TMI Blog1977 (6) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1965-66, that thereafter the control of the mill had been given to one Pappachan as lessee, and that the petitioner had no turnover from the mill for the years in question. The assessing authority issued a preassessment notice dated 22nd April, 1967, fixing the turnover at Rs. 1,10,400 at four times the bid amount, of the coupes, of which, Rs. 33,500 was to be taxed as turnover of timber and Rs. 22,000 as turnover of firewood for the year 1965-66, and the balance left out of Rs. 1,10,400.00 was to be treated as the turnover for the year 1966-67. To this notice the assessee replied with an objection dated 27th November, 1967, that the turnover was excessive and the estimate should be only at two and a half times the bid amount. Meanwhile, the Intelligence Officer, Ernakulam, inspected the petitioner's rice mill on 24th May, 1967, and seized some records and also recorded a statement from Pappachan. These were sent over to the assessing officer. These disclosed that the assessee was doing business in rice also. Pappachan, the alleged lessee, denied the lease and submitted that he was working only as an employee of the petitioner. The assessing officer therefore issued two revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Kerala[1972] 29 S.T.C. 44; 1971 K.L.T. 630. Reference was also made to the recent judgment of a learned Judge of this Court in Abraham v. Additional Collector of Customs1976 K.L.T. 660. The latter decision, after surveying the relevant decisions bearing on this aspect of the matter and the Division Bench ruling in K. T. Shaduli v. State of Kerala[1972] 29 S.T.C. 44; 1971 K.L.T. 630., held that, on the facts, the petitioner in that case had been afforded an opportunity of crossexamination. No further reference to that decision is called for. 4. The real question for our consideration is whether K.T. Shadull v. State of Kerala[1972] 29 S.T.C. 44; 1971 K.L.T. 630. can be said to have laid down the law correctly, and whether, on the facts and in the light of settled principles, it can be stated that a right of cross-examination is inherent in the right of reasonable opportunity as known to the principles of natural justice or as embodied in section 17 of the Act. On the facts of this case, the question does not seem to us to admit of much difficulty. Section 17(3) of the General Sales Tax Act reads: "17. Procedure to be followed by the assessing authority.-(1) and (2)... (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Lahore High Court had surveyed the position in Seth Gurmukh Singh v. Commissioner of Income-tax, Punjab[1944] 12 I.T.R. 393 (F.B.). That decision was approved by the Supreme Court in Raghubar Mandal Harihar Mandal v. State of Bihar[1957] 8 S.T.C. 770 (S.C.).and also in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal[1954] 26 I.T.R. 775 (S.C.). It was in view of these decisions that the Division Bench, by analogy, was prepared to equate section 17(3) of the Sales Tax Act with section 23(3) of the Indian Incometax Act, 1922. The assessee in the case before the Division Bench had, at the earliest opportunity, prayed for an opportunity to cross-examine a local merchant whose accounts were looked into by the Sales Tax Officer and whose statement had been accepted by him. The prayer was declined by the sales tax authorities. The Division Bench held that as the assessee had repeatedly insisted on cross-examination of the merchant, the assessment completed without affording this opportunity was vitiated. It was observed: "When materials are collected by the assessing authority and when he decides to use them against the assessee to reject his accounts, the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the contrary (that the right of cross-examination was not part of reasonable opportunity) of the Gujarat High Court in Jayantilal Thakordas v. State of Gujarat[1969] 23 S.T.C. 11. 6.. Even on the touchstone of the Division Bench ruling in K. T. Shaduli v. State of Kerala[1972] 29 S.T.C. 44; 1971 K.L.T. 630., the petitioner in this case cannot succeed. No request for cross-examination of Pappachan was made before the Sales Tax Officer. Before the Appellate Assistant Commissioner again no such request was made, the grievance was only that the Sales Tax Officer did not afford an opportunity to the appellant to cross-examine Pappachan. This was factually incorrect, as no request for cross-examination was made before the officer; so that, even before the appellate authority, the petitioner did not make an actual request to cross-examine Pappachan. Of course, the Appellate Assistant Commissioner relied on Jayantilal Thakordas v. State of Gujarat[1969] 23 S.T.C. 11. and held that the petitioner had no right of crossexamining Pappachan. The petitioner is entitled to complain in law, that the reliance placed on Jayantilal Thakordas v. State of