{"id":4274,"date":"2017-06-30T14:30:12","date_gmt":"2017-06-30T09:00:12","guid":{"rendered":"http:\/\/www.itatonline.org\/articles_new\/?p=4274"},"modified":"2017-06-30T14:31:52","modified_gmt":"2017-06-30T09:01:52","slug":"why-is-the-evidence-act-so-critical-for-income-tax-proceedings-entire-law-explained-with-all-imp-judgements","status":"publish","type":"post","link":"https:\/\/itatonline.org\/articles_new\/why-is-the-evidence-act-so-critical-for-income-tax-proceedings-entire-law-explained-with-all-imp-judgements\/","title":{"rendered":"Why Is The Evidence Act So Critical For Income-tax Proceedings: Entire Law Explained With All Imp Judgements"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.itatonline.org\/articles_new\/wp-content\/uploads\/firoze-andhyarujina.jpg\" alt=\"firoze andhyarujina\" width=\"78\" height=\"100\" class=\"alignleft size-full wp-image-4280\" \/><\/p>\n<p><strong>Shri Firoze B. Andhyarujina, Sr. Advocate, has explained the entire law relating to the interplay between the Income-tax Act and the Evidence Act with particular reference to retraction of recorded statements and affidavits, cross-examination, drawing of presumptions etc. All the important judgements on the topic, including the latest Supreme Court judgements, have been discussed threadbare. The discussion will prove invaluable to all taxpayers and tax professionals. A pdf copy of the article is available for download<\/strong><\/p>\n<div align=\"right\"><span class=\"journal2\"><a href=\"https:\/\/www.itatonline.org\/articles_new\/why-is-the-evidence-act-so-critical-for-income-tax-proceedings-entire-law-explained-with-all-imp-judgements\/#link\">Link to download this article in pdf format is at the bottom<\/a><\/span><\/div>\n<\/p>\n<p>  1.  Preface<\/p>\n<p>  1.1 The Income-tax  Act is an All India statute. It has its own mechanism and methodology for levy,  recovery and collection of taxes. The Income Tax Authorities who are empowered  under the Income-tax Act, 196 l (&quot;the Act&quot;) have got certain powers  which are conferred to them under the Act. However, there are certain areas  where for the purposes of proper execution of the Act and the proceedings  thereunder resort has to be made to other allied Acts.<\/p>\n<p><!--more--><\/p>\n<p>  1.2 It is therefore  essential that certain methodologies and procedures prescribed under Evidence  Act, Civil Procedure Code, 1908 (&quot;CPC&quot;} and the Limitation Act come  into play.<\/p>\n<p>  1.3 At the outset,  it must be clarified that if a procedure is prescribed under the Income-tax  Act, the same is required to be followed. It is only in the absence of a  particular procedure which is required to be followed that the Income Tax  Authorities have to fall back upon and rely upon other allied laws.<\/p>\n<p>  1.4 There are  certain provisions in the Income-tax Act where a specific reference is  mentioned about the Evidence Act, CPC and Criminal Procedure Code  (&quot;Cr.P.C.&quot;}. It is in this connection that various angles of evidence  and CPC are examined in this article.<\/p>\n<p><iframe loading=\"lazy\" width=\"560\" height=\"315\" src=\"https:\/\/www.youtube.com\/embed\/-fVWGa8XrDg\" frameborder=\"0\" allowfullscreen><\/iframe><\/p>\n<h3>   2. Presumption and  Probable Consequences<\/h3>\n<\/p>\n<p>  2.1 One of the  important issues of prime importance in connection with the Law of Evidence and  Cr.P.C. as well as CPC is to examine the import and meaning of the words  &quot;presumption&quot; and &quot;probable consequences&quot;.<\/p>\n<p>  2.2 In Black&#8217;s Law  Dictionary it has been defined to mean &#8216;to believe or accept upon probable  evidence&#8217;. In Shorter Oxford English Dictionary it has been mentioned in law  &#8216;presume&#8217; means &#8216;to take as proved until evidence to the contrary is  forthcoming&#8217;, Stroud&#8217;s Legal Dictionary has quoted in this context a certain  judgment according to which &#8216;A presumption is a probable consequence drawn from  facts {either certain, or proved by direct testimony} as to the truth of a fact  alleged&#8217;. In Law Lexicon by P. Ramanath Aiyer the same quotation finds place at  p. 1007 of 1987 Edn.<\/p>\n<p>  The aforesaid shows that if on the basis of materials on  record, a court could come co the conclusion that commission of the offence is  a probable consequence.<\/p>\n<p>  2.3 Section 132(4A)  lays down a rule of &quot;presumption&quot;. It is presumed that whatever is  found during the search, the ownership is that of the &quot;occupant&quot;.<\/p>\n<p>  This rule of presumption is intended with the sole purpose  that the raiding party would seize the assets where there is no proper  explanation forthcoming.<\/p>\n<p>  2.4 This does not  mean that what is good at the time of search would also be through for the  purposes of assessment. Assessment proceedings are different from action and  enquiry at the time of search. In an assessment proceedings, necessary enquiry  is required to be made. The presumption raised in Section 132(4A) would be an  important piece of evidence, but that <em>ipso facto<\/em> would not justify an  addition in the assessment without reference to a proper enquiry as to the  nature of the transaction. Thus, in an assessment proceeding, it is essential  that the presumption is rebutable and fresh light could be thrown on the same.<\/p>\n<p>  Thus, the proposition which emerges is that presumption is  total and absolute so far as Section 132(4A) r.w. Section 132(5) is concerned,  but so far as assessment proceedings are concerned, it is only a &quot;rebuttable presumption&quot;.<\/p>\n<p>  2.5.1 It is necessary  at this stage to analyse the scheme of Section 132 regarding search and  seizure. Section 132(1) deals with issue of summons, power to enter and search  premises, to break open lock, door, safe, box where keys are not available. It  also provides for power to seize books of account, documents, money, bullion,  jewellery or other valuable articles or things found on the premises.<\/p>\n<p>  Section 132(2) provides for requisition of any Police Officer  or officer of the Central Government, or both for the purpose of search and seizure  action. Section 132(3) provides that where the documents or articles cannot be  removed then a direction or order is issued not to remove or part with or  otherwise deal with the same. Section 132(4) provides for recording statement  and the same can be used as evidence in any proceedings under the Act. The  explanation gives a wide scope that the examination is connected with any  matter of investigation connected with any proceedings. Section 132(4A)  provides a rule of presumption with regard to accounts, documents, money,  bullion, jewellery, etc. found and are in control and possession of any person.  