AO failed to cross-examine Customs Broker as well as bank officials despite requested by assessee: Madras HC orders de novo proceedings [Read Order]

The Madras High Court while ordering the de novo proceedings said that despite a request for cross-examination of the Customs Broker as well as bank officials by the assessee, the AO failed to cross-examine Customs Broker and officials.

The petitioner is a proprietor of Tvl.S.R.S. Traders, a dealer in electronic goods and stationery. The petitioner was assessed for the periods 2010-11 and 2011-12 in terms of the provisions of the Tamil Nadu Value Added Tax Act, 2006.

There was an audit inspection on the premises of the petitioner/dealer and two audit slips had been issued during the months of November 2012 and June 2013. The audit slips were to the effect that the petitioner had engaged in high-value transactions related to imports of mobile phones, indicating the petitioners’ TIN and PAN numbers. The audit slips contained a direction to the Assessing Officer to take necessary action for finalization of assessment under the provisions of the TNVAT Act.

Based on the direction contained in the audit slips, proceedings for assessment were commenced by the Assessing Officer alleging that no returns have been filed reporting turnover from the sale of the imports conducted.

The petitioner has filed applications seeking rectification of certain errors in the orders of assessments and these applications came to be rejected.

The single-judge bench of Justice Anita Sumanth directed that a proper inquiry be made by the Assessing Officer, which would not only include an examination of all materials procured from the Customs and the Income Tax Department, but also on an independent application of mind of those materials and a proper and effective opportunity being extended to the petitioner to substantiate his repeated contention that he is unconnected with the import transactions.

The court further observed that the Assessing Officer has merely relied on the same materials which were already available on record, to pass the impugned order. The observations of the Assessing Officer indicate the cursory and arbitrary manner in which the assessments have been completed. Moreover, despite a request for cross-examination of the Customs Broker as well as bank officials by the assessee, the Assessing Officer does not even refer to the request, let alone consider the same.

“I am thus of the view that the impugned assessments have not been framed in a proper manner. Though I am inclined to quash the assessments in full, I remit the same to the file of the officer to be re-done de novo solely for the reason that the report of the Income Tax Department also does not support the case of the petitioner in full and a full fledged and thorough enquiry is certainly called for in the matter,” the court said.