the petitioner’s income, relying on a slip recovered from Pradeep Kumar Sehgal and his statement that the slip’s entry of ₹10,000 represented ₹1 crore.

In an earlier writ petition, the High Court set aside the assessment and directed the AO to provide the petitioner an opportunity to cross-examine Sehgal.

The petitioner did not attend at the scheduled time on 19 May 2026; the witness had left shortly before the petitioner arrived.

At the petitioner’s request, the AO fixed another date, 26 May 2026, but the witnesses did not appear, although the petitioner and his counsel did.

The AO nevertheless treated the earlier direction as complied with and passed a fresh assessment order on 22 September 2026.

1. Whether the AO could treat the High Court’s direction to provide cross-examination as complied with after the petitioner attended the later date fixed at his request but the witnesses did not appear.

2. Whether the fresh assessment order could stand when the petitioner had not received the directed opportunity to cross-examine the witnesses whose evidence supported the addition.

Section 143(3) of the Income Tax Act, 1961, empowers the AO to make an assessment, but the assessment process remains subject to the principles of natural justice, including a meaningful opportunity to cross-examine a witness where the assessment materially relies on that witness’s statement.

A court’s directions must be given effect in substance.

Where an authority, after a party’s initial default, fixes a further date at that party’s request, it cannot disregard the subsequent proceedings and rely solely on the initial default to claim compliance with the court’s directions.

The Court criticised the petitioner’s failure to attend the first scheduled hearing, noting that he had received advance notice and was responsible for being available for cross-examination.

However, the AO had acceded to the petitioner’s request and fixed a further date.

The petitioner and his counsel attended that date, while the witnesses did not.

Having provided that further opportunity, the AO could not revert to the petitioner’s earlier absence as the basis for treating the cross-examination direction as fulfilled.

Because the assessment relied on the slip and witness evidence, the Court set aside the fresh order and directed that cross-examination be facilitated, while imposing costs to account for the witnesses’ time.

The AO was directed to fix a hearing, preferably between 16 and 30 November 2026, give at least seven days’ notice, and ensure that Pradeep Kumar Sehgal and Yogesh Jain were available for cross-examination.

If either witness failed to appear, another date was to be fixed; after three failures to appear, the AO could proceed to pass an order in accordance with law.

The petitioner was required to pay ₹25,000 to each witness upon appearance, by pay order or banker’s cheque, as a condition of cross-examination.

If cross-examination occurred, the AO was to pass a fresh assessment order in accordance with law, giving due regard to it.