Income Tax Proceedings Is Cross Examination is Absolute Right at the Time of Income Tax Proceedings

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The Tax Publishers Income Tax--Income Tax Proceedings Is Cross Examination is Absolute Right at the Time of Income Tax Proceedings CA. Sanjeev Goyal The present write up aims at discussing the right of cross examination of witness during assessment proceedings so as to comply with principle of natural justice. The learned author has discussed certain judicial pronouncements dealing with the necessity of providing such opportunity or otherwise. 1. Introduction As we all know, Income Tax Department conducts searches and surveys (also known as raids) every year where they suspect a person or business to be having illegal money. In this context, let us understand an interesting situation with help of an illustration. Let us assume that a raid is conducted in case of Mr. X. During the course of such raid, some documents are found which prove that Mr. X has made financial transactions with Mr. Y, which Mr. X has not disclosed in his income. As a result of which, Mr. X has under-disclosed his actual income and paid less tax. Mr. X has also admitted the said facts at the time of his statement recorded under oath. Thereafter, based on the above material, in addition to tax proceeding, against the Income-tax officer sends notice to Mr. Y also for action. This is a standing operating procedure in such cases. Now, the question arises that if Mr. Y also accepts that he is involved in the said financial transactions, then in such a situation, action against Mr. Y is legally justified. But, if Mr. Y says that I have no business connection with Mr. X, so in such a situation only on the basis of some documents and the statement of Mr. X, is it right to include Mr. Y in the rigors of tax proceedings along with Mr. X. Normally, Mr. Y asks the Income Tax Department to cross-examine Mr. X to prove himself not guilty, so as to ensure natural justice. Therefore, in this article, we will try to understand the concept relating to whether cross-examination is absolute right for anyone under the proceeding of Income Tax Case. Whether an aggrieved person has absolute right to Cross Examine a witness during the Income Tax Proceedings? No, the right to cross-examine a witness is not absolute and is subject to the discretion of the court, which can deny it based on the circumstances of the case and the necessity and relevance of the evidence. 2. Some Judicial Pronouncements of the courts where the courts denied Cross Examination Punjab & Haryana High Court in the case of CIT v. Metal Products of India [150 ITR 714] In the context of the Indian Evidence Act, 'evidence' means and includes all statements made before the Court which are called 'oral evidence' and all documents produced before it for inspection which are called 'documentary evidence''. That is a controlled meaning of the word for that Act. Yet, in certain circumstances, evidence in the form of affidavits, declarations and other means of the same kind are allowed to be adduced. But, all such exercise is made before a Court or a quasi-judicial Tribunal to make things obvious or manifest. In other words, the effort is to make things plainly visible or conspicuous. The object can also be achieved by a positive suggestion indicating an inference which adds to the plain visibility or manifestation. The Court or the Tribunal must have before it, in all events, the correct perspective of things and what is helpful or valuable in that direction is 'evidence' in the larger context or in the generic sense. As is well known, strict rules of evidence, as are known to the Indian Evidence Act, are not applicable to income-tax proceedings and thus the word 'evidence' in the income-tax proceedings has to be understood in the generic sense. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Income Tax Proceedings

Is Cross Examination is Absolute Right at the Time of Income Tax Proceedings

CA. Sanjeev Goyal

The present write up aims at discussing the right of cross examination of witness during assessment proceedings so as to comply with principle of natural justice. The learned author has discussed certain judicial pronouncements dealing with the necessity of providing such opportunity or otherwise.

1. Introduction

As we all know, Income Tax Department conducts searches and surveys (also known as raids) every year where they suspect a person or business to be having illegal money. In this context, let us understand an interesting situation with help of an illustration.

Let us assume that a raid is conducted in case of Mr. X. During the course of such raid, some documents are found which prove that Mr. X has made financial transactions with Mr. Y, which Mr. X has not disclosed in his income. As a result of which, Mr. X has under-disclosed his actual income and paid less tax. Mr. X has also admitted the said facts at the time of his statement recorded under oath. Thereafter, based on the above material, in addition to tax proceeding, against the Income-tax officer sends notice to Mr. Y also for action. This is a standing operating procedure in such cases.

Now, the question arises that if Mr. Y also accepts that he is involved in the said financial transactions, then in such a situation, action against Mr. Y is legally justified. But, if Mr. Y says that I have no business connection with Mr. X, so in such a situation only on the basis of some documents and the statement of Mr. X, is it right to include Mr. Y in the rigors of tax proceedings along with Mr. X.

Normally, Mr. Y asks the Income Tax Department to cross-examine Mr. X to prove himself not guilty, so as to ensure natural justice. Therefore, in this article, we will try to understand the concept relating to whether cross-examination is absolute right for anyone under the proceeding of Income Tax Case.

Whether an aggrieved person has absolute right to Cross Examine a witness during the Income Tax Proceedings?

No, the right to cross-examine a witness is not absolute and is subject to the discretion of the court, which can deny it based on the circumstances of the case and the necessity and relevance of the evidence.

2. Some Judicial Pronouncements of the courts where the courts denied Cross Examination

Punjab & Haryana High Court in the case of CIT v. Metal Products of India [150 ITR 714]

In the context of the Indian Evidence Act, 'evidence' means and includes all statements made before the Court which are called 'oral evidence' and all documents produced before it for inspection which are called 'documentary evidence''. That is a controlled meaning of the word for that Act. Yet, in certain circumstances, evidence in the form of affidavits, declarations and other means of the same kind are allowed to be adduced. But, all such exercise is made before a Court or a quasi-judicial Tribunal to make things obvious or manifest. In other words, the effort is to make things plainly visible or conspicuous. The object can also be achieved by a positive suggestion indicating an inference which adds to the plain visibility or manifestation. The Court or the Tribunal must have before it, in all events, the correct perspective of things and what is helpful or valuable in that direction is 'evidence' in the larger context or in the generic sense. As is well known, strict rules of evidence, as are known to the Indian Evidence Act, are not applicable to income-tax proceedings and thus the word 'evidence' in the income-tax proceedings has to be understood in the generic sense.