In a significant ruling the Madras High Court held that the Assessing Officer (AO) is not governed by strict rules of Evidence Act for the assessment proceedings under the Income Tax Act, 1961.
The challenge to the respective Assessment Orders passed by the Assessing Officers is primarily on the ground that the Assessing Officers have failed to consider the decision of the Supreme Court in Super Malls (P) Ltd v CIT. There the Court held that when the Assessing Officer of searched person and third person is same, it is sufficient by Assessing Officer to record in satisfaction note that documents seized from searched person belonged to other person and there is no requirement of transmitting documents so seized from searched person. It was submitted that that initiation of proceedings Section 153C of the Income Tax Act were time barred.
The petitioner argued that there was a gross violation of principles of natural justice for not allowing any of the respective petitioners to cross-examine the director and the accountant. The person whose sworn statements were relied upon for initiating the proceedings under Section 153C of the Income Tax Act, 1961, was not produced for cross-examination.
The petitioner contended that the procedure under Section 65B of the Evidence Act, was not followed. It is a mandatory requirement for the admissibility of evidence from a computer printout, and therefore it cannot be relied upon. A Court of Justice C Saravanan observed that “The Assessment proceedings under the Income Tax Act, 1961 before an Assessing Officer is not a judicial proceeding. It is a Quasi judicial proceeding before a Quasi judicial officer. Therefore, the provisions of The Evidence Act, 1872 particularly special provisions relating to evidence relating to Section 65A, Section 65B and Section 66 are not relevant.”
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