Gujarat[1969] 23 S.T.C. 11. was wrong, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l necessarily depend upon the peculiar facts and circumstances of each case, including the nature of the action proposed, the grounds on which the action is proposed, the material on which the allegations are based, the attitude of the party against whom the action is proposed in showing cause against such proposed action, the nature of the plea raised by him in reply, the requests for further opportunity that may be made, his admissions by conduct or otherwise of some or all the allegations and all other matters which help the mind in coming to a fair conclusion on the question. " 7.. In the light of the above principle we have little hesitation to hold that the petitioner is not entitled to claim a right of crossexamination of Pappachan as part of the reasonable opportunity to be afforded under section 17(3) of the Act. 8.. Counsel for the petitioner argued with some force that he cannot be blamed for not making a request to cross-examine Pappachan, as, at the relevant time, the two ruling decisions noticed supra, made it the duty of the sales tax authorities to offer the person for cross-examination irrespective of any request by the assessee. Whatever be the plausibility of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Sind in Commissioner of Income-tax v. Khemchand Ramdas[1940] 8 I.T.R. 159., where it was observed that there can be no question of the assessee being entitled to demand copies of the confidential statements from the Income-tax Officer or to demand that his informants should be called for cross-examination. It is, in the light of the discussion thus made that the propositions of law are stated at page 416, on which the Division Bench placed reliance, and which it extracted in K. T. Shaduli v. State of Kerala(4). The decision of the Lahore High Court in Seth Gurmukh Singh v. Commissioner of Income-tax, Punjab(3), was approved by the Supreme Court in Raghubar Mandal Harihar Mandal v. State of Bihar[1957] 8 S.T.C. 770 (S.C.). and also in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal[1954] 26 I.T.R. 775 (S.C.). If, as noticed in the decisions referred to, the assessing authority is not bound to disclose the source of its infor. mation and it is enough to draw the assessee's attention to the material collected, the assessee's right of cross-examination seems to rest on rather slender foundation. 11.. The decision of Mathew, J., of this court (as h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the customs authorities. Accordingly we hold that there is no force in the third contention of the appellant." The pronouncement is as categoric as it is significant (see the comment at pages 910 to 913 of Seervai's Constitutional Law, 2nd Edn., Vol. II). 14.. The next decision is C. Vasantlal Co. v. Commissioner of Incometax, Bombay City[1962] 45 I.T.R. 206 (S.C.). The Supreme Court observed: "The Income-tax Officer is not bound by any technical rules of the law of evidence. It is open to him to collect materials to facilitate assessment even by private enquiry. But if he desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it. The statements made by Achaldas and Poonamchand before the Income-tax Officer were material on which the income-tax authorities could act provided that the material was disclosed and the assessee had opportunity to render their explanation in that behalf. It was therefore open to the Tribunal in appreciating the evidence to rely upon the statements made by Achaldas and Poonamchand before the Income-tax Officer and to disbelieve the statements made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in a proper case, governed by a particular statute. At page 488, the learned Judge observed Here italicised. "It is true that the words 'opportunity of being heard' are of very wide amplitude but in the context the sales tax proceedings which are quasi-judicial proceedings all that the court has to see is whether the assessee has been given a fair hearing. Whether the hearing would extend to the right of demanding cross-examination of witnesses or not would naturally depend upon the nature of the materials relied upon by the sales tax authorities, the manner in which the assessee can rebut those materials and the facts and circumstances of each case. It is difficult to lay down any hard and fast rule of universal application." Adverting to the judgment of the Gujarat High Court in Jayantilal Thakordas's case[1969] 23 S.T.C. 11, it was observed that it did not appear that the assessee had at any time made a specific prayer for cross-examining the party In question. It was made clear that the Supreme Court cannot endorse the extreme position that the right of cross-examination in the circumstances noticed, stood completely excluded. Reference was made to Appukutty ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
