| COURT: | Supreme Court |
| CORAM: | A.K. Sikri J., Rohinton Fali Nariman J. |
| SECTION(S): | - |
| GENRE: | Domestic Tax |
| CATCH WORDS: | cross examination, natural justice |
| COUNSEL: | Kavin Gulati |
| DATE: | September 2, 2015 (Date of pronouncement) |
| DATE: | November 16, 2015 (Date of publication) |
| AY: | - |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| Failure to give the assessee the right to cross-examine witnesses whose statements are relied up results in breach of principles of natural justice. It is a serious flaw which renders the order a nullity | |
The assessee raised a plea that it was not allowed to cross-examine the dealers whose statements were relied upon by the Adjudicating Authority in passing the order. However, the Tribunal rejected the plea on the basis that “The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static”. On appeal by the assessee to the Supreme Court HELD allowing the appeal:
Not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.
Sir, it is a timely reminder to all departmental authorities in income tax or customs and central excise departments to follow scrupulously the rules of natural justice so that cases do not fail for non- observance of such basic principles. Examination-in- chief , cross-examination and re- examination should be the norm in proceedings especially if the assessee wants to cross-examine a witness relied on by department.
Cross examination of neutral witness may be not a breach of natural justice but when it comes to cross examination of witnesses, who are employees of an entity whose statements form the basis of allegation, then cross-examination should be invariably allowed. Venkatesh Iyer