It also provides for a legal presumption regarding the truthfulness of  documents, books of account and signatures. Section 132(5) provides for an  order being passed under the Act.<\/p>\n<p>  2.5.2 The object of  Section 132 is to unearth undisclosed income of an assessee and to levy tax  thereon. Search and seizure is one of the recognised methods therefore adopted  for bringing to tax the undisclosed income of the assessee. On a conjoint  reading of sub-section (4) and sub-section 4A) of Section 132, it appears that  the restriction as to presumption is not restricted only to action connected  with search and seizure, but the same may have application to other provisions  of the Act.<\/p>\n<p>  2.5.3 Thus a  proposition which could be agitated is that the presumptive value is total so  far as Section 132(5) is concerned, but for other proceedings it has a  persuasive value and the same is a rebuttable presumption.<\/p>\n<p>  2.5.4 Section 132(4A)  was introduced by the Taxation Laws (Amendment) Act, 1975, w.e.&pound; 1-10-1975. It  raises a presumption in respect of the contents of books of account and other  documents. This presumption is linked with what is found at the time of search  and seizure. Sections 132A and 132B provides an integrated scheme laying down  the procedure for search and seizure along with the powers of confiscation of  assets.<\/p>\n<p>  Thus, it could be argued that the presumption must be held to  be applicable only in relation to adjudication as per Section 132(5).<\/p>\n<p>  2.6 At this stage,  it is necessary to examine the said Section 132 in the light of Section 106 of  the Evidence Act. As per Section 106 of the Evidence Act, the Department is  deemed to have discharged its burden if it adduces only so much evidence,  circumstantial and direct, as is sufficient to raise a presumption in its  favour as regards the existence of particular articles and things found at the  time of search.<\/p>\n<p>  This can be illustrated by way of two examples, quoted from  the decision of the Supreme Court in <em>Collector of Customs v. D. Bhoormal,  AIR 1974 SC 859.<\/em> Once it is shown that the accused was travelling without a  ticket, a <em>prima facie<\/em> case against him is proved. If he once had such a  ticket and lost it, it will be for him to prove this fact within his special  knowledge. Similarly, if a person is proved to be in recent possession of  stolen goods, the prosecution will be deemed to have established the charge  that he was either the Chief or had received those stolen goods known them to  be stolen. If his possession was innocent and lacked the requisite  incriminating knowledge, then it will be for him to explain or establish those  facts within his peculiar knowledge, failing which the prosecution will be  entitled to take advantage of the presumption of fact arising against him, in  discharging its burden of proof.<\/p>\n<p>  Attention is invited to the decision of <em>Chuharmal v. CIT  (1988) 172 !TR 250 (SC) <\/em>where it was held that the Evidence Act does not  apply to proceedings under the Income-tax Act. The Supreme Court pointed out  that the rigours of rule of evidence contained in the Evidence Act were not  applicable to the Income-tax Act, but on first principles and on general law,  the principles of Evidence Act can be applied to proceedings under the Income-tax  Act.<\/p>\n<p>  2.7 However, there  is one exception that the presumption in terms of Section 132(4A) is not  applicable in cases of prosecution under Section 276C and 277. The Supreme  Court in <em>Prem Dass v. ITO (1999) 236 ITR 683 (SC)<\/em> held that the  presumption laid down in Section 132(4A) cannot be applied to criminal  proceedings in view of the specific language mentioned in Sections 276C and 277  of the Income-tax Act. Section 276C requires that it must be established that  there is wilful attempt to evade any tax and hence rhe doctrine of <em>mens rea<\/em> is still required to be proved by the prosecution. Thus in matters of  prosecution u\/ss. 276 and 277 of the Income-tax Act, the rule of presumption  would not operate, but the doctrine of <em>mens rea<\/em> would still prevail.<\/p>\n<p>  2.8.1 In juxtaposition  with Section 132(4A), it is also necessary to analyse the provisions of Section  68 of the Act. Section 68 requires that where any sum is found credited in the  books of an assessee for any previous year, and the assessee offers no  explanation about the nature and source or offers explanation which in the  opinion of the Assessing Officer is not satisfactory, then the sum so credited  may be charged to income tax as the income of the assessee for that previous  year.<\/p>\n<p>  2.8.2 Section 68 is of  general application and applies to all cases of regular assessment. The  presumption in Section 132(4A) that, &quot;the contents of such books of  account and other documents are true&quot; applies only in relation to the  provisions contemplated under the said Section and the Order passed under  Section 132(5). Section 68 operates in a different field and, therefore, the  requirements of Section 68 are required to be fulfilled, even where cash  credits are found in the books seized under Section 132(4A).<\/p>\n<p>  2.8.3 The rule of  evidence prescribed in Section 132(4A) raises a presumption that the contents  in books of account and documents are &quot;true&quot; and that the documents  in the handwriting of the person can be presumed to be of such person. Thus  where there are entries or borrowings reflected in the books in the assessee&#8217;s  own handwriting, a presumption can be raised as to the genuineness by the  Department without any further claim to support the same. However, Section 68  would still require an explanation as to the nature and source of every cash  credit. Thus the presumption cannot be operated automatically. It would also  imply that Section 132(4A) does not override Section 68.<\/p>\n<p>  It applies that there are two conflicting rules of evidence  in Section 132(4A) and Section 68 and that there is a need to reconcile the  same, more particularly with reference to genuineness of the same.<\/p>\n<p>  The issue that would arise is (a) that the handwriting in  which the amounts are wtitten is presumed to be of the assessee and that (b)  there is no reason why an assessee should make false entries in his books.  However, while Section 132(4A) may give rise to presumptions, Section 68 would  still give a chance and an opportunity to an assessee to rebut the same,  explain the nature, the source and surrounding circumstances of such writings.<\/p>\n<p>  2.9 As to whether  Section 132(4A) would apply or not, would all depend upon the facts of each  case.<\/p>\n<p>  The question which therefore arises is whether it could be  said that a question of law arises?