TMI Blog2021 (10) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment concluded as belonging to the other group and what was the basis for such conclusion when the petitioners in its communication dated 28.07.2021 has explained their interest in every concern. Non furnishing of the panchanama to the assessee is a violation of the principles of natural justice as it disables the petitioners from having knowledge of the seized materials and the alleged incriminating materials relied upon by the respondent department. Refusal of cross examination of the persons whose statements were recorded during the time of search under Section 132(4) - The person against whom a statement is used, should be given opportunity to counter and contest the same. We are unable to accept the contention of the learned Senior Counsel that since the statements recorded were of persons who were employees of the assessee and therefore the assessee cannot seek for cross examination of them. The basic principles of jurisprudence governing the law of evidence can in no way interfered and could not be by the Income Tax Act provisions and neither the authorities functioning under the Income Tax Act has any discretion in such matters. In view of the violation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roof, proving that the income determined and sought to be taxed were not from the materials seized during the time of search. The learned counsel for the petitioners relied on the following judgments namely, a.M/s. All Cargo Global Logistics Ltd., vs. DCIT(ITA Nos.5018 to 5022 5059/M/10 dated 23.05.2012) b.(2015) 374 ITR 645 Commissioner of Income Tax vs. Continental Warehousing Corporation Ltd. c.(2016) 380 ITR 573 - Commissioner of Income Tax vs. Kabul Chawla d.(2016) 385 ITR 624 - Commissioner of Income Tax vs. St.Francis Clay D cor Tiles e.(2017) 390 ITR 496 - Commissioner of Income Tax vs. Ajay Gupta f.(2017) 395 ITR 526 - Commissioner of Income Tax vs. Meeta Gutgutia Prop. M/s.Ferns 'N' Petals g.(2017) 397 ITR 82 Principal Commissioner of Income Tax vs. Best Infrastructure (India) Pvt. Ltd. and contended that in case of assessment under Section 153(A), the addition or disallowance can be made only from the materials found during the time of search. The petitioners along with the written arguments have annexed the orders of dismissal of the Special Leave Petition preferred by the Income Tax Department in Special Leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent, they being not admissible in evidence, the assessment orders being passed on the same, cannot be sustained in the eye of law. 6.It was further contended by the petitioners' counsel that depriving the assessee the opportunity to cross examine the persons whose statements were recorded under Section 132(4) of the Income Tax Act, were used for making additions/disallowance under Section 153(A) would amount to violation of the principles of natural justice. 7.The petitioners' counsel further pointed out that in spite of specific request by the petitioners, they were not allowed to cross examine the said persons, but the request was not even considered. The petitioners in support of his arguments placed reliance on the decision of the Delhi High Court in the case of PCIT vs. Anand Kumar Jain reported in 2021 SCC Online Del 3174 and the decisions of ITAT Delhi Bench in the case of Deputy Commissioner of Income Tax vs. M/s.Roger Enterprises (P) Ltd., reported in 2012 SCC Online ITAT 11821 and Brij Bhushan Singhal reported in 2018 SCC Online ITAT 2891 and the decision in the case of D.S.Suresh by the ITAT Bangalore Bench in ITA.No.462 and 463 Bang/2020. 8.The peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t show cause notices that preceded the assessment orders are identical and similar to the assessment orders and therefore, the counsel for the petitioners pleaded for quashing of the assessment orders as it is violative of the law laid down by the Supreme Court in the case of Siemens Ltd., vs. State of Maharashtra and others reported in (2006) 12 SCC 33 and Oryx Fisheries Private Limited vs. Union of India and others reported in (2010) 13 SCC 427. 12.The petitioners also pointed out that the assessment orders are mechanical orders passed without any independent application of mind and it was a cut and paste one from the predetermined show cause notice and communication dated 08.09.2020 and 13.03.2020. 13.The counsel for the petitioners also contended that as far as the writ petitions in W.P(MD)No.11271 to 11273 of 2021, are concerned, not only the specific objections raised by communication dated 08.03.2021 were not considered but also the statements made in paragraphs 3 and 4 of the assessment orders are completely false and the same demonstrates the mechanical manner in which the impugned orders came to be passed. 