Case Law Details
Thasil Babu Vs DCIT (Karnataka High Court)
Karnataka High Court held that the seized material that is used in the assessment proceeding against the petitioner is required to be shared with the petitioner/ assessee. Hence, matter remanded back.
Facts- The petitioner has challenged the assessment order dated 24.03.2024 passed by respondent No.1 u/s. 147 of the Income Tax Act, 1961. The case of the petitioner is that during the assessment proceedings, the respondent has relied on certain seized material and statements of certain persons and on the basis of such seized material and statements made, the Assessing Officer has proceeded to pass an order. It is submitted that the specific request of the petitioner for furnishing the entirety of the statements made as also the seized material, has not been accepted in its entirety and only the portions of statements were made available which has prejudiced the petitioner.
Conclusion- It is not in dispute that only portions of the statements were furnished to the petitioner as is evident from the assessment order. The request was specifically to provide “complete statements recorded”. It would be appropriate for a full opportunity to be given to the petitioner that complete statements recorded which are relied upon during the assessment proceedings being made over to the petitioner.
Held that insofar as the seized material, it is open for the petitioner to make a request during the assessment proceedings and the same may be considered appropriately. Keeping in mind that, if any material that is seized, is being used in the assessment proceedings against the petitioner, needless to state, same is to be shared with the petitioner.
Accordingly, the order is set aside and the matter is relegated back to the Assessing Officer to reconsider the matter after providing an opportunity and making available the statements of such persons which are sought to be relied upon and would constitute an adverse statements as regards the petitioner.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has challenged the assessment order dated 24.03.2024 passed by respondent No.1 under Section 147 of the Income Tax Act, 1961 (for short ‘the Act’) at Annexure-‘A1’. The petitioner has also sought for setting aside of the notice of demand at Annexure-‘A3’, show cause notice for penalty at Annexure-‘A4’, notice under Section 148 of the Act at Annexure-‘B3’, show cause notice under Section 148A(b) of the Act at Annexure-‘B1’ and the order under Section 148A(d) of the Act at Annexure-‘B2’.
2. The case of the petitioner is that during the assessment proceedings, the respondent has relied on certain seized material and statements of certain persons and on the basis of such seized material and statements made, the Assessing Officer has proceeded to pass an order. It is submitted that the specific request of the petitioner for furnishing the entirety of the statements made as also the seized material, has not been accepted in its entirety and only the portions of statements were made available which has prejudiced the petitioner. Reliance is placed on paragraph No.33 of the preliminary reply made out by the petitioner to the show cause notice dated 05.09.2023.
3. It is submitted that the matter is required to be relegated to the Assessing Officer with appropriate direction to the Assessing Officer to make available the statements which are relied upon by the department as well as to share the seized material.
4. Learned counsel Sri. M. Dilip, appearing for the revenue would submit that portions of the statements as is relevant have already been made out to the petitioner.
5. The reply to the show cause notice dated 05.09.2023 made on 18.12.2023 at paragraph No.33 is as below:
“33. As your good selves will have noticed, I have sought complete seized materials relied upon by the department in this communication. Furthermore, I have also sought for complete statements recorded from various persons which are relied upon by the department in this communication. It is humbly submitted that providing bits and pieces of information will not meet the ends of justice. It is also not in accordance with law as already elaborated herein earlier. I have also sought for the opportunity of cross examining all the persons whose statements are relied upon by the department. In this view of the matter, I have not been able to make complete rebuttal of the entire allegations against me and raise complete and effective defenses and I am only making this preliminary submission. I am requesting your good selves to kindly provide all and complete seized material and statements and also the supporting evidences and also opportunity of cross examination of the parties which would enable me to present my defenses effectively.”
6. After hearing the matter for sometime, it is not in dispute that only portions of the statements were furnished to the petitioner as is evident from the assessment order. The request was specifically to provide “complete statements recorded”. It would be appropriate for a full opportunity to be given to the petitioner that complete statements recorded which are relied upon during the assessment proceedings being made over to the petitioner.
7. Insofar as the seized material, it is open for the petitioner to make a request during the assessment proceedings and the same may be considered appropriately. Keeping in mind that, if any material that is seized, is being used in the assessment proceedings against the petitioner, needless to state, same is to be shared with the petitioner.
8. Accordingly, the order dated 24.03.2024 at Annexure-‘A1’ is set aside and the matter is relegated back to the Assessing Officer to reconsider the matter after providing an opportunity and making available the statements of such persons which are sought to be relied upon and would constitute an adverse statements as regards the petitioner.
9. Insofar as seized material is concerned, petitioner to make out an application which may be considered appropriately in light of the observations made. All contentions are kept open. Consequently, Annexures-‘A2’ to ‘A4’ are set aside.
10. Needless to state that the petitioner is entitled for cross examination of the persons whose statements are relied upon and made use of by the revenue in the assessment proceedings.
11. Accordingly, petition is disposed off.
Author Bio