<\/p>\n<p>  The Tribunal is the final fact-finding authority. A decision  on fact can be gone into by the High Court, only if a question has been  referred co it, stating that the finding of the Tribunal on facts is perverse.  In <em>K. Ravindranathan Nair v. CIT (2001) 247\/TR 178 (SC), <\/em>the Supreme  Court held chat when a finding of fact made by the Tribunal is challenged as  being perverse, a question of law can be said to arise. In <em>Omar Salay  Mohammed Sait v. CIT (1959) 37 \/TR 151 (SC), <\/em>it was held that a question of  law arises if the Tribunal has improperly rejected the evidence. Rejection of  evidence, which is material converts a question of fact into a question of law.  Where the Tribunal has relied upon partly relevant and partly irrelevant  materials and it is not possible to find out what influenced the mind of the  Tribunal, the finding is vitiated because of use of irrelevant materials, which  give rise to the question of law: <em>Dhirajlal Giridharilal v. CIT (1954) 26  ITR 736 (SC)<\/em> and <em>CIT v. Daulat Ram Rawatmull (1973) 87 ITR 349 (SC).<\/em> Where the Tribunal has ignored essential matters and evidence a question of law  arises, <em>CIT v. Radha Kishan Nandlal (1875) 99 ITR 143 (SC).<\/em><\/p>\n<p>  Thus, in such circumstances, a question of law can still  arise based on the above parameters even though the entire matter may be  essentially factual.<\/p>\n<h3>   3. Presumption  however strong cannot take place of evidence rule of estimation is no  substitute for evidence <\/h3>\n<\/p>\n<p>  3.1 In <em>D.N.  Kamani (HUF) v. DCIT (2000) 241 !TR 85 (Trib) (Patna),<\/em> there was a search  on the assessee who was a property developer. The raiding party came to the  conclusion that the assessee had received on-money on sale on certain  transactions which was recorded.<\/p>\n<p>  3.2 The Assessing  Officer estimated the income on the basis of other sale instances of property.<\/p>\n<p>  3.3 The assessee&#8217;s  case was that there is no cogent proof of receipt of on-money and that the A.O.  has no power &quot;to estimate&quot; income under Block Assessment. That the  power of estimation is restricted only to Section 145 and is not available in  Block Assessments. There was difference of opinion between the two Members of  the Tribunal. Thus the matter was referred to a Third Member.<\/p>\n<p>  3.4 In this case,  it was held that in absence of any evidence of receipt of on-money, it is not  possible to make an addition merely on the basis of &quot;doubt&quot;. That the  assessee may have received some on-money.<\/p>\n<p>  The Tribunal further held that Sections 68, 69, 69A, 69B and  69C have a mention under Block Assessment, while there is no reference to  Section 145 under Block Assessment. In view of the above, the Tribunal held  that the question of estimation cannot arise in Block Assessments.<\/p>\n<p>  The Tribunal further held that presumption, however, strong,  cannot be a substitute, nor can it rake the place of evidence.<\/p>\n<p>  3.5 This issue can  also be approached from the angle that the assessee in sale transactions of  property has received amounts over and above the apparent consideration.<\/p>\n<p>  3.6 In<em> Indore  Construction Pvt. Ltd. v. ACIT (1999) 71 ITD 128 (Ind.),<\/em> it was held that  where the A.O. had referred the matter to Valuation Cell to ascertain the  investments made by the assessee and thereafter applied Section 69 and added  the amount as unexplained investments, the action of rhe A.O. was treated as  beyond the scope of Section 158BB.<\/p>\n<p>  3.7 That the Department  normally presumes chat no purchase of flats is made in city like Mumbai,  without payment of on-money. Such suspicion is of no avail and in the absence  of evidence to establish such on-money payment no addition can be made purely  on estimation and suspicion: <em>Ramakant Umashankar Khetan v. ACIT (2000) 66  TT] 378 (Nag.).<\/em><\/p>\n<p>  Similarly, the A.O. cannot estimate and place a higher sale  consideration based only on estimation and suspicion. In absence of cogent  evidence arbitrarily taking and guessing larger apparent consideration is  unsustainable in law: <em>Pankaj Dayabhai Patel (HUF) v. ACIT (1999) 63 TT] 790  (Ahd.).<\/em><\/p>\n<p>  3.8  Thus,  estimation has no place in Block Assessment and even in regular assessment,  mere presumptions and suspicions cannot hold good. Participants may discuss to  what extent estimation theory is valid in regular assessments.<\/p>\n<h3>  4. Evidence Act and  Criminal Procedure Code with reference to penalty <\/h3>\n<\/p>\n<p>  4.1 The fundamental  principle for the levy of penalty is that the penal proceedings are  quasi-criminal in nature. They are distinct, separate and independent of the  assessment proceedings. So far as penalty is concerned, the rules of natural  justice and the issues for consideration of facts and circumstances and the  relevant evidences collected have to be taken into consideration.<\/p>\n<p>  4.2 Every person  against whom penal action is sought to be proceeded with has as in criminal and  civil law an inherent right to explain the facts and circumstances of the case  &quot;to prove his innocence&quot; and consequencly the tax authorities are  bound to consider the evidences in the circumstances which are placed before  the tax authorities which are required to be exercised judiciously.<\/p>\n<p>  4.3 As in criminal  law, in absence of any &quot;incriminating material&quot; found in the course  of search and seizure operation, no income can be assessed under the provisions  of Chapter XIV-B.<\/p>\n<p>  4.4 The concept of <em>mens  rea<\/em> is peculiar and applicable strictly in criminal law but the same cannot  be strictly imported under the Income- tax Act more particularly with reference  to levy of penalty. The theory of onus is both on the revenue  as well as on the assessee. The onus is not on the revenue either to  prove the guilty mind or the sufficient cause  on the part  of the assessee.  The onus is entirely on the  assessee to prove his bonafides on the basis of facts and circumstances of the  case. If the assessee can discharge such onus, then there can be no levy of  penalty : <em>Gujarat Travancore Agency v. CIT (1989) 177 ITR 455 (SC).<\/em><\/p>\n<h3>   5. Where certain  parts are deleted in a complaint, can fresh complaint be filed<\/h3>\n<\/p>\n<p>  5.1 Issue for  examination is that where certain parts in a complaint are quashed and certain  offences are also quashed, whether a complaint is required to be withdrawn and  a new complaint is required to be filed after deleting the portions which are  struck <\/p>\n<p>  off and whether fresh evidence is required to be let in?<\/p>\n<p>  5.2 The issue is  that when a prosecution is launched which has a number of sections contained in  the Indian Penal Code and the Criminal Procedure Code and its certain sections  and charges are brought at a preliminary stage. If complaint is required to be  filed and what would be the position of the evidence already collected.