TaxTMI 
TaxTMI 
2023 (11) TMI 543
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....tive 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: 4.1. The Petitioner is a company, engaged in the business of manufacture and sale of poultry and cattle feeds, processing of vegetable oils, trading of eggs and feed raw materials, operating of petrol bunk, processing of chicken and operation of cold storage facilities. The Petitioner has e-filed its return of income on 16.12.2022 for the A.Y. 2021-2022, admitting an income of Rs. 2,63,03,81,820/-. 4.2. As per section 132 of Income Tax Act, 1961, a search was conducted....
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....titioner 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 in a pen drive. 4.6. Thereafter, a Show-Cause Notice (hereinafter called as SCN) dated 19.12.2022 was issued wherein for the very first time where the statement of T. Mohanraj dated 09.02.2022 was relied on which was never provided to the petitioner and provided 3 days time to file a reply. The petitioner submits that he sought for a statement of T.Mohanraj vide his letter dated 21.12.2122 and thereafter filed a detailed response to the SCN uploaded on 24.12.2022 objecting t....
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....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 employees of the petitioner Company, but contends that their statements cannot be relied upon since they were alleged to have given statements pertaining to the transactions of the past years during which period, they were not employed at all. The witnesses nos.1 and 2 who haven't handled the cash, have no locus standi to give the statements about the receipts and cash payments regarding the alleged unaccounted transactions. Further, witness nos. 3, 4 and 5 where one of them has jo....
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....t 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 23.12.2022. Pursuant to the same, on 21.12.2022, the petitioner sought for the statement of T.Mohanraj and also made a request for cross-examination of the employees whose statements were relied upon. In the assessment order, statements of certain employees have been relied upon by the 1st respondent against the petitioner company and also the electronic devices. Therefore, the petitioner specifically made a request on 21.12.2022 to cross-examine the witnesses. In the show cause notice, dated 19.12.2022, ....
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....naccounted 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. 4. Mr.K.S.Gopalakrishnan Assistant Manager-Cash 1 to 6 (all) He was transferred to Cash Section only on 1.3.2016. Therefore he cannot give statement for 10 years. For Example; 1) with reference to the cash memo dated 16.03.2020 mentioning the name of the purchaser of old culled birds, along with the total amount and denomination of the currency, he has stated it is unaccounted, which is contrary to the fact. This cash memo is seized vide ANN/KK/SFMK/LS/S, on page no.15. 2) The amount of Rs. 10,02,97,132/-being the total of the alleged unaccounted birds as per the noting in the diary seized, are nothing but the handled by him and total of some random figures and does not represent the unaccounted sales. Further the figure mentioned in the sworn statement as per noting in diary and the assessment order does not match. 3) Some of the statements gi....
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....provided to the petitioner for filing the reply was hardly 3 days, which in the opinion of this Court, is not reasonable one and it appears to be only a nominal in nature. Even though, the 1st respondent provided very short time of 3 days, the petitioner filed their reply, but what they sought for was only personal hearing as well as cross-examination of the witnesses. 14. The law has been well settled by this Court as well as Apex Court in umpteen number of cases that right of cross-examination is part of one of the most essential rights and whenever a request is made for cross-examination of the witnesses to test the veracity of their statements, the authority have to necessarily grant the said request. In the case of "Thilagarathinam Match Works & others vs CCE" (2013) 2 CTC 369 = 2013 SCCOL Mad 333, this Court has held in para 9 as under: "9. Petitioners have not stated any reason for cross-examination of those persons No reason need be stated by any person for requiring cross-examination in an enquiry a person gets two kinds of rights. The first set of right revolves around the night to peruse the documents relied upon by the department and the right to cross-examine the wi....
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....ating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them." 16. A perusal of the above, 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 b....
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....t, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for the opportunity to cross examine the Manager of the bank with reference to the statement made by him." "23. The counsel for the petitioners also placed the recent judgment of the Supreme Court in the case of ICDS Ltd., reported in 2020 10 SCC 529, wherein, the Apex Court has remanded back the matter on account of the assessee being deprived of cross examination. Therefore, the respondent either should not have relied on the statements recorded under Section 132(4) or in case, if they want to rely on the same, they should not have denied the opportunity to the petitioners when they demanded of cross examining the persons who gave the statement. When the department has taken a stand that there are two groups which were searched by a single warrant and that the companies of one group should not be given to another, as rightly pointed out by the learned counsel for the petitioners, the assessing officer should not have discussed the statement of the other group for framing the assessment of the petitioners. This completely vitiates the entire assessm....
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....t Officer before making assessment and the cross-examination to be conducted before the appellate authority after the assessment which was passed without cross-examination, cannot be equated. That apart, under the frame work of law, it is a legal right of the petitioner before concluding the assessment to provide reply. In the event if anything is required for cross-examination, the same has to be permitted to putforth his case and thereafter, the Assessment Officer has to give his opinion. In the event of failure to provide an opportunity for cross-examination of the witnesses, no doubt the petitioner will loose the opportunity of well considered assessment order to be made by the Assessment Officer along with his points raised in the cross-examination. By loosing this opportunity before the Assessing Officer, the petitioner has to approach the Appellate Authority for cross-examination. Thereby, he is loosing the considered opinion of the Assessing Officer, which he is equally entitled to, for no mistake of him. When a person is having legal right, he is certainly entitled to such right and the said right cannot be deprived of by the Courts holding that the Appellate Authority is ....
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....ontained 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 further proof or production of the original. The very admissibility of such a document, i.e., electronic record which is called as computer output, depends on the satisfaction of the four conditions under Section 65B(2). Following are the specified conditions under Section 65B(2) of the Evidence Act: (i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; (ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity; (iii) During the material part of the said period, the computer was opera....
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....les 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 of violation of principles of natural justice should be an effective one capable of remedying the violations by providing afresh, but however, it remains the fact that after amendment to Section 251(1)(a) of the Income Tax Act on 01.06.2001, the CIT(Appeals) does not have the power of remand. Therefore, in the facts and circumstances of the case, since the petitioners have made out a clear case of violation of principles of natural justice and the statute, this Court feels that it is a fit case for interfering with the impugned orders. In such circumstances, plea of alternative remedy which is also an effective one to undo the violations committed by the respondent, cannot be sustained. This Court is well within its power to set aside the impugned orders and remand back the same for fresh consideration. The Supreme Court in the recent judgment reported in (2020) 13 SCC 285, Maharashtra Chess Association vs. Union of India and others, negatived the....
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....o.21571 of 2023 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 271 AAD (1)(i) of the Act by issuing a show cause notice dated 20.01.2023 on the ground that during the couse of proceedings under the Act for the A.Y.2021-22, there was a false entry within the meaning of the provisions Clause (i) to Sub Section (1) of Section 271AAD of the Act, which invites penalty. It appears that the petitioner filed their detailed reply on 26.06.2023 and allso 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. 32,99,86,000/- . Challenging the same, the present Writ Petition has been filed by the petitioner. 28. Inasmuch as this Court, after a detailed discussion, set aside the main impugned original assessment orde....
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....espondent 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 31.01.2023 and also brought to the notice of the 1st respondent that the Writ Petition in W.P.No.2094 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. 79,20,000/-. Challenging the same, the present Writ Petition has been filed by the petitioner. 33. In fact, during the course of same search conducted in respect of M/s.SKM Animal Feeds and Foods (India) Private Limited, the respondent officials also conducted the search in respect of the premises of the petitioner in the above two said Writ Petitions and based on the sworn statements of the employees, particularly, Mr.T.Mohanraj, AGM and also the same material, viz., pen-drive and excel sheets seized during the course of search of M/s.SKM Animal Feeds and Foods (India) Pvt.Ltd., the 1st respondent....