Allahabad High Court
S/S NISHANT TRADERSversusTHE COMMISSIONER COMMERCIAL TAX U.P. LUCKNOW
- Decided
- Bench
- PIYUSH AGRAWAL
Holding
The assessment cannot stand as the revisionist was denied cross‑examination; the matter is remanded for a fresh assessment after allowing cross‑examination.
Summary
S/S Nishant Traders, a dealer in cement and steel bars, was assessed for the AY 2010-11 based on a diary seized from a third‑party dealer, M/s Suraj Building Material, which contained entries marked "NT" and the name of Satya Narayan Jaiswal, the uncle of Nishant Traders' proprietor. The assessing authority inferred a business relationship and issued a notice, but the revisionist was never given an opportunity to cross‑examine the third‑party dealer despite repeated requests at the assessing, appellate and tribunal stages. The Commercial Tax Tribunal upheld the assessment without such cross‑examination. The High Court held that reliance on the third‑party’s diary without affording cross‑examination violated established principles, citing several Supreme Court and High Court precedents. Consequently, the Court remanded the matter to the Tribunal to allow cross‑examination and to pass a fresh, reasoned order, and disposed of the revision petitions.
Issues considered
- Whether the Commercial Tax Tribunal and lower authorities were legally justified in refusing to provide an opportunity for cross‑examination of the third‑party dealer whose diary entries were used against the revisionist.
- Whether an assessment based on such unauthenticated third‑party evidence can be sustained.
Subjects
- sales tax
- cross‑examination
- assessment
- best judgment assessment
- commercial tax tribunal
- procedural fairness
- evidence
Judgment
Reserved on : 03.09.2026
Delivered on :15.09.2026
HIGH COURT OF JUDICATURE AT ALLAHABAD
SALES/TRADE TAX REVISION No. - 436 of 2017
S/S Nishant Traders
…..Revisionist(s)
Versus
The Commissioner Commercial Tax U.P. Lucknow
…..Opposite Party(s)
Counsel for Revisionist(s) : Aditya Pandey
Counsel for Opposite Party(s) : C.S.C.
With
SALES/TRADE TAX REVISION No. - 437 of 2017
S/S Nishant Traders
…..Revisionist(s)
Versus
The Commissioner Commercial Tax U.P. Lucknow
…..Opposite Party(s)
Counsel for Revisionist(s) : Aditya Pandey
Counsel for Opposite Party(s) : C.S.C.
And
2
STRE No. - 436 of 2017
SALES/TRADE TAX REVISION No. - 438 of 2017
S/S Nishant Traders
…..Revisionist(s)
Versus
The Commissioner Commercial Tax U.P. Lucknow
…..Opposite Party(s)
Counsel for Revisionist(s) : Aditya Pandey
Counsel for Opposite Party(s) : C.S.C.
And
SALES/TRADE TAX REVISION No. - 439 of 2017
S/S Nishant Traders
…..Revisionist(s)
Versus
The Commissioner Commercial Tax U.P. Lucknow
…..Opposite Party(s)
Counsel for Revisionist(s) : Aditya Pandey
Counsel for Opposite Party(s) : C.S.C.
Court No. - 7
HON'BLE PIYUSH AGRAWAL, J.
3
STRE No. - 436 of 2017
1. Heard Sri Aditya Pandey, learned Counsel for the revisionist and Sri
Ravi Shankar Pandey, learned Additional Chief Standing Counsel for the
opposite party.
2. The present revision has been filed against the order dated 01.08.2017
passed by the Commercial Tax Tribunal, Gorakhpur for Assessment Year
2010-11. The present revision was admitted by this Court vide order
dated 06.10.2017 on the following question of law:
“Whether on the facts and circumstances of the case, the Commercial Tax
Tribunal as well as authorities below were legally justified in not providing for
cross-examination with the proprietor of M/s. Suraj Building Material,
Waterganj, Basti, and at the same time, on the basis of the alleged entry in the
account of third party, the account of the applicant has been rejected and best
judgment assessment has been made.?”
3. Learned counsel for the revisionist submits that the revisionist-firm is
a registered dealer engaged in the business of purchase and sale of
cement and iron bars/steel bars (Sariya). On 25.03.2012, the business
premises of another dealer, namely, M/s Suraj Building Material,
Walterganj, Basti, was inspected, and one diary was seized, in which
certain purchase entries with regard to cement and steel bars were found.
