Calcutta High Court
Lakshman Prasad Agarwal vs Union Of India & Ors on 3 November, 2025
2025:CHC-OS:214
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
BEFORE:
HON'BLE JUSTICE RAJA BASU CHOWDHURY
WPO 638 of 2025
LAKSHMAN PRASAD AGARWAL
VS
UNION OF INDIA & ORS.
For the petitioner : Mr. Pranit Bag, Adv.
Mr. Anujit Mookherji, Adv.
Mr. Prothish Chandra, Adv.
Mr. Vinaayak Chaturvedi, Adv.
For the respondents : Mr. Aryak Dutt, Sr. Standing Counsel
Mr. Soumen Bhattacharjee, Sr. Santding Counsel
Heard on : 27.10.2025 & 28.10.2025
Judgment on : 3rd November, 2025.
RAJA BASU CHOWDHURY, J:
1. The instant writ petition has been filed, inter alia, challenging the order
dated 26th June 2025 issued under section 148A(3) of the Income Tax Act
1961 (hereinafter referred to as 'the said Act) for the assessment year 2019-
20.
2. Mr. Bag, learned Advocate appearing in support of the writ petition by
drawing attention of this Court to the notice issued under section 148A(1)
of the said Act dated 31st March, 2025 and the order impugned, has
stressed on the fact that though search and survey action was conducted at
various spots of finance brokers and evidence was collected during such
2 WPO 638 of 2025
2025:CHC-OS:214
proceedings and though incriminating material and statement of Sri
Sarbejeet Thakur alias, Pathakji, Hitesh Kanodia and Sri Jai Bhagwan
Agarwal were recorded, under section 132(4) of the said Act and the
statement of one Parveen Kumar Kasera was recorded under section 132(4)
of the said Act, the same had not been furnished to the petitioner.
3. Mr. Bag further by placing before this Court the response to the show
cause has claimed that the petitioner had specifically requested and sought
for permission to cross-examine Sri Jai Bhagwan Agarwal. Unfortunately,
the same was not allowed. According to Mr. Bag the allegation that the
assessee has two separate bank accounts maintained with the Yes Bank,
bearing account nos.064661900001248 and 064663500001103 wherein
allegedly huge cash deposits had been made are incorrect. In so far as the
account no.064663500001103 is concerned, the same does not belong to
the assessee at all and the said account is of a private limited company,
namely, Champa Impex Private Limited wherein the assessee is one of the
directors.
4. The PAN of the said Champa Impex Private Limited is different from that
of the assessee. According to the petitioner, the return of income of the
company has also been disclosed. In so far as the receipt of cash in the
account no. 064661900001248 maintained with Yes Bank to the extent of
Rs.90,25,000/- for the financial year 2018-19 is concerned, the same has
been duly explained. The entire cash deposits have been accounted for and
there has been no suppression.
3 WPO 638 of 2025
2025:CHC-OS:214
5. According to Mr. Bag, failure to afford opportunity to cross-examine the
persons who had made statements constitutes violation of principles of
natural justice. In support of his aforesaid contentions, he has placed
reliance on the following judgments:
a. Andaman Timber Industries v. Commissioner of Central Excise,
Kolkata-II, reported in (2016) 15 SCC 785
b. An unreported judgment delivered by the Division Bench of this
Court in the case of Krishna Tisses Pvt. Ltd. v. Union of India
dated 28th April, 2023, in MAT 648 of 2023.
6. Independent of the above, there was no material based on which the
notice under section 148 of the said Act could have been issued and on
such ground, the order issued under section 148A(3) of the said Act and the
notice issued under section 148 of the said Act, both dated 26th June, 2025
in respect of the assessment year 2019-20 should be set aside.
