Baleshwar Sharma Vs DCIT (Delhi High Court)
Delhi High Court Sets Aside Section 68 Addition Due to Denial of Cross-Examination; Assessment Order Set Aside as Third-Party Slip Was Relied Upon Without Fair Hearing; Delhi HC Rules Natural Justice Violated When Assessment Relied on Third-Party Statement; Section 68 Addition Based on Seized Slip Invalid for Lack of Effective Cross-Examination.
The Delhi High Court considered a writ petition challenging an assessment order dated 31.03.2026 passed under Section 143(3) of the Income Tax Act, 1961. The assessment had raised a tax demand against the petitioner primarily on the basis of a seized slip (Kachchi Parchi) recovered during the search of a third party, Mr. Pradeep Kumar Sehgal. The slip contained the figure Rs.10,000/-, which the Assessing Officer (AO) interpreted as Rs.1 crore on the assumption that three zeroes had been omitted.
The petitioner contended that the addition was made solely on the basis of the seized slip, which did not even correctly record his name. During the assessment proceedings, he denied any knowledge of or acquaintance with Mr. Pradeep Kumar Sehgal and also denied any connection with the amount mentioned in the slip. The petitioner further pointed out that Mr. Sehgal had allegedly stated that the amount had been paid to the petitioner for construction of a farmhouse, whereas the petitioner was not engaged in the construction business.