<\/p>\n<p>  5.3 In <em>Kumudini  Subhan v. Chief Commissioner (Administration) (1992) 198 ITR 390 (Mad. HC),<\/em> it was held that there is no need to withdraw the complaint and file a fresh  complaint at all. Thus here the provisions of the Criminal Procedure Code were  taken into consideration and followed and applied in a prosecution case  launched under the I.T. Act.<\/p>\n<h3>   6. Primary facts  and material evidence with reference to reassessment <\/h3>\n<\/p>\n<p>  The ambit and the scope of primary facts with reference to  reassessment was explained by the Supreme Court in <em>Phool Chand Bajarang Lal  v. ITO (1993) 203 ITR 456 (SC).<\/em><\/p>\n<p>  &quot;One of the purposes of Section 147 appears to us to  ensure that a party cannot get away by wilfully making a false or untrue  statements at the time of original assessment and when that falsity comes to  notice to turn around and say &#8216;you accepted my lie&#8230; now your hands are tied  and you can do nothing&#8217;. It would be a travesty of justice to allow the  assessee that latitude.&quot;<\/p>\n<p>  6.2 Income-tax Act  is a taxing statute. The provisions of the Act had to be construed strictly.  The Assessing Officer can assume jurisdiction to reopen completed assessment  under Sections 147 and 148 only if there is material evidence and <em>&quot;reason  to believe&quot;<\/em> that there is suppression of primary facts.<\/p>\n<p>  6.3 The expression <em>&quot;reason  to believe&quot;<\/em> relates to a process of entertaining an opinion which is  subjective in nature, and is not liable to be scrutinised by the objective test  of judicial scrutiny in Appeal. It is only when the subjective satisfaction is  wrongly and arbitrarily exercised that the Court would interfere in  reassessment proceedings.<\/p>\n<p>  6.4 In <em>Barium  Chemicals Ltd. v. Company Law Board (1966) 36 Company Cases 639, <\/em>it was  observed, &quot;If it is shown that the circumstances do not exist or that they  are such that it is impossible for any one to form an opinion, therefrom  suggestive of the aforesaid things, the opinion is challengeable on the ground  of non-application of mind or perversity or on the ground that it was formed on  collateral grounds and was beyond the scope of the statute.<\/p>\n<p>  6.5 The Supreme  Court in <em>Calcutta Discount Co. Ltd. v. ITO (1961) 41 ITR 191 (SC),<\/em> laid  down that it is a duty of the assessee to disclose all primary facts, the duty  to find inferential facts from primary facts disclosed and the duty to draw  inferences of law from such facts is the duty of the Assessing Officer. The assessee  is only bound and required to disclose all the facts fully and truly.<\/p>\n<p>  6.6 In<em> ITO v.  Lakhmani Mewef Das (1976) 103 JTR 137 (SC), <\/em>the Supreme Court observed that  all that the assessee is required is to make true and full disclosure of  primary facts at the time of original assessment. Production of account books  and other evidence from which material could be with due diligence be  discovered by the A.O. does not amount to disclosure contemplated by law. The  duty of the assessee does not extend beyond making full disclosure of primary  facts. Once this is done, his duty ends and it is for the A.O. to draw correct  inference from primary facts. Question arises whether such inferences drawn  from facts would amount to presumption, conjectures and surmise on the basis of  which re opening can be justified? Question further arises is that all the  primary facts are disclosed and material evidence is produced, can the  Assessing Officer draw adverse inference so as to reopen completed assessment  based on such evidence produced by the assessee?<\/p>\n<p>  6.7 In <em>Ganga  Saran and Sons Pvt. Ltd. vs ITO (1991) 130 ITR 1 (SC)<\/em>, the Supreme Court  observed that the words &quot;reason to believe &#8216;are stronger than the words  reason to be satisfied&quot;. Since the words used are reason to believe the  satisfaction theory would not apply but the belief must be reasonable and based  on relevant materials.<\/p>\n<p>  6.8 In<em> Indian  Oil Corporation v. ITO (1986) 159 ITR 956 (SC), <\/em>the ratio can be summed up  as: 1) there is obligation for the assessee to disclose all primary facts; 2)  those facts should be relevant and material; 3) there must be full disclosure  and it must be proved; 4) what facts are material <\/p>\n<p>  and necessary will depend on the facts of each case; 5) it is the duty of the  assessee to disclose all facts so that the A.O. can come to a conclusion, or  form a belief 6) based on those facts the A.O. has to draw inference and form a  belief whether reopening could be justified.<\/p>\n<p>  6.9 Issues for  discussions would therefore be:<\/p>\n<p>  (a) Subjective  versus objective satisfaction;<\/p>\n<p>  (b)  What is  primary facts;<\/p>\n<p>  (c) What are  relevant documents and material evidence;<\/p>\n<p>  (d) Whether  inference drawn from facts could constitute a belief for reopening;<\/p>\n<p>  (e) What is the  rest to be applied for the belief; and whether reasons are to be given;<\/p>\n<p>  (f) To what  extent there is falsity for non-disclosure;<\/p>\n<p>  (g) Whether the  non-disclosure was intentional or deliberate;<\/p>\n<p>  (h) Whether  events and situation arising subsequent to the filing of the return can be  regarded as material evidence for reopening, since at the time of filing the  return all primary facts were disclosed.<\/p>\n<h3>   7. Should secret  and confidential documents relied on by the department be furnished to the  assessee<\/h3>\n<\/p>\n<p>  7.1 Section  ll9(2)(a) provides that the CBDT can issue directions or instructions and  guidelines regarding assessment, collection of revenue, initiations of  proceedings, penalty and such other orders as is necessary in public interest.  Rule 111B of the LT. Rules, 1962 further provides that the Board may publish  the instructions and send necessary copies to organisations. The instructions  which are published are regarded as &quot;Circular&quot;. But sometimes certain  &quot;instructions&quot; are issued only for Departmental officers.<\/p>\n<p>  The issue which arises is can the Department rely upon such  instructions without disclosing the same to the assessee?<\/p>\n<p>  7.2 In <em>Capricorn  Shopping Complex v. ITO (1996) 218 ITR 721 (Ker.),<\/em> the valuation of the  building was done according to secret instruction No. 671 issued by the Board.  The assessee was not furnished with the copy of the instructions on the ground  that it was secret and not meant for public.<\/p>\n<p>  The Kerala High Court in<em> (1996) 218 ITR 721<\/em> at page  723, observed &quot;that if some document is relied on against an assessee to  assess him to a high rate of tax, the documents shall be disclosed to him. It  cannot be withheld&quot;.