TMI Blog2023 (11) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... provided the reasons which necessitated to cross-examine the witnesses whose statements were relied upon by the 1st respondent and a perusal of the reasons mentioned by the petitioner, appear to be just and reasonable and the 1st respondent ought to have provided the opportunity, but unfortunately, no opportunity was provided by which, right to lead rebuttal evidence is deprived of. It is clear that not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. In the present case, the statements of the employees of the petitioner company have been relied upon by the AO while passing the impugned order of assessment. When such being the situation, it is bounden duty of the AO to permit the petitioner to cross-examine the witnesses and not allowing the petitioner to cross-examine the said witnesses whose statements were made the basis of the impugned order, is no doubt, a serious flaw, by itself makes the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivas Sr.St. Counsel Mr.A.N.R.Jayaprathap Standing Counsel. W.P.Nos. 2094,201844,21568,21571 of 2023 For the Petitioner : Mr.M.P.Senthil Kumar, I. Dinesh. For the Respondents : Mr.A.P.Srinivas, Sr.Standing Counsel and Mr.A.N.R.Jayaprathap Standing Counsel COMMON ORDER Since the facts and circumstances are similar and also as common issues are involved in these Writ Petitions, they are taken up together for final disposal. 2. For effective disposal of these Writ Petitions on hand, it would be appropriate at first to deal with the Writ Petition in W.P.No.2225 of 2023. 3. This Writ Petition has been filed, praying for issuance of a Writ of Certiorari, to call for the records in DIN ITBA/AST/S143(3)/2022- 23/1048350023(1) dated 30.12.2022, DIN ITBA/ PNL/ F/ 271AAD (1)(i)/ 2023-24/ 1054034897(1) dated 28.06.2023, DIN ITBA/PNL/F/271AAD(1)(i)/2023-24/1054034897(1) dated 28.06.2023, DIN ITBA/AST/S 143(3) / 2022-23 / 1048347029 (1) dated 29.12.2022 and DIN ITBA/PNL/F/271AAB/2023-24/1054034880(1) dated 28.06.2023 on the files of the 1st respondent relating to A.Y. 2021-2022 and to quash them all. 4. The facts of case in W.P.2225 of 2023 are as follows: 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees during the the search. The petitioner has, vide response dated 04.11.2022 requested for 3 weeks adjournment. The 1st Respondent in a reply notice dated 14.11.2022, cited the limitation of time required for the Petitioner to file the details required vide notice dated 26.10.2022 on or before 17.11.2022, by stating that details sworn statements / hard / soft copies are given already and most of the basic details are already available with the petitioner. In response, the petitioner through a notice dated 17.11.2022 filed the required details in elaboration. Again the 1st respondent has sent a notice u/S.142(1) dated 08.12.2022 required petitioner for various details to be filed on or before 12.12.2022. Then the petitioner responded through the a letter dated 10.12.2022 stating that the details were already filed in previous response dated 17.11.2022 and also attached the covering letter and annexures thereto once again. This pattern didn't stop and 1st respondent again requested the petitioner for various details to be filed on or before 16.11.2022. The petitioner had also responded vide a letter dated 16.12.2022 on 19.12.2022 after handing over the annexures to the response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir response on 13.07.2022. 6. Mr.R.V.Eashwar, learned Senior counsel contends that the 1st respondent passed an impugned assessment order in a hurried manner without providing an opportunity for cross-examination and without even referring to the petitioner's request for cross examination which is illegal, contrary to law and in gross violation to the principles of natural justice and thus the impugned assessment order passed by the 1st respondent is liable to be quashed. He also contends that how can the 1st respondent put forth questions to the employees who do not even have the locus standi for replying such questions and such the statements of the employees cannot be relied on unless the veracity of the same is tested by way of cross examination. 7. The Learned Senior Counsel would further contend that the petitioner is not seeking cross-examination as a ritualistic formality to delay the proceedings, but certain relevant and crucial questions have to be put forth to the witnesses to test the veracity of the statements given by them to the 1st respondents during the search conducted under Section 132 of the Income Tax Act,1961. He conceded that the witnesses are the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve also admitted everything stating that all the acts were done under the instructions of the Managing Director. He further pleaded that MS Excel sheet contains the chart of unaccounted receipts and payments which were shown to the employees as well as the Managing Director who admitted that the modus operandi and the accumulation of unaccounted money. He also pleaded that the petitioners have an alternative remedy before the Commissioner of Income Tax (Appeals) whose powers are co-terminus with that of the Assessing Officer and therefore, prayed for dismissal of the Writ Petitions while directing the petitioners to work out their remedy by way of appeal before the Commissioner of Income Tax (Appeals). 10. Heard the learned Senior counsel and the learned counsel appearing for the petitioners and the learned Senior Standing counsel appearing for the respondents and peruse the entire materials placed on record. 11. In the present case, a challenge was made to the impugned order dated 30.12.2022 passed by the 1st respondent pertaining to the assessment year 2021-22. The 1st respondent issued a show cause notice on 19.12.2022 directing the petitioner to file reply on or before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Mr.K.Thirunavakkarasu DGM Accounts 1 to 6 (all) He has not handled cash and therefore has no Locus standi to give statement about the receipts and payments of cash alleged to be representing unaccounted transactions. Need to verify the veracity of facts given in the statements. 2. Mr.T.Mohanraj AGM Accounts 3 The Statements recorded on 30.10.2021 and on 09.02.22 as far as the alleged payments made to contractors appears to be contradictory. As he has not handled cash, he does not have the Locus Standi to give statements about the receipts and payments of cash concerning the alleged unaccounted transactions. Need to verify the veracity of the facts given in the statements. 3. Mr.P.Mohandas AGM, Purchase 1.2 He Joined the service of the company only during January 2014. Therefore obviously and logically his statement cannot be taken as sacrosanct for the alleged unaccounted transactions for all the ten years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity for cross-examination of the witnesses. However, in the present case, the petitioner has provided the reasons as could be seen from the above mentioned table, for which, they required to cross-examine the seven witnesses of their employees who made statements before the 1st respondent, which were relied upon as documents and proof for passing the impugned assessment order. When the 1st respondent has relied upon the statements of the seven witnesses mentioned above, no doubt certainly, to find out the veracity of the statements, the petitioner is entitled to cross-examine the witnesses and to file their effective reply. Therefore, it is bounden duty of the 1st respondent to provide a personal hearing and an opportunity to the petitioner to cross-examine the witnesses. Nowhere in the correspondence, the 1st respondent ever mentioned about the personal hearing and providing opportunity for cross-examination. These are all admitted facts and not denied on behalf of the respondents. This attitude of the 1st respondent clearly amounts to violation of principles of natural justice which would ultimately deprive of the legal rights of the petitioner. Further, the time provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case, the petitioner, in fact, provided the reasons which necessitated to cross-examine the witnesses whose statements were relied upon by the 1st respondent and a perusal of the reasons mentioned by the petitioner, appear to be just and reasonable and the 1st respondent ought to have provided the opportunity, but unfortunately, no opportunity was provided by which, right to lead rebuttal evidence is deprived of. In the case of Andaman Timer Industries versus Commissioner of Central Excise (2015) 94 CCH 0187 ISCC, the Hon'ble Supreme Court of India, has held as under in para 6: 6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. I am 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. The Supreme Court in the judgment Kishan Chadn Chellaram reported in 125 ITR 713 at page 720 which is also followed in the judgments cited by the petitioner in the case of Deputy Commissioner of Income Tax vs. M/s.Roger Enterprises (P) Ltd., reported in 2012 SCC Online ITAT 11821 and in the case of Brij Bhushan Singal vs. Assistant Commissioner of Income Tax reported in 2018 SCC Online ITAT 2891, held as follows:~ It is true that the proceedings under the Income Tax Act law are not governed by the strict rules of evidence and therefore, it may be said that even without calling the Manager of the bank in evidence to prove this letter, it could be taken into account as evidence. But before the Income Tax authorities c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 01.06.2001. It reads as follows: Under the existing provisions contained in subsection (1), where an appeal is filed before the Commissioner (Appeals), against an order of assessment, the Commissioner (Appeals) may confirm, reduce, enhance or annul the assessment, or he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment in accordance with the directions given by him and after making such further enquiry as may be necessary. With a view to help bringing an early finalisation to the assessment and to avoid prolonging the process litigation, it is proposed to amend clause (a) of the aforesaid section so as to provide that, where an appeal is filed before the Commissioner (Appeals), against an order of assessment, the Commissioner (Appeals) may not set aside the assessment or refer the case back to the Assessing Officer for making fresh assessment, This amendment will take effect from 1st June, 2001. 21. By not providing an opportunity of hearing, the person can approach the appellate authority, who in turn can permit him to cross examine the witnesses and thereafter he can pass orders. The cross-examination co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under the Indian Evidence Act, 1872, Section 65B prescribes a distinct framework that governs the admissibility of electronic evidence. In this regard, it is worthwhile to extract paragraphs 24 and 25 from a decision rendered by this Court in Vetrivel Minerals vs ACIT (2021) 129, which read as under: 24.As contended by the writ petitioners, 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 clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be 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 Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, this Court has no hesitation to hold that the impugned order is liable to be set aside. 24. Accordingly, the impugned order dated 30.12.2022 passed by the 1st respondent relating to assessment year 2021-22 is hereby set aside. 25. In the result, the Writ Petition in W.P.No.2225 of 2023 is allowed. No costs. 26. As far as the Writ Petitions in W.P.Nos.21568 of2023 is concerned, consequent to the impugned assessment order, dated 30.12.2022, which is subject matter of challenge in W.P.No.2225 of 2023, the 1st respondent initiated the penalty proceedings under Section 271AAB(1A) of the Act by issuing a show cause notice dated 06.01.2023. It appears that the petitioner filed their detailed reply on 28.06.2023 and also brought to the notice of the 1st respondent that the Writ Petition in W.P.No.2225 of 2023 has been filed challenging the original assessment order dated 30.12.2022 and requested to keep the present penalty proceedings in abeyance till disposal of the said Writ Petition. However, the 1st respondent proceeded with the matter and by proceedings dated 28.06.2023, levied penalty of Rs. 19,79,91,600/- . Challenging the same, the present Writ Petition has been filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arched and certain sheets and electronic devices were seized and sworn statements were also recorded. Based on the same, a show cause notice under Section 143(2) of the Act dated 29.06.2022 was issued by the 1st respondent. The petitioner filed their reply on 09.11.2022. Later, vide communication dated 14.12.2022 and 23.12.2022, the petitioner requested the 1st respondent to furnish the copies of statements and other evidences seized from M/s.SKM Group and also for providing an opportunity to cross-examine the witnesses, more particularly, T.Mohanraj, Asst.General Manager of M/s.SKM Animal Feeds and Foods (India) Private Limited since the 1st respondent relied upon his statement. However, without acceding to the request made by the petitioner, the 1st respondent completed the scrutiny assessment under Section 143(3) of the Act vide proceedings dated 29.12.2022, wherein, while making additions, determined the assessed income at Rs. 1,35,64,710/-. Challenging the same, the petitioner has come forward with the present Writ Petition. 32. As far as the Writ Petition in W.P.No.21844 of 2023 is concerned, consequent to the issuance of the impugned assessment order, dated 30.12.2023, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income at Rs. 1,35,64,710/-. 35. In the present Writ Petitions also, the petitioner has raised similar contentions, viz., violation of principles of natural justice and non-compliance of Section 65B(4) of the Indian Evidence Act,1872, which were exhaustively dealt with while disposing of the Writ Petition in W.P.No.2225 of 2022. Therefore, this Court is of the view that the order passed in W.P.No.2225 of 2022 will hold good in respect of these Writ Petitions, viz., W.P.Nos.2094 and 21844 of 2023 also and the impugned orders are liable to be set aside. 36. Accordingly, the impugned orders dated 30.12.2022 and 28.06.2023 are hereby set aside. 37. In the result, the Writ Petition in W.P.No.2094 and 21844 of 2023 are allowed. No costs. 38. To sum up, i) All the Writ Petitions, viz., W.P.Nos.2225, 2094, 21844, 21568 and 21571 of 2023 are allowed and the respective impugned orders dated 30.12.2022 and 28.06.2022 are set aside. ii) Inasmuch as the impugned orders are set aside on the grounds of violation of principles of natural justice and also due to noncompliance of Section 65(B) of the Indian Evidence Act, this Court feels it appropriate to remand the matters back ..... X X X X Extracts X X X X X X X X Extracts X X X X
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