Back
2023 Supreme(P&H) 2727
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
G.S. SANDHAWALIA, MS LAPITA BANERJI, JJ.
Pr. Commissioner of Income Tax (Central) – Appellant
Versus
M/s. DSG Papers Pvt. Ltd. – Respondent
ITA-38 of 2023 (O&M), ITA-1 of 2023 (O&M), ITA-8 o
Decided On : 09-11-2023
Ms. Gauri Neo Rampal Opal, Senior Standing Counsel; For the Appellant
The denial of the right to cross-examine witnesses constitutes a violation of natural justice, rendering the assessment order invalid.
Headnote:(A) Income Tax Act, 1961 - Section 260A - Appeals against the Tribunal's decision regarding assessment years 2013-2014 to 2017-2018 - Tribunal allowed appeals on ground of denial of cross-examination rights, violating principles of natural justice - Reliance on third-party statements without proper corroboration deemed insufficient. (Paras 2, 5, 10, 12)
(B) Natural Justice - Right to cross-examine - The Tribunal emphasized the necessity of allowing cross-examination to ensure fairness in proceedings, as established in Andaman Timbers Industries case and supported by the Delhi High Court in Rajesh Kumar. (Paras 10, 11)
Facts of the case:
The appeals stem from the Tribunal's decision to allow relief on the basis that the Assessing Officer failed to provide the assessee with the opportunity to cross-examine witnesses, which led to the reliance on statements made without the assessee's rebuttal. (Paras 4, 6)
Findings of Court:
The Tribunal's finding that the additions were made on uncorroborated third-party evidence without allowing cross-examination was upheld, establishing a violation of natural justice principles. (Paras 10, 12)
Issues: The main issues included whether the Tribunal erred in allowing relief based on the failure to provide cross-examination opportunities and whether the impugned order was erroneous in law. (Paras 3.1, 3.2)
Ratio Decidendi: The court concluded that the denial of cross-examination constituted a serious flaw rendering the order a nullity, thereby violating natural justice principles. (Paras 10, 12)
Result: Appeals dismissed.
JUDGMENT
Mr. G.S. Sandhawalia, J. (Oral)
The present judgment shall dispose of five appeals i.e. ITA No.281 of 2022 and ITA Nos. 1, 8, 11 and 38 of 2023, which have been filed under section 260A of the Income Tax Act, 1961 (for short 'the Act') regarding the Assessment Years 2013-2014, 2014-2015, 2015-2016, 2016-2017 and 2017-2018. The facts are being taken from ITA-38-2023 pertaining to the Assessment Year 2013-2014.
2. It is to be noticed that the Tribunal had decided 5 appeals bearing ITA Nos.82 to 86/CHD/2022 for the Assessment Years 2013- 2014, 2014-2015, 2015-2016, 2016-2017 and 2017-2018 vide common order dated 29.07.2022. The Tribunal had allowed the appeals principally on the ground that the Assessing Officer has not given any opportunity of cross-examination to the assessee regarding the persons on whose statements the assessing authority had relied on. Resultantly while placing reliance upon the judgment of the Apex Court passed in Andaman Timbers Industries v. Commissioner of Central Excise, (2015) 81 CTR (SC) 241, judgment of the Delhi High Court in Commissioner of Income Tax v. Dharam Pal Prem Chand Ltd. (2007) 295 ITR 106; Commissioner of Income Tax v. Rajesh Kumar (2008) 306 ITR 27 (Delhi) and judgment of the Madhya Pradesh High Court in Prakash Chand Nahta v. Commissioner of Income Tax (2008) 301 ITR 1354, it allowed the above said appeals.
3. The following substantial questions of law are sought to be raised:-
"3.1 Whether on the facts and circumstances of the case, the Hon'ble ITAT has erred in allowing relief regarding the addition of Rs. 14,70,900/- made by applying net profit (declared by the assessee) @ 3.12% on suppressed sales, ignoring the fact that the said books of accounts were already rejected under section 145(3) of the Income Tax Act, 1961.
3.2 Whether on the facts and circumstances of the case, the Hon'ble ITAT has erred in allowing relief to the assessee by observing that the AO did not provide opportunity of cross examination though information received from Directorate General of GST Intelligence (DGGI) which is a law enforcement agency was duly confronted to the Director of the company.
3.2A. Whether on the facts and circumstances of the case, the Hon'ble ITAT has erred in allowing relief to the assessee by observing that proper opportunity of cross examination was not provided to the assessee keeping in view of the principles decided in the judgment of Hon'ble Calcutta High Court in the case of Kisanlal Agarwalla v. Collector of Land Customs AIR 1967 & Cal.80 which throws light on the right of cross examination.
3.3 Whether the impugned order dated 29.07.2022 passed by the Hon'ble ITAT is erroneous in the eyes of law and deserves to be vacated and overruled."
4. It has also been admitted by the revenue as such that for the Assessment Year 2013-2014, 2014-2015, 2015-2016, 2016-2017 and 2017-2018 the tax effect is of Rs. 5,19,998/-, Rs. 1,89,733/-, Rs. 28,57,860/-, Rs. 52,52,093/- and Rs. 27,63,990/-, respectively, which is below the prescribed monetary limits prescribed by the CBDT, Circular No.17/2019 dated 08.08.2019. However, the justification is that since the addition is based on an information received from law enforcement agencies that the assessee company had been allegedly suppressing its turn over to the Income Tax Department by way of not accounting for the sales by under invoicing the sales.
5. We are of the firm opinion that no substantial question of law is made out as contended. The factual background of the case would go on to show that on an information being received from the Directorate General of GST Intelligence, Ludhiana Zonal Unit, who had conducted a search on 05.08.2016 on the assessee company and its related parties on alleged suppression of turnover on account of unaccounted sales as well as under-invoicing of sales. Apparently from the premises of Shri Sanjay Dhawan 225 invoices were recovered, who was the Ex-President of the assessee company and had left the company
