1. Income tax appeal involving disputes over evidence and recovery proceedings under Section 226(3) of the Income Tax Act. (Para 5 )
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2020 Supreme(SC) 752
SUPREME COURT OF INDIA
A.M. KHANWILKAR, DINESH MAHESHWARI, JJ.
M/S. I.C.D.S. LIMITED - APPELLANTS
Vs.
COMMISSIONER OF INCOME TAX & ANR. - RESPONDENTS
CIVIL APPEAL NO(S).6053-6054 OF 2014
Decided On : 12-02-2020
Advocates Appeared:
For the Appellants : Mr. Arvind P. Datar, Sr. Adv., Mr. K. V. Mohan, AOR, Mr. R.K. Raghavan, Adv., Mr. K.V. Balakrishnan, Adv., Mr. Rahul Kumar Sharma, Adv.
For the Respondents: Mr. S. Wasim A. Qadri, Sr. Adv., Mr. S.A. Haseeb, Adv., Mr. Bijan Ghosh, Adv., Mr. B. V. Balaram Das, AOR
For the Appellants : Mr. Arvind P. Datar, Sr. Adv., Mr. K. V. Mohan, AOR, Mr. R.K. Raghavan, Adv., Mr. K.V. Balakrishnan, Adv., Mr. Rahul Kumar Sharma, Adv.
For the Respondents: Mr. S. Wasim A. Qadri, Sr. Adv., Mr. S.A. Haseeb, Adv., Mr. Bijan Ghosh, Adv., Mr. B. V. Balaram Das, AOR
The Supreme Court remanded the matter to the First Appellate Authority for fresh consideration, emphasizing that if the Department relies on witness evidence, the appellant must be granted a fair opportunity for cross-examination to ensure a just determination of the case on its merits.
Headnote:
Income Tax - Arguments - Evidence - Factual matrix of case or analyse arguments advanced by both sides except to observe that we disagree with the approach of High Court as well as Income Tax Appellate Tribunal - First Appellate Authority may reconsider matter afresh on its own merits in accordance with law including by examining additional material/circumstances to be produced by parties - In other words, entire matter will have to be considered by First Appellate Authority afresh by giving fair opportunity to both sides to espouse their claim in remanded appeals – Held, Court set aside impugned order of High Court dated as well as orders dated and passed by Income Tax Appellate Tribunal and Commissioner of Income Tax (Appeals)-I, Bangalore respectively and relegate the parties before First Appellate Authority, namely, Commissioner of Income Tax-I, Bangalore for reconsideration of appeals on its own merits in accordance with law as aforementioned - Appeals be decided expeditiously - Appeals and pending applications are accordingly disposed of.
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2. Dispute regarding the denial of opportunity to cross-examine witnesses relied upon by the Assessing Officer and the admissibility of additional evidence. (Para 3 )
3. The court found the lower courts' approach incorrect, emphasizing the necessity of providing cross-examination opportunities and considering additional evidence to ensure a fair hearing. (Para 2 , 3 )
4. To ensure a fair hearing in tax appeals, the appellant must be provided an opportunity to cross-examine witnesses relied upon by the Assessing Officer. (Para 3 )
5. Impugned orders set aside and matter remanded to the First Appellate Authority for fresh consideration; recovery proceedings stayed pending the outcome of remanded appeals. (Para 4 , 6 , 7 )
6. Does the failure to provide an opportunity to cross-examine witnesses relied upon by the Assessing Officer warrant a remand?
Yes, if the Department relies on evidence from witnesses, the appellant should be provided an opportunity for cross-examination to ensure a fair hearing and a decision on merits. (Para 3 )
7. Can a tax appeal be remanded for fresh consideration if both parties intend to rely on additional documents?
Yes, the First Appellate Authority may reconsider the matter afresh on its own merits, including the examination of additional material or circumstances produced by the parties. (Para 3 )
8. Can the court stay recovery proceedings during the pendency of a remanded appeal?
Yes, the court may direct the Department not to give effect to demand and attachment notices until the decision on the remanded appeals is rendered. (Para 6 )
ORDER :
1. Heard counsel for the parties.
2. For the nature of order we propose to pass, it is unnecessary to dilate on the factual matrix of the case or analyse the arguments advanced by both sides except to observe that we disagree with the approach of the High Court as well as Income Tax Appellate Tribunal, Bangalore.
3. In view of rival submissions and the documents on which reliance has been placed by the respective parties, we would deem it appropriate to relegate the parties before the First Appellate Authority. Be it noted that one of the issues involved is about not extending opportunity to the appellant to cross-examine the witnesses relied upon by the Assessing Officer. If the Department wants to rely on their evidence, it may be necessary to provide opportunity of cross-examination of these witnesses to the appellant, which can be done by the First Appellate Authority itself, namely, Commissioner of Income Tax (Appeals)-I, Bangalore. We say so because both parties intend to rely on some additional documents and circumstances. The First Appellate Authority may reconsider the matter afresh on its own merits in accordance with law including by examining the additional material/circumstances to be produced by the parties. In other words, the entire matter will have to be considered by the First Appellate Authority afresh by giving fair opportunity to both sides to espouse their claim in the remanded appeals.
4. Resultantly, we set aside the impugned order of the High Court dated 18.09.2007 as well as the orders dated 29.06.2001 and 23.08.2000 passed by the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals)-I, Bangalore respectively and relegate the parties before the First Appellate Authority, namely, Commissioner of Income Tax-I, Bangalore for reconsideration of appeals on its own merits in accordance with law as aforementioned. The appeals be decided expeditiously.
5. Counsel for the appellant had invited our attention to communication(s) dated 21.01.2020 and 06.02.2020 issued by the Department vide DIN & Letter No. 1TBA/COM/F/172019-20/1024085523(1) calling upon the appellant to pay arrears of demand and attachment notice under Section 226(3) of the Income Tax Act.
6. We direct that the Department shall not give effect to the said communications until the decision on the remanded appeals by the Commissioner of Income Tax (Appeals) is rendered and abide by that decision.
7. The appeals and pending applications are accordingly disposed of in the above terms.
