V. Gopala Gowda, C.J.@mdashIn the present writ petition, the petitioner an Income Tax assessee seeks to question the correctness of the assessment order dated 6.12.2010 (Annexure-2) passed by the Asst. Commissioner of Income Tax, Circle-1(1), Bhubaneswar and consequential demand notice vide Annexure-2 series on the ground of violation of the principles of natural justice.
2. Learned senior counsel for the petitioner assails the impugned assessment order, inter alia, on the ground that the Assessing Officer had based the impugned order on various documents/reports which were never confronted to the Assessee nor copies furnished to the petitioner. In particular, learned senior counsel for the petitioner invited the Court''s attention to the impugned order of assessment where the Assessing Officer had placed reliance upon the following documents/reports:
(i) Response of MPEDA to the query made by the A.O. in relation to the "conversion ratio".
(ii) "Socio-Economic Condition of Fisheries in and around Chilika" published by the Chilika Development Authority (CDA).
(iii) Globalisation and Seafood Export Legislation: The Effect of Poverty In India: Final Report for Orissa dated November 2002 by Cirrus Management Services Pvt. Ltd. (this report is a part of the Post Harvest Fisheries Research Project managed by the Natural Resources Institute, UK and funded by the UK Government''s Department for International Development (DFID)
(iv) Value chain analysis of fishery in Puri and Ganjam District of Orissa prepared by Nimble Systems Pvt. Ltd. for OXFAM (India) Trust
(v) Field Visit Report dated 14.11.2010 conducted by the A.O.
3. To substantiate the allegation of violation of the principles of natural justice, learned counsel for the petitioner also placed reliance on the counter affidavit filed on behalf of opposite parties 2 and 3 and in particular, the averments contained in Paragraphs-9 and 9 A thereof which is quoted herein below:
9. xx It was not necessary for the assessing officer to produce copy of the DFID report on Orissa Fisheries as the same is available on the internet. Petitioner has further erred in stating that the disclosure that Babuni Behera is a middleman was generalized to other sellers without a basis. The very fact that the assessee did not discharge its initial burden of proof was sufficient ground to reject the claim of deduction of assessee. This provided clinching evidence and the non-traceability of other sellers from Bhadrak further compounds to it.
9 A. xx The petitioner alleges that copies of research reports were not given to them. This is not required as same is available online on the internet and is for consumption of the eyes of general population."
4. With reference to the stand taken by the opposite party nos.2 & 3, learned counsel for the petitioner placed reliance upon the decision of the Hon''ble Supreme Court in the case of
14. The statutory authorities under the Act exercise quasi-judicial function. By reason of the impugned order, the properties could be confiscated, redemption fine and personal fine could be imposed in the event an importer was found guilty of violation of the provisions of the Act. In the event a finding as regards violation of the provisions of the Act is arrived at, several steps resulting in civil or evil consequences may be taken. The principles of natural justice, therefore, were required to be complied with.
15. The Act does not prohibit application of the principles of natural justice. The Commissioner of Customs either could not have passed the order on the basis of the materials which were known only to them, copies whereof were not supplied or inspection thereto had not been given. He, thus, could not have adverted to the report of the overseas enquiries. A person charged with misdeclaration is entitled to know the ground on the basis whereof he would be penalized. He may have an answer to the charges or may not have But there cannot be any doubt whatsoever that in law he is entitled to a proper hearing which would include supply of the documents. Only on knowing the contents of the documents, he could furnish an effective reply. This aspect of the matter has been considered in
48. In any event, when civil consequences ensue, there is hardly any distinction between an administrative order and a quasi-judicial order. There might have been difference of opinions at one point of time, but it is now well settled that a thin demarcated line between an administrative order and quasi-judicial order now stands obliterated (see
49. Recently, in
51. An order passed by a statutory authority, particularly when by reason whereof a citizen of India would be visited with civil or evil consequences must meet the test of reasonableness.
It was observed: (Rajesh Kumar case, SCC p.200, paras 55-56
55. Justice, as is well known, is not only to be done but manifestly seem to be done. If the assessee is put to notice, he could show that the nature of accounts is not such which would require appointment of special auditors. He could further show that what the assessing officer considers to be complex is in fact not so. It was also open to him to show that the same would not be in the interest of the Revenue.