<\/p>\n<p>  7.3 Based on the  above case law, can an assessee insist on instructions, documents, valuation  report or other evidences on which reliance is placed by the Department? If  such documents are not furnished, what would be the remedy of the assessee?<\/p>\n<p>  7.4 In this  connection, attention is invited where an admission is made by a person, then  the document which is sought to be used against the assessee, must be furnished  and explained. Further, a right of cross-examination should also be provided.  The Supreme Court laid down that admission is to be proved in accordance with  the provisions of Evidence Act and due opportunity must be given for  explanation, cross-examination and verification of documents : AIR 1977 SC  1712.<\/p>\n<p>  7.5 In <em>Pooran Mal  v. Director of Investigation 93 ITR 505 (SC)<\/em> it was held that even when  search and seizure was held to be illegal, yet documents and other papers  seized would have &quot;evidential value&quot;. However, the Supreme Court in <em>Pratap  Singh v. Director of Enforcement 155 !TR 166 (SC) <\/em>held that the illegality  in the method, manner or initiation of search, does not necessarily mean that  anything seized during the search has to be returned.<\/p>\n<p>  7.6 In the light of  two judgments of the Supreme Court where the search itself is illegal, would  documents seized be of any relevance? If the search is<em> per se<\/em> held to be  not in accordance with the provi ions of Law, then the entire operation should  be regarded as an act of an illegality and hence everything found or relied  upon cannot be considered, but ought to, be returned forthwith.<\/p>\n<p>  7.7 In this  connection, it may be useful to refer to the decision of the Supreme Court in <em>CIT  v. Vindhya Metal Corporation 224 ITR 614<\/em> where it was held that presumption  under Section 132(4A) would also apply to documents requisitioned and assets  found. However, the fact that an asset is seized is not enough, it must further  be shown that it was not disclosed for tax purposes. It is necessary to  reconcile this decision with the ratio of the above two judgments.<\/p>\n<h3>   8. Retraction of  statements recorded and affidavits <\/h3>\n<\/p>\n<p>  8.1 Very often  statements recorded at the time of search and seizure are retracted claiming  that the statement has been obtained under pressure and duress or mistaken  impression. An Affidavit in this connection is filed with the Department. An  attempt is made to find out the evidentiary value of such retraction by an Affidavit.<\/p>\n<p>  8.2 Under the  Evidence Act, admissions are treated as admitted fact, they may not be  conclusive proof of the matter, but they may operate as &quot;estoppel in  further proceedings&quot; &ndash; Section 31 of Evidence Act.<\/p>\n<p>  8.3 Admissions give  rise to rebuttable presumptions and can be rebutted on the grounds that the  confession was made by inducement, threat or promise &ndash; Section 24 of the  Evidence Act.<\/p>\n<p>  8.4 The Bombay High Court in <em>R.R. Gavit v. Sherbanu Hassan Daya  (1986) 161 ITR 793<\/em> held that the power to interrogate on oath under Section  132(4) is limited only with respect to explanation of documents, articles or  things found during search. However, the effect of this decision seems to be  nullified by insertion of Explanation to the Section w.e.f 1st April, 1989.<\/p>\n<p>  8.5 The rule of rebutable presumption of the Evidence Act is itself  embodied in Section 132(4) by the words &quot;may thereafter be used in  evidence in any proceedings&quot;. This would mean that the statement recorded  is a piece of evidence which can be used against the assessee, but the assessee  has got a right to rebut the admission made by him. This is further supported  by the fact that admission though regarded as a piece of evidence, is not  conclusive proof by itself. <em><\/p>\n<p>    S. Arjtm Singh v. CWT (1989) 175 ITR 91 (Del.).<\/em><\/p>\n<p>  8.6 In <em>Pullanagade Rubber Produce Ltd. v. State of Kerala (1973)  91 ITR 18,<\/em> it was held that retraction is permissible in law and it is for  the assessee to show that the statement recorded is incorrect. Further, in <em>Satinder  Kumar v. CIT (1977) 106 ITR 64 (HP),<\/em> retraction is possible where the  assessee states that he was under a mistaken understanding of the true position  and state of affairs.<\/p>\n<p>  8.7 However,  reliance is placed on the decision of <em>Deepchand and Co. v. ACIT (1995) 51  TT] 421 (Bom.) <\/em>where it was held that where the search continued for unduly  long period, statements made can be retracted on the grounds that the  statements were recorded under pressure and force. This authority is of  particular significance since very often search and seizure actions continue  throughout the night, any confessional statements are thereafter recorded under  pressure. It is essential, therefore, that CBDT should come out with Circulars  or instructions that no search shall continue after sunset and this rule must  be strictly enforced. The assessee can argue that statements recorded late at  night was not given in a proper frame of mind and that the statements were  given under mistaken belief of law and fact.<\/p>\n<p>  8.8 Retraction when  made on an Affidavit should have value and must be considered as an important  piece of &#8216;evidence&#8217;. Sworn Affidavits which are duly notarised would therefore  retract the statement and a plea could be made to once again record fresh  evidence thereafter.<\/p>\n<p>  8.9 In this  connection a question would arise that if during the course of search the  assessee agrees to make a disclosure and based on that disclosure, the raiding  party stops further action. Subsequently, the assessee retracts his statement.  Can the Department make an addition on the statement made by the assessee which  is retracted and at the same time, no further search and investigation was done  based on such admission?<\/p>\n<p>  8.10 Would it make a  difference if retraction statement in the form of an Affidavit is not given  immediately (may be, because of fear) but such Affidavit is submitted for the  first time at assessment? Distinction should be made between retraction made  immediately after search and retraction at the time of assessment which is  after lapse of considerable time.<\/p>\n<p>  8.11 Attention is  invited to the case of <em>Monga Metals Pvt. Ltd. v. ACIT 67 TT] 247 (All.) <\/em>where  Block Assessment made by placing reliance on evidence of third party, without  giving assessee an opportunity to cross-examine the third party is a nullity.