14.Per contra, the learned Senior Standing Counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C Online Del 3613, ESS Advertising (Mauritius) S.N.C. vs. Assistant Commissioner of Income Tax. 17.Further, the counsel for the petitioners contended that the excuse given for not furnishing the panchanama is an after-thought and the excuse is invented subsequently which can neither be sustained nor accepted as the law in this regard is no more res integra. For the said purpose, he argued placing reliance on the judgment of the Supreme Court in Mohinder Singh Gill and another vs. The Chief Election Commissioner, New Delhi and others reported in (1978) 1 SCC 405 which was followed in the cases of Chandra Ammal Educational and Charitable Trust vs. BSNL reported in 2015 SCC Online Mad 4419, N.Subburaj vs. District Collector reported in 2016 SCC Online Mad 4715 and Dr.Mary Nirmala Jeyaraj vs. Joint Director of Medical and Rurla reported in 2019 SCC Online Mad 18738. 18.On considering the arguments, documents and judgments cited by both sides, I find that the petitioners have sought for copies of panchanamas in the 63 places searched, but however, the department had admittedly not given all the panchanamas to the petitioners even though they accepted that the petitioners are ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt should have informed the same before passing the assessment order or atleast should have discussed the same in the assessment order. 20.Therefore, the stand taken by the department now by way of counter of non furnishing of panchanamas cannot be accepted. It is also not explained as to which are the concern, the respondent department concluded as belonging to the other group and what was the basis for such conclusion when the petitioners in its communication dated 28.07.2021 has explained their interest in every concern. 21.Therefore, non furnishing of the panchanama to the assessee is a violation of the principles of natural justice as it disables the petitioners from having knowledge of the seized materials and the alleged incriminating materials relied upon by the respondent department. 22.On the next issue of refusal of cross examination of the persons whose statements were recorded during the time of search under Section 132(4) of the Income Tax Act, it is trite law that the person against whom a statement is used, should be given opportunity to counter and contest the same. I am unable to accept the contention of the learned Senior Counsel that since the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners, when the entire assessment has been framed only on the basis of the so-called electronic record which are said to be copies of Excel Sheet, Excel work note book etc., non compliance of Section 65(B) of the Indian Evidence Act renders the document inadmissible in the eye of law as held by the Supreme Court in the judgment reported in Anvar P.V vs. P.K.Basheer and others reported in (2014) 10 SCC 473. ''14.Any documentary evidence by way of an electronic record under the Evidence Act, in view of Sections 59 and 65A, can be proved only in accordance with the procedure prescribed under Section 65B. Section 65B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the Section starts with a non obstante clause. Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub- Section (2) are satisfied, without f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice. 17.Only if the electronic record is duly produced in terms of Section 65B of the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to Section 45A opinion of examiner of electronic evidence. 18.The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under Section 65B of the Evidence Act are not complied with, as the law now stands in India.'' 25.In view of the violation of the principles of natural justice and also due to the non compliance of Section 65(B) of the Indian Evidence Act, this Court feels that it is a fit case for setting aside the assessment orders. The alternative remedy under the statute is in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or disallowance ; b)give the details of all the seized materials including the place of seizure and give copies of seized material demanded by the petitioners. In case, the department thinks that the seized materials sought for by the petitioners does not belong to the petitioners or the petitioners' group, communicate the same to the petitioners and in such event, in the assessment orders that framed either on the concerns that do not belong to the petitioners/petitioners' group or the assessment orders that are framed on the basis of the seized materials refused to be given to the petitioners/members of the petitioners' group, there would be no tax liability on the petitioners or members of the petitioners' group; c)the respondent should strictly comply with Section 65-B of the Indian Evidence Act if the respondent wants to use the electronic document by way of secondary evidence; d)none of the statements of the other group should be taken into consideration while framing the assessment on the petitioners or members of the petitioners' group and if the department thinks it is necessary to use the statement of the other group members, the peti ..... 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