7. Mr. Dutt, learned Advocate assisted by Mr.Bhattacharjee, learned
Advocate appears on behalf of the income tax department. According to the
department, neither the show cause nor the order is solely based on the
statements of the third parties. It is submitted that there is enough material
based on which the notice under section 148 has been issued. Simply
because the petitioner has not been offered opportunity to cross-examine
Sri Jai Bhagwan Agarwal, the same cannot have the effect of vitiating the
order. The aforesaid at best can be said to be an irregularity, though
according to him, the stage to offer cross-examination is not over. In
support of his aforesaid contention, reliance has been placed on the
4 WPO 638 of 2025
2025:CHC-OS:214
judgment delivered by the Division Bench of this Court in the case of
Principal Commissioner of Income Tax-V vs. Swati bajaj, reported in
2022 SCC Online Cal 1572.
8. Having heard the learned Advocates appearing for the parties and
considering the materials on record, I find that in the instant case notice
under Section 148A(1) of the said Act had been issued for the assessment
year 2019-20 on the petitioner. From the above, it is seen that on the basis
of an inquiry made in the case and the subsequent information made
available on the portal of the department, the above show cause notice has
been issued. The show cause records that the statements had been
obtained from third party witnesses in respect of the cash transactions.
9. Independent of the above, in the show cause in paragraph 9, it has been
highlighted that the petitioner has two separate bank accounts maintained
with Yes Bank and huge cash deposits have been made in such accounts
which does not commensurate with the cash deposits made into the bank
accounts. A financial analysis has also been provided in the show cause
notice. I find that the petitioner had responded to the said show cause and
had categorically denied that the account no.064663500001103 maintained
with Yes Bank was that of the petitioner. In fact, it was contended that the
said account was of one Champa Impex Pvt. Ltd. wherein the assessee is
one of the directors.
10. Incidentally, in this case, the jurisdictional assessing officer did not
afford opportunity to the petitioner to cross-examine the third parties.
Though failure to give opportunity to cross-examine may constitute an
5 WPO 638 of 2025
2025:CHC-OS:214
irregularity, and could have invited consequences, I, however, notice that
the order that was passed was not solely based on the statements of the
aforesaid persons. Admittedly, in this case, though the petitioner has
denied to have any connection in respect of the bank account
no.064663500001103, however, it is seen that the petitioner's bank
account bearing no. 064661900001248 maintained with Yes Bank Ltd., is
linked with the current account of Champa Impex Pvt. Ltd. having account
no.064663500001103 which was opened on 20th March 2017. There has
been no denial of such fact.
11. The petitioner has also not disclosed the bank statement in relation to
the aforesaid bank account, though both the accounts were linked. This
apart, it would also transpire that the petitioner happens to be a signatory
in respect of the bank account being no.064663500001103. It is also found
that huge cash deposits have been made in such account in different
financial years which are not accounted for. Further the petitioner as
assessee also could not explain the treatment of sundry debtor balance
written off in the books of account, since the assessee did not declare any
bad debts or add back income in the books of account for the relevant
assessment year. Though from the statement of the assessee it is clear that
the assessee had written off the debtors in his ledger, but the same is not
included in the audited books of account of the assessee.
12. Having regard to the above, it cannot be said that the order is based on
no evidence or is perverse. There appears to be enough material for
issuance of notice under section 148 of the said Act. As rightly pointed out
6 WPO 638 of 2025
2025:CHC-OS:214
by Mr. Bhattacharjee that even for sake of argument, failure to afford cross-
examination would only constitute an irregularity which does not have the
effect of vitiating the order.
13. This apart, I find that since the basis of the order is not solely
dependent on the third party statements, the judgment delivered in the case
of Krishna Tissues Private Limited (supra) does not assist the petitioner.
In the said case a fundamental error had been committed by the assessing
officer in not providing third party information which was the basis for
issuance of the show cause notice. Such is not the case here. The third
party evidence does not form the only basis for issuance of either the show
cause or the order impugned. The case of Andaman Timber Industries
(supra) deals with a case of the witness not being subject to cross-
examination by the adjudicating authority. In this case before an
assessment order is passed at appropriate stage cross-examination can be
offered. The judgment is thus, also distinguishable on facts.
14. Having regard thereto, the writ petition fails and is accordingly
dismissed.
15. There will be no order as to costs.
16. Urgent photostat certified copy of this order, if applied for, be made
available to the parties upon compliance of all necessary formalities.
(RAJA BASU CHOWDHURY, J.)
akg/R.Bose