<\/p>\n<h3>   9. Cross-examination <\/h3>\n<\/p>\n<p>  9.1 It is necessary  in the interest of justice that all relevant evidence must be submitted, the  party must be informed on the evidence on which reliance is placed and to allow  witnesses to be questioned and to allow evidence and cross-&shy;examination on the  same.<\/p>\n<p>  9.2 Any statement which is recorded by the Department, an assessee  is entitled to get the copy of the statement so recorded, using evidence behind  the back of the assessee is against the principles of natural justice. Also  where copies of reports or documents or statement of third party is relied upon  for making an addition, it is the duty of the Department to allow the assessee  not only to examine such documents but also to cross-examine the party.<\/p>\n<p>  9.3 In <em>State of Kerala v. K T. Shaduli Yusuf (1977) 39 STC 478,<\/em> the Supreme Court held that not only it is the duty of the Department to  provide copies of statements or reports, but the assessee is entitled to seek  right of cross-examination.<\/p>\n<p>  9.4 The Supreme Court in <em>Kishan Chand Chellaram v. CIT (1980)  125 ITR 713 (SC) <\/em>held that evidence which is used against the assessee must  be provided to the assessee and also an opportunity to confront the same should  be given permitting cross-examination,<\/p>\n<p>  9.5 The right of cross-examination is an inherent right and the  assessee has also got a right to have his Advocate present at the time of  cross&shy;-examination.<\/p>\n<p>  9.6 Sometimes it appears that the assessee has made a statement  based on ignorance. However, such a statement turns out to be false at a  subsequent stage. It may be noted that when the statement was recorded  originally, it was made to the best of his knowledge and on ignorance of facts  in such circumstances, since there is no <em>mens rea<\/em> penalty cannot be  levied. In <em>Union of India &amp; Others v. Ganesh Das Bhojraj (2000) 244 ITR 691  (SC], <\/em>the assessee imported consignment of pulses and claimed clearance of  goods free of customs duty on the ground of notification which was issued  earlier. It appears that on the date of import, a new Notification came whereby  basic duty at 25% was imposed. The assessee pleaded that he was not aware of  the Notification and that the Notification was not made available to the public  on that day. The Supreme Court in this case held that if the Notification is  published on a particular date, it is presumed to have been known to the  Public. However, it was pointed out that non-availability of Gazette is a  defence plea of ignorance where <em>mens rea<\/em> is an ingredient of an offence  which calls for leniency in punishment. This case lays down the proposition  that if an assessee has acted in ignorance based on set of circumstances and  facts at a particular point of time, when the plea was recorded, in absence of <em>mens  rea<\/em> he cannot be necessarily held guilty or be prosecuted.<\/p>\n<p>  9.7 In <em>CIT v. L.KS. Ganee (2001) 244 ITR 130 (Mad.),<\/em> in this  case the Tribunal judicially noticed the features of Lottery business and came  to the conclusion that in Lottery business, it is not possible to have proper  accounts as there are large number of hawkers and petty traders.<\/p>\n<p>  9.8 The Madras High Court while relying upon Section 56 of the  Indian Evidence Act, 1872 which prescribed facts judicially noticeable need not  be proved and Section 157 which provides the necessary and requisite facts of  which Courts must take judicial notice came to the conclusion that the Tribunal  had acted arbitrarily.<\/p>\n<p>  9.9 This authority is quoted for the proposition that in view of  Sections 56 and 57 of the Indian Evidence Act, facts which are judicially  noticeable need not be proved and there is no need for any examination or  cross-examination on proved facts.<\/p>\n<p>  9.10 This is further based on the facts that once an admission is made  by the assessee, that certain amounts be added to his income and that the same  is concealed income, if this be the accepted position, then by virtue of  Section 58 of the Indian Evidence Act such admitted facts need not be proved.<\/p>\n<p>  9.11 It is only where facts are disputed and reliance is made on  certain documents or statements of third party are controverted that there is a  need to submit the document and cross-examine the parties.<\/p>\n<h3>   10. Evidence Act and  onus &ndash; section 110 of the Evidence Act and section 69 of the Income-tax Act <\/h3>\n<\/p>\n<p>  10.1  Section 110 of  the Evidence Act assumes importance with reference to Section 69A of the  Income-tax Act. In<em> CIT v. K T.M.S. Mohamood (1997) 228 ITR 113 (Mad) at p.  119,<\/em> the issue was whether currency recovered from the premises of the  assessee belonged to the assessee or not. Issue was also whether the Department  has to establish that the assessee is the owner of cash fund. It was the  contention of the assessee that this cash fund did not belong to him. The  Madras High Court relied upon Section 110 of the Evidence Act and came to the  conclusion that the onus is on the person who is in possession of money to show  that he is not the owner of the same. The Court held that the burden is not on  the Department but it is on the assessee who is the owner of the amount found  in possession at the time when the currency was recovered. Thus, in this case,  the Court relied upon the provisions of Section 110 of the Evidence Act.<\/p>\n<p>  10.2  In <em>Chuharmal  v. CIT (1988) 172 ITR 250 (SC),<\/em> wrist watches were seized from the bedroom  of the assessee. It was the case of the Department that the assessee was the  owner of the watches which was denied by the assessee. In this case, the  Supreme Court relying upon Section 110 of the Evidence Act came to the  conclusion that the tests laid down in Section 110 that when the question is  whether any person is the owner of anything of which he is shown to be in possession,  the onus of proving that he is not the owner is on the person who affirms that  he is not the owner. At page 255, the Supreme Court applied the provisions of  the Evidence Act to Section 69 and came to the conclusion that the onus to  prove is on the assessee based on the criteria laid down in the Evidence Act.<\/p>\n<p>  10.3  Thus, under  these circumstances, it is absolutely essential that the provisions of Evidence  Act will have to be considered. In this connection, attention is also invited  to the recent decision of Sukh Ram vs ACJT (2006) 285 ITR 256. In this case,  pursuant to search and seizure cash was found in possession of the assessee.  Burden of proof was on the assessee to prove that he is not the owner of the  currency. Assessee stated that the cash found belonged to political party but  made no efforts to substantiate the statement. The President and Treasurer of  the party denied any connection with the cash found nor was there any entry  noted in the books of account of the political party. Based on the above, it  was held that the assessee has not been able to rebut the presumption and  therefore, the addition under Section 69A was justified.