In the said entries, the letters “NT” were written, and below the same,
the name of Satya Narayan Jaiswal was mentioned. Therefore, it was
presumed by the authority that “NT” stood for M/s Nishant Traders, as
Satya Narayan Jaiswal is the uncle of the proprietor of M/s Nishant
Traders. On the basis of the said presumption, a business relationship
between the revisionist and M/s Suraj Building Material was inferred.
He further submits that merely on the basis of the aforesaid survey,
notice was issued to the revisionist. The revisionist requested for cross-
examination, but without providing an opportunity for cross-
examination, the assessment order was passed. Aggrieved by the said
assessment order, an appeal was preferred, which was partly allowed.
Against the said order, a cross-appeal was filed before the Tribunal;
however, by the impugned order, all the appeals were dismissed. Hence,
the present revision.
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STRE No. - 436 of 2017
4. Learned counsel for the revisionist submits that no survey was
conducted at the business premises of the revisionist, rather the survey
was conducted at the business premises of M/s Suraj Building Material,
Walterganj, Basti. On the basis of the said survey, the seized diary was
relied upon and an inference was drawn against the revisionist. However,
despite the request for cross-examination, the orders have been passed
without providing such opportunity. Learned counsel further submits
that, at every stage, the revisionist requested for cross-examination, but
neither the Assessing Authority nor the Appellate Authority nor the
Tribunal summoned the persons concerned for cross-examination and
proceeded to pass the orders. He further submits that the books of
account of another dealer cannot be relied upon unless and until an
opportunity to cross-examine the said dealer is afforded to the
revisionist. In support of his submissions, learned counsel for the
revisionist relies upon the judgment of the Apex Court in the cases of
M/s. Banshi Dhar Banke Lal v. Commissioner of Sales Tax, 2000
STD HC 56; M/s. Tulsidas Babu Lal v. Commissioner of Sales Tax,
1999 UPTC 1273; S/s. Adarsh Wire Knitting Industries v.
Commissioner of Trade Tax, 2004 UPTC 287; and the judgment of
this Court in M/s. Durga Agro Industries Ltd. v. Commissioner,
Trade Tax, passed in Sales/Trade Tax Revision No. 1556 of 2007,
decided on 21.10.2013.
5. Per contra, learned Standing Counsel supports the impugned order.
6. After hearing learned counsel for the parties, the Court has perused the
record.
7. The record shows that the business premises of the revisionist-firm
was never surveyed for the relevant assessment year. The survey was
conducted at the premises of a third party, i.e., M/s Suraj Building
Material, Walterganj, Basti, wherein a diary was seized in which “NT”
was mentioned, and the name mentioned thereunder was Satya Narayan
Jaiswal. On the basis of the said entry, an adverse inference has been
drawn against the revisionist. The entry of the third-party dealer has been
5
STRE No. - 436 of 2017
relied upon without affording an opportunity of cross-examination to the
revisionist. The record further shows that, at every stage, i.e., before the
Assessing Authority, the First Appellate Authority, and the Tribunal, a
specific prayer was made for cross-examination, but no due weightage
was given to the said request. The Tribunal, in the impugned order, has
recorded the said fact, but has still failed to give due weightage to the
same and to exercise the power under Rule 75 so as to ensure the
presence of the third party, at whose business premises the alleged diary
was seized. Once the revisionist was not afforded an opportunity to
cross-examine the said third party, the entries contained in the books of
account of another dealer could not have been relied upon against the
revisionist. A similar view has been taken by the Apex Court in the cases
of M/s. Banshi Dhar Banke Lal (supra), M/s. Tulsidas Babu Lal (supra),
S/s. Adarsh Wire Knitting Industries (supra), and by this Court in M/s.
Durga Agro Industries Ltd. (supra).
8. The impugned order cannot be sustained. The matter is remanded to
the tribunal for affording an opportunity to revisionist to cross examine
the person on whose statement/material were used against it, thereafter
pass a fresh and reasoned order in accordance with law.
9. Consequently, the revisions are disposed off.
(Piyush Agrawal,J.)
September 15, 2026
A.N. Mishra
Digitally signed by :-
AMARNATH MISHRA
High Court of Judicature at Allahabad
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