56. In this case itself the appellants were not made known as to what led the. Deputy Commissioner to form an opinion that all relevant factors including the ones mentioned in Section 142(2-A) of the Act are satisfied. If even one of them was not satisfied, no order could be passed. If the attention of the Commissioner could be drawn to the fact that the underlined purpose for appointment of the special auditor is not bona fide it might not have approved the same.
17. In view of the aforementioned settled legal principles, there cannot be any doubt whatsoever that the principles of natural justice have been violated in this case.
5. He also placed reliance upon the judgment of the Hon''ble Supreme Court in the case of
7. Failure to lay the requisite evidence cannot be made up by reference to authoritative publications unless the Excise authorities inform the assessee that they propose to rely upon the same before the adjudicating authority. It is then open to the assessee to establish that it does not obtain the article by the means referred to in the publication or, indeed, that the publication is not authoritative. In the decision of matters relating to excise, technical knowledge plays a part. It is for that reason that the Tribunal has a Technical Member. Technical evidence and authoritative publications must, therefore, be placed in the first instance before the adjudicating authority and the Tribunal. They have the requisite technical expertise to evaluate the same. Technical publications cannot usefully be cited for the first time at the Bar of this Court.
8. Upon such material as has been referred to by learned counsel for the Excise authorities, which we have set out above, we find it "not proved" that hot-rolled strips undergo a process of manufacture before they become cold-rolled strips. We are, therefore, unable to accept the contention of the Excise authorities that the assessees'' cold-rolled strips are liable to excise duty at the rate of Rs.650 per metric tonne.
6. Learned counsel for the petitioner also drew attention- of the Court to the alleged contentions of the Field Visit Report dated 14.11.2010 by the Assessing Officer and in particular Paragraph-9 and 10 thereof which have been extracted in the assessment order at internal page-13. The same is as follows:
Then an employee of Falcon Marine, Sri Rabindranath Prusty, was approached. He stated that business in Balugaon is most brisk two days before and two days after full moon and new moon. That is the reason why there was on business on 14.11.2010. On further query he stated that prawns are brought by various parties. Prawns are sorted in their godown and price is determined then and there. A recording of the conversation was made using mobile recording system, in which he states that prawns are sorted into different counts in their godown in Balugaon itself.
10. During the visit the name and identity of the Assessing Officer was not revealed. It was stated that we are doctorate students doing research on Fishery business in Lake Chilika.
7. In the light of the aforesaid submissions, learned counsel for the petitioner asserts that not only the order of assessment is wholly unlawful being in violation of the principles of natural justice but also the conclusions in Paragraphs-9 and 10 of his Filed Visit Report extracted hereinabove, also clearly indicate that the Assessing Officer had himself conducted the investigation without revealing his own identity and claiming to have taped his conversation under the, guise that he was a doctorate student doing research on fishery business in Lake Chilika.
8. The aforesaid documents/reports referred to by the petitioner, clearly have been utilized by the Assessing Officer to come to his conclusions, especially with regard to the conclusion reached in Part (III) Bogus Purchase and (IV) Cash Purchase of the impugned assessment order.
9. Mr. Mohapatra, learned Standing Counsel appearing on behalf of the Revenue submits that while it is the fact that the petitioner had not been provided with some of the materials relied upon by the Assessing Officer, yet in fact, the impugned order itself indicates that, a copy of the Field Visit Report of the Assessing Officer dated 14.11.2010 was communicated to the A.R. (Assessee''s representative) on 01.12.2010.
Apart from the same, learned counsel for the Revenue submits that the very reports relied upon and referred to by the Assessing Officer were available on the internet and, therefore, accessible to the general public including the petitioner, therefore, no violation of the principles of natural justice has occurred to justify any interference in the present case.
Apart from the above, Mr. Mohapatra strenuously urged that the petitioner has the statutory right of appeal u/s 249 of the Income Tax Act, 1961 and therefore, adequate efficacious alternative remedy being available to the petitioner, the writ petition ought not to be entertained.