<\/p>\n<h3>  11. Application of  Evidence Act to Income-tax Act <\/h3>\n<\/p>\n<p>  11.1 The general rule  is that the provisions of the Evidence Act do not apply to assessment  proceedings, when the authorities are called upon to consider the effect of  terms of documents, then in interpreting certain terms of the document and the  effect of the document, the relevant sections viz., Sections 91, 92 and 94 of  the Evidence Act would be required to be considered. In other words, as laid  down in <em>A.V.N. Jagga Row v. CIT (1987) 166 ITR 862 (AP), <\/em>the court came  to the conclusion that with regard to the effect of the terms of the document  and the validity, the provisions of the Evidence Act is required to be  considered.<\/p>\n<p>  11.2 The A.O. is a  quasi-judicial authority, but he is not fettered by technical rules of evidence  and pleadings and he is entitled to act on materials which may not be accepted  as evidence in a court of law. In other words, the A.O. while making an  assessment is not bound by the parameters laid down in the Civil Procedure  Code. This view was laid down in <em>Dhakeshwari Cotton Mills Ltd v. CIT (1954)  26 ITR 775 (SC).<\/em><\/p>\n<p>  11.3 Like in criminal  law, the A.O. is required to take into consideration &quot;circumstantial  evidence&quot; and he is also required to take into consideration  &quot;totality of the circumstances&quot; before coming to a determinative  question as to whether a particular item of income or expenditure is proved or  not. This rule of evidence in circumstantial probability was considered in <em>CIT  v. Rameshwar Prasad Bagla (1968) 68 ITR 653 (All).<\/em><\/p>\n<p>  11.4 Besides that the  A.O. can go beyond the parameters laid down in Civil, Criminal and Evidence Act  and look into the surrounding circumstances and even issue summons and examine  witnesses and other people who he suspects would have given the loans or entered  into agreements in order to find out the reality of the situation as was laid  down in <em>CIT v. Durga Prasad More (1971) 82 ITR 540 (SC).<\/em><\/p>\n<h3>   12. Application of  Section 34 of the Evidence Act &ndash; v. c.  Shukla&#8217;s case <\/h3>\n<\/p>\n<p>  12.1 In <em>Central  Bureau of Investigation v. V.C. Shukla (1998) 3 SCC 410, <\/em>the provisions of  Section 34 of the Evidence Act, was considered for the purposes of the  expression &quot;entries in books of account&quot;, &quot;books of  account&quot;.<\/p>\n<p>  12.2 In this case,  which is also known as <em>&#8216;Jain Hawala Diaries <\/em>case&quot;, the Supreme  Court came to conclusion that entries in notebooks are admissible evidence u\/s.  34 of the Evidence Act but loose sheets of papers are not <em>&quot;books&quot; <\/em>and  hence entries in loose sheets of papers are not admissible evidence at all. The  Court further came to the conclusion that entries in books of accounts has<em> &quot;probative value&quot;<\/em> and <em>&quot;corroborative evidence&quot;,<\/em> the court on the facts came to the conclusion that entries made in Jain Hawala  Diaries though admissible u\/s. 34, but truthfulness thereof was not proved by any  independent evidence.<\/p>\n<p>  12.3 The point that I  am trying to emphasise that certain papers which are maintained would have  relevance at the time of assessment. However, loose papers or notings cannot be  considered as independent evidence for the purposes of making additions.<\/p>\n<p>  12.4 It is  interesting to note that sometime. &quot;statements and admissions&quot; are  made by a person. The position regarding &quot;statements and  admissions&quot; are governed by  Sections 17 to 21 of the Evidence Act. Hence, those rules would apply to  statements and admissions made by the assessee.<\/p>\n<h3>  13. Gifts <\/h3>\n<\/p>\n<p>  13.1 Very often  question arises when gifts are received from abroad. The Assessing Officer  disbelieves the gifts and tries to add the same on the grounds that the alleged  gifts are treated as unexplained cash credits u\/s. 68.<\/p>\n<p>  13.2 In order to  examine this problems from all angles concerning burden of proof, evidence,  onus of proving the genuineness of the gift and penalty, the following analysis  is made.<\/p>\n<p>  13.3 Stand of the  Department: The following details\/explanations are normally required:<\/p>\n<p>  1. Details and  proof of friendship or relationship;<\/p>\n<p>  2. Evidence  that donor had capacity to make the gift;<\/p>\n<p>  3. Details  about status, occupation, address of donor;<\/p>\n<p>  4 Details of  gift given by donor to assessee;<\/p>\n<p>  5. Cheques how  delivered and details of Bank;<\/p>\n<p>  6. Address of  donor in India and abroad.<\/p>\n<p>  13.4 Evidences  adduced by assessee: Normally the following evidences are submitted :<\/p>\n<p>  1. Confirmation  of the gift;<\/p>\n<p>  2. Explanation  of the relationship;<\/p>\n<p>  3. Address of  the donor;<\/p>\n<p>  4. Affidavit  regarding confirmation of the gift;<\/p>\n<p>  5. Issue of  cheques and details of NRE Account.<\/p>\n<p>  Problems : The A.O., in spite of all the details is not  prepared to believe that the donor is a friend who is a man of success. He  further contends that the assessee has not explained how the balance in NRE  Account was made up at the time when gift was made. Further that the donor is  only a friend and is not directly related and no evidence is filed about the  proof of friendship.<\/p>\n<p>  The contention of A.O. is that it is against human  probability that it is only a one-way traffic and the gifts are therefore not  accepted as genuine.<\/p>\n<p>  13.5 Decisions on  which Revenue may rely upon : That though the gifts amount are credited in  assessee&#8217;s account, the assessees is duty bound to discharge the initial burden  of proof to establish the capacity of the donor to give the gift and as regards  his creditworthiness and genuineness of the gift transaction. The gift is  liable to be treated as unexplained cash credit u\/s. 68 of the I. T. Act based  on <em>Shanker Industries 114 ITR 689 (Cal.), United Commercial &amp; Industries  Co. Pvt. Ltd. 187 ITR 796 (Cal.), Xorlay Trading Co. Pvt. Ltd. 232 ITR 820  (Cal.), K.M. Sadhukhan &amp; Sons (1999) 239 ITR 77 (Cal.).<\/em><\/p>\n<p>  13.6 Reference is  also made to an unreported judgment of the Hon&#8217;ble Mumbai ITAT OCI Bench in  LT.A. Nos. 571-574\/ Bom\/80 in the case of Shri Bharat Narain and Others where  the gifts were liable to be assessed as unexplained cash credit even though the  identity of donor was established and gifts were given by cheques, but the  Tribunal came to the conclusion that the capacity of the donor and genuineness  of the gift was not proved.