A Single Bench of the Madras High Court ruled that Income Tax Department should mandatorily follow Digital Evidence Investigation Manual by the Central Board of Direct Taxes ( CBDT ) while conducting searches and seizing electronic evidence.
The case of the petitioner is that the respondents-Department had conducted a sudden search under Section 132 of the Income Tax Act on different dates between 01.12.2021 and 27.01.2022. In the said searches, the 2nd respondent had seized the electronic data and pursuant to the same, the Show Cause Notices were issued to the petitioner and the reply was filed by the petitioner. Subsequently, the assessment orders were passed.
The main grievance of the petitioner was that the digital data evidences were collected by the respondents from unknown locations without any valid search warrant and without following the guidelines issued by the CBDT vide Digital Evidence Investigation Manual. Further, without providing any opportunity of personal hearing to the petitioner and without any corroborative evidence to corroborate the digital data evidences as mandated in the Digital Evidence Investigation Manual, four non-speaking assessment orders were passed by the respondents.
The Senior counsel appearing for the petitioner submitted that in the present case, the search was conducted and the assessment orders were passed in a hasty manner. At the time of search and in the event of collection of electronic data, the respondents are supposed to have followed the procedures laid down in the Digital Evidence Investigation Manual. However, the said Manual, which was issued in terms of Section 119 of the Act by CBDT, was not followed by the respondents in letter and spirit.
The Court of Justice Krishnan Ramasamy observed that “Under these circumstances, this Court is of the considered view that since the respondents had not followed the Digital Evidence Investigation Manual while collecting and preserving the evidences, as per the law laid down by the Hon’ble Apex Court, if there is no corroborative evidence and proved in the manner known to law, the digital data collected by the Department in the course of search and seizure and thus, the said search and seizure is against the law and ab initio bad.”
“Before passing the assessment order, the data, which were relied upon by the respondents, have to be corroborated by any additional evidences since the same is mandatory requirement as per the Digital Evidence Investigation Manual and as per the law laid down by the Hon’ble Apex Court as stated above. However, the same was not done. Further, no opportunity of personal hearing was provided to the petitioner before the passing of assessment order. Hence, there is no doubt that the assessment orders were passed in violation of principles of natural justice and accordingly, the same were liable to be quashed” the Bench noted.
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