High Court of Judicature for Rajasthan · Judgments and reasoned final orders
Principal Commissioner of Income Tax (Central), Rajasthan v. Shri Shailendra Kumar Gupta (and Connected Appeals: Pawan Gupta & Smt. Raj Rajeshwari Gupta)
D.B. Income Tax Appeal Nos. 44/2025, 45/2025 & 46/2025 ·
Deletion of Section 68 additions on Long Term Capital Gains (LTCG) where the Assessing Officer relied on third-party statements recorded by the Kolkata Investigation Directorate without providing copies or opportunity of cross-examination to the assessees despite specific demand.
1. FACTS OF THE CASE
The Revenue filed three connected appeals (D.B. ITA Nos. 44/2025, 45/2025, and 46/2025) against the ITAT Jaipur Bench order deleting additions made under Section 68 in respect of Long Term Capital Gains (LTCG) on sale of listed shares. The Assessing Officer had relied on general investigation reports and third-party statements recorded by the Investigation Directorate, Kolkata without confronting the assessees with the material or granting cross-examination of the deponents.
2. DISCUSSION BY THE COURT
Relying on the Supreme Court judgment in Andaman Timber Industries v. Commissioner of Central Excise (2016) 15 SCC 785 and the coordinate bench decision in PCIT (Central), Rajasthan v. Sanjay Chhabra (D.B. ITA No. 42/2022 decided on 06.04.2023), the Division Bench held that not allowing the assessee to cross-examine witnesses whose statements are made the basis of the assessment order is a serious flaw amounting to violation of principles of natural justice, which renders the addition unsustainable.
3. JUDICIAL DECISION
Holding that the controversy stood concluded by Andaman Timber Industries and Sanjay Chhabra and that no substantial question of law arose, the High Court dismissed all three Revenue appeals.
4. OUTCOME
Assessee - All three Revenue appeals dismissed; deletion of Section 68 LTCG additions upheld.
5. AKHB REVIEW POINT
Where an LTCG addition under Section 68 rests on third-party statements recorded by the Investigation Wing and the AO fails to provide cross-examination despite request, the addition is void under Andaman Timber Industries.
Source and verification
6-page official High Court of Judicature for Rajasthan judgment PDF (20260324_RJHC020283002025.pdf, 103,089 bytes).
Original PDF: 6 pages · SHA-256: ea8a26b85373c0e2f7c017a132047a96c29f7307527ce7405fa7372aff71ec40
Supplied source-reviewed note retained; original bytes and identity validation checked in this release. Substantive re-review is not claimed for this record.
Applies Sections 10(38), 68, and 260A of the Income-tax Act, 1961. Income-tax Act, 2025 equivalence is not verified.
Full 6-page primary judgment PDF text read and verified page-by-page. Follows Andaman Timber Industries v. CCE (2016) 15 SCC 785 (SC) and PCIT (Central) v. Sanjay Chhabra (D.B. ITA No. 42/2022, Raj HC).
AI disclosure and professional disclaimer
AI-assisted source review. Independent human approval is not represented.
General research only. Read the complete judgment and verify applicable law and subsequent treatment before reliance.