10. We have considered the averments made by the learned counsel for the respective parties. Perused the pleadings as well as the impugned order. On a clear reading of the same, it is clear that the law is well settled by the Hon''ble Supreme Court in the case of Kothari Filaments (supra) that when a statutory authority has passed an order on the basis of the materials which were known only to itself and on the basis of such materials arrived at the conclusions without supplying copies thereof or without providing opportunity of inspection of such document. A person charged with misdeclaration is entitled to know the ground on the basis whereof there would be a levy of tax, non-compliance of which is a clear violation of the principles of natural justice. It is well settled that an assessee may have an answer to the charges or may not have. But without doubt in law, an assessee is entitled to a proper hearing and such proper hearing cannot be said to have taken place without the assessee being provided with the copies of such documents or opportunity to inspect the documents sought to be relied upon by the revenue. This would be so, since an assessee can only possible respond to any charge only on knowing the contentions of the said documents sought to be relied upon and not otherwise. The said principles has also been referred by the Hon''ble Supreme Court in the case of Collector of Central Excise, Chandigarh (supra)
11. In the present case, it is admitted case of the Revenue that the reports relied upon and/or referred to by the Assessing Officer in the impugned assessment order have not been served on the assessee except the Field Visit Report dated 14.11.2010 which is mentioned at internal page-13 of the assessment order which indicates that the same had been communicated to the assessee''s representative only on 1.12.2010..
Learned counsel for the petitioner asserts that no such communication was received by the assessee''s representative. But, without entering into this dispute, the impugned assessment order itself also indicates that, the last date of hearing was 1.12.2010 and even assuming that the Field Visit Report had been handed over to the assessee''s representative on 1.12.2010, no effective opportunity was given to the assessee to respond to the same in course of hearing. Since hearing was concluded on the same date. Therefore, it can be safely concluded that no effective opportunity was given to the assessee to respond to the field visit report said to have been handed over to the assessee''s representative on 1.12.2010 when on the same day, the hearing of the assessment proceedings were concluded.
12. In any event, the stand of the revenue that other reports relied upon by the Assessing Officer were available in the internet, is no consequence, since, the assessee was entitled to prior notice of any report or material which the Assessment Officer, intended to rely upon and without such advance notice, by merely claiming that the said reports are available on the internet, does not and cannot satisfy the mandate of rules of natural justice.
13. In the light of the aforesaid conclusion arrived by us since the principles of natural justice have been clearly violated in the present case and the conclusion arrived at by the Assessment officer in itself Field Visit Report dated 14.11.2010 extracted at internal page-13 of the assessment order and in particular Paragraphs-9 and 10 thereof which are extracted page-13 of the assessment order is clearly indicative of possible bias, since the Assessment Officer himself had acted as a ''investigator'' and had collected certain statements under the guise of being a doctorate student having research in fishery business in Chilika.
14. Considering the aforesaid conclusion reached and further, we dispose of the present writ application to the following directions:
i) The impugned assessment order under Annexure-2 series for the assessment order 2008-09 is hereby quashed,
ii) The revenue is directed to serve copies of the reports sought to be relied upon by the revenue against the assessee listed in Paragraph-3. Such documents/reports shall be handed over by the learned Standing Counsel for the revenue to the Assessee''s counsel by 09.02.2011.
iii) The petitioner shall appear before the Range Officer on 11.02.2011 at 11.00 A.M. on which date, the assessee shall be intimated of the name and designation of the officer to whom assessment may be transferred by the Range Officer.
iv) The reassessment proceeding be concluded within six weeks from the date of appearance of the petitioner.
15. Since we have quashed the impugned order and consequently the demand dealt on technical ground i.e. violation of the principles of natural justice, learned counsel for the petitioner submits that the additional income of the petitioner determined [apart from, the demand relatable to Points (III) Bogus Purchases and (IV) Cash Purchases] is approximately Rs.3.5 crores. The tax and interest thereon would be approximately Rs.1.5 crore. In order to protect the interest of revenue, we direct the petitioner to deposit a sum of Rs.1.5 crores (without prejudice to its rights) within a period of one week from today and such deposit shall be subject to the result of the re-assessment proceedings, which may be taken up, pursuant to the direction contained herein.
16. The petitioner is at liberty to file its statement of claim in support of its case and the same must be proved to show that the payments made in cash which is not in conformity with Section 40A(3) read with rule 6DD of the Income Tax Act and Rules respectively wherein the Hon''ble Supreme Court in support of the said contention relied upon the judgment of the Supreme Court in the case of
17. The writ petition is disposed of in terms of the directions made hereinabove.