<\/p>\n<p>  13.7 Burden of Proof  : In <em>Pradipkumar Loyalka (1997) 63 ITD 87 (Patna) (TM) (Trib.) <\/em>it was  held that even though the burden of proof lies upon the assessee to prove the  source of income of each of the donors, the assessee failed to furnish any  evidence worth the name to establish their creditworthiness.. The evidence  produced by him order to prove their creditworthiness was either scanty or  negligible or did not a instill any confidence whatsoever or was against human  probabilities. Therefore, the amounts were correctly disallowed by the Lower  Authorities and they were correctly added in the hands of the assessee as his unexplained  income.<\/p>\n<p>  In <em>Sanjeev Batra (1969) 69 ITR 23 (Delhi)<\/em> it was held  that considering the facts and circumstances of this case and the evidence on  record. we are of the view that the onus that lay on the assessee to establish  the creditworthiness of the donors and genuineness of the gifts has not been  discharged. The A.O. in such circumstances was justified in invoking Section 68  in deeming the receipts as income of the assessee from undisclosed sources.<\/p>\n<p>  13.8 Affidavits :  Sometimes an Affidavit is also filed stating that the gifts have been made and  indicating capacity of the party and credibility to show the genuineness of the  gift having been made from the Bank Account of the donor.<\/p>\n<p>  13.9 Assessee&#8217;s stand  : That the original burden of proof which laid on the assessee has been  discharged by filing necessary confirmation of the gift. Also, if relationship  is mentioned, it would amount to discharging the burden of proof and if a Bank  Statement coupled with Affidavit is given, then the capacity is also  established. In such circumstances, the burden would then shift on the  Department to prove the same. The assessee could argue the matter from the  following angles:<\/p>\n<p>  13.9.1 That where  Affidavit of donor is given the assessee has discharged his initial onus and  offered satisfactory explanation with reference to NRI gifts received by him.<\/p>\n<p>  13.9.2 The NRI gifts  have been made out of NRE Accounts.<\/p>\n<p>  13.9.3 That elements of  close relationship and occasion relate to &quot;realm of human  probability&quot; are in the nature of circumstantial evidence. The question of  proving friendship is a matter of evidence coupled with human nature, for a  person may develop fancy for a friend or a neighbour. In this connection  reliance is placed on the decision of <em>R. K Syal v. ACIT (2000) 66 TT] 656  (Chad).<\/em><\/p>\n<p>  13.9.4 That gifts  through cheques and confirmed by the NRI and duly supported by Affidavit is to  be considered genuine : <em>Jaikishan R. Agrawal v. ACIT (2000) 66 TT] 704  (Pune).<\/em><\/p>\n<p>  13.9.5 That where name  and address of the donor is submitted, the identity is established,  creditworthiness is evidenced and the genuineness of the transaction is proved,  Where documentary evidence of gift and fact of payment by cheque and Affidavit  is submitted, the gifted money cannot be treated as unexplained cash credit.<\/p>\n<p>  13.9.6 The onus to prove  that &quot;apparent is not real is on the revenue&quot;. Once if necessary  evidence is given, the burden of proof shifts on the Department and it is for  the Department thereafter to prove that the gifted money belonged to the  assessees : <em>Elite Developers v. DCIT (2000) 73 ITD 379 (Nag).<\/em><\/p>\n<p>  13.9.7 That where the  assessee has disclosed primary facts, then the original burden of proof is  discharged and it would be for the Department thereafter to prove that the gift  is not genuine : <em>Parekh Foods Ltd. v. DCIT (1998) 64 ITD 396 (Pune).<\/em><\/p>\n<p>  13.9.8 That where the  assessee has submitted relevant evidence, documents and materials and the same  are authentic. reliable and verifiable, there cannot be any ground to  disbelieve the same on the basis of surmise, conjecture or probability. In <em>Jaya  S. Shetty v. ACIT (1999) 69 ITD 336 (Mum.)<\/em> the Tribunal made it clear that  additions based on conjecture, surmise. estimates and presumptions which are  not supported by any document or evidence cannot be treated as undisclosed  income.<\/p>\n<p>  13.10 Controversy :  Where gift is received from NRI and the Assessing Officer is doubting since the  quantum of the gift is huge amount. say Rs. 50 lakhs, he has questioned the genuineness of the gift. At the same time, the  assessee has furnished various evidences and proofs including Affidavit Thus  the assessee has discharged the initial burden of proof, the onus is now  shifted on the Department to prove that the evidence which is furnished is  false. This must be substantiated by some cogent evidence and cannot be on the  basis of mere preponderance of probability or on human nature. It is very  difficult for the Department to establish what is friendship?&quot;<\/p>\n<p>  13.11 The case of the  Department could be that the gift is colourable devise and is a mode to  transfer funds out of India and to channelise them back to India. Participants  are requested to analyse such situations in the light of (a) the requirement of  proof which the Department would require; (b) the evidences furnished by the  assessee and (c) on the basis of the caselaws which have been cited, the  validity of the gift will have to be examined since this is very often a  burning problem when gift are received of large amounts from foreign countries.<\/p>\n<h3>  14. Statement of  assessee as part of evidence and law of retraction <\/h3>\n<\/p>\n<p>  14.1 Statements are  made by the assessee at the time of search and these statements become part of  the record. Once a statement is made in the presence of witnesses and signature  is taken, it becomes &quot;piece of evidence&quot;. However, it is quite likely  that thereafter, the assessee files an affidavit retracting his statement.<\/p>\n<p>  14.2 The general rule  is that admissions give rise to &quot;rebuttable presumption&quot;. Admissions  are not conclusive proof and they may operate as estoppel in further  proceedings as laid down in Section 31 of the Evidence Act. However, there is a  right of rebuttal on the ground that the confession or admission was induced by  threat, promise and hence, it is irrelevant &ndash; Section 24 of the Evidence Acc.<\/p>\n<p>  14.3 It can also be  argued that the statement made was for a limited purpose of seeking explanation  in respect of documents, articles or things found during the search : <em>R.C.  Gavit v. Smt. Sherbano Hassan Daya &ndash; (1986) 161 ITR 793 (Bom.).<\/em><\/p>\n<p>  14.4 A confession  even if inculpatory should be corroborated by independence evidence. It is  quite likely that statements recorded during search continue for an unduly long  period and therