Mohammed Ali Akram Khan vs Deputy Commissioner Of Income .... ... on 24 September, 2025

Please note, while the analysis is from the perspective of a GST legal expert, the judgment in question pertains to the Income Tax Act, 1961, not GST law. The only reference to GST is regarding the seizure of documents by GST officials.

Here is the structured summary of the judgment:

Summary of High Court Order

Case Title: Mohammed Ali Akram Khan vs Deputy Commissioner Of Income Tax
Date of Order: 24 September, 2025
Court: High Court of Orissa, Cuttack

1. Outcome

The High Court granted an interim stay on the recovery of the tax demand raised against the petitioner through the assessment order dated 27th March, 2025. The tax authorities were restrained from taking any coercive measures against the petitioner until the next hearing date, scheduled for 29th October, 2025.

2. Core Issue

The central legal issue is whether the assessment order passed by the Income Tax authority is legally invalid due to a gross violation of the principles of natural justice. Specifically, the Court examined if the failure to provide the petitioner with the underlying evidence, deny the opportunity for confrontation with a witness, and disregard a previous High Court directive for a "fair trial" vitiates the entire assessment proceeding.

3. Key Facts

• The petitioner had previously approached the High Court, which, by its order dated 5th January, 2024, had quashed an earlier assessment order and remitted the matter back to the Assessing Authority for a fresh and fair adjudication.
• In the re-assessment proceedings, the petitioner was issued notices based on the statement of a third party, Sri Dipanshu Gupta.
• The petitioner consistently requested a copy of Sri Gupta's statement and the opportunity to confront him, but the department did not provide either.
• The petitioner informed the Assessing Authority that crucial documents required for his defense had been seized by the GST Organization during a search under Section 67 of the CGST Act, 2017, and were not in his possession.
• Despite these requests and submissions, the Deputy Commissioner of Income Tax passed the final assessment order on 27th March, 2025, which is now being challenged in the present petition.

4. Arguments

• Petitioner's Arguments (Mr. Saswat Kumar Acharya):

  • The assessment order was passed in flagrant violation of the principles of natural justice.
  • The authorities failed to comply with the High Court's previous direction to ensure a "fair trial" and allow the petitioner to place all materials on record.
  • The department did not supply the statement of the third party (Sri Dipanshu Gupta) upon which the assessment was based, nor did it grant the petitioner's request for confrontation.
  • The authority unfairly proceeded with the assessment without considering that the petitioner's relevant documents were seized by and in the custody of the GST department.

• Respondent's Arguments (Income Tax Department):

  • The Senior Standing Counsel for the Income Tax Department did not present any arguments on the merits of the case.
  • He stated that he was not in possession of the necessary instructions and requested time to file a counter-affidavit.

5. Court’s Reasoning

The Court provided the following prima facie reasoning for granting the interim stay:
* The record clearly shows that the petitioner was not supplied with the material information (statement of Sri Gupta) that formed the basis of the assessment.
* The petitioner’s repeated demands for confrontation with the said witness were ignored.
* The Court took note of the petitioner's claim that his relevant documents were held by the GST Organization, making it difficult for him to defend his case effectively.
* Based on these facts, the Court formed a preliminary opinion that the petitioner was not given a fair trial, which was a specific directive in the Court's earlier order dated 5th January, 2024.
* Given the prima facie violation of natural justice and the department's request for time to respond, the Court found it just to grant interim protection to the petitioner.

6. Statutory References

• Income Tax Act, 1961:
  • Section 142: Inquiry before assessment.
  • Section 143(3): Scrutiny assessment order.
  • Section 148: Notice for income escaping assessment.
  • Section 148A(d): Order passed after conducting inquiry before issuing a notice under Section 148.
  • Section 260: Appeal to the High Court.
• Central Goods and Services Tax Act, 2017:
  • Section 67: Power of inspection, search, and seizure.

7. Precedents Cited

The petitioner cited the following Supreme Court judgments to argue that a writ petition is maintainable when there is a violation of the principles of natural justice:
1. Radha Krishan Industries v. State of H.P., 2021 SCC OnLine S.C. 334
2. Whirlpool Corporation v. Registrar of Trade Marks, (1998) 8 SCC 1