Seized documents and relied-upon copies must be supplied before adjudication where defence is prejudiced by withholding material.

Revenue authorities were required to segregate seized material, return documents not proposed to be relied upon, and supply copies of the relied upon documents before adjudicating the show cause notices. Departmental circulars governing seizure and return of documents were treated as binding on the Revenue, and withholding copies while retaining irrelevant material was found to prejudice the assessee's ability to respond effectively and prepare a defence. The writ petition succeeded, and the assessee was directed to receive effective access to the seized material necessary for adjudication.

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Issues: Whether the Revenue authorities were bound to return the non-relied upon documents seized during search and to furnish copies of the relied upon documents before proceeding with adjudication of the show cause notices.

Analysis: The seized material included both documents relevant to the proposed adjudication and other documents not likely to be relied upon. The Department's circulars required prompt segregation of relied upon and non-relied upon material, return of documents not proposed to be used, and supply of copies of the relied upon documents. Such departmental instructions were treated as binding on the Revenue. The denial of copies and retention of non-relied upon documents was held to prejudice the assessee's ability to reply effectively, assist in assessment, and prepare a meaningful defence, offending principles of natural justice.

Conclusion: The Revenue was directed to return the original non-relied upon documents and furnish copies of the relied upon documents to the assessee, with the adjudication to proceed accordingly.

Final Conclusion: The writ petition succeeded and the assessee was granted effective access to the seized material necessary for adjudication.

Ratio Decidendi: Departmental circulars governing seizure and return of documents are binding on the Revenue, and withholding relied upon copies or retaining irrelevant seized documents so as to impair defence violates natural justice.

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