Assessing Officers Are Not Governed By Strict Rules Of Indian Evidence Act, 1872 In Case Of Assessment Proceedings: Madras High Court

The Madras High Court has held that assessing officers are not governed by the strict rules of the Indian Evidence Act, 1872.

The bench of Justice C. Saravanan has observed that the assessment proceedings under the Income Tax Act, 1961, before an assessee officer are not judicial proceedings. It is a quasi-judicial proceeding before a quasi-judicial officer. The provisions of the Evidence Act, 1872, particularly the special provisions relating to evidence relating to Sections 65A, 65B, and 66, are not relevant.

The petitioners challenged the respective assessment orders passed under Section 153C read with Section 143(3) of the Income Tax Act, 1961, and the scrutiny assessment orders passed under Section 143(3) of the Income Tax Act, 1961.

The background to proceedings under Section 153C of the Income Tax Act, 1961, against each of the petitioners is a search that was conducted at the premises of the said “searched person” on November 10, 2020.

The search was carried out at the secret office of the “searched person." The search team found customized software named “J Pack” that was being used for recording unaccounted gold and cash transactions. The search team seized an IBM desktop PC and pen drive related to “J Pack” maintained by the accountant of the “searched person.”.

The challenge to the respective assessment orders passed by the assessing officers is primarily on the ground that the assessing officer(s) have failed to consider the decision of the Supreme Court in Super Malls (P) Ltd. v. CIT. The court held that when the assessing officer of the searched person and the third person are the same, it is sufficient for the assessing officer to record in a satisfaction note that documents seized from the searched person belonged to another person, and there is no requirement of transmitting documents so seized from the searched person. The initiation of proceedings under Section 153C of the Income Tax Act, 1961, was time-barred.

The petitioner contended that there was a gross violation of principles of natural justice for not allowing any of the respective petitioners to cross-examine Mr. Suresh Khatri, the director of the “searched person,” and Mr. Rajendra Kothari, the accountant of the “searched person." The person whose sworn statements were relied upon for initiating the proceedings under Section 153C of the Income Tax Act, 1961, was not produced for cross-examination.

The petitioner contended that the procedure under Section 65B of the Evidence Act, 1872, was not followed. It is a mandatory requirement for the admissibility of evidence from a computer printout, and therefore it cannot be relied upon.

The court held that the Indian Evidence Act, 1872, applies to all judicial proceedings in or before any court, including court-martial. It does not apply to proceedings before an arbitrator. Provisions of the Indian Evidence Act, 1872, do not apply to a quasi-judicial proceeding before a quasi-judicial officer, such as an assessee officer under various tax laws or the appellate authority and tribunal under them.

The court dismissed all the written petitions filed by the respective petitioners challenging the order passed under Section 153C of the Income Tax Act, 1961, read with Section 143(3) of the Act and under Section 143(3) of the Income Tax Act, 1961.

Counsel For Petitioner: A.S.Sriram

Counsel For Respondent: A.P.Srinivas

Case Title: M/s.LKS Gold House Private Limited Versus The Deputy Commissioner of Income Tax

Citation: 2024 LiveLaw (Mad) 120

Case No.: W.P.Nos.11630, 11633, 11635, 11636, 11638, 11644, 12018, 12021, 12686, 12688, 12691, 13114, 13117, 13119, 13125, 13129, 13142, 13432, 13436, 13438, 13442, 13443, 13489, 13494, 13500, 13504, 13602, 13609, 13616, 13619, 13625, 13771, 13775, 13781, 14379, 14384, 14387, 14391, 14918, 14927, 14929, 14930, 14934 & 16431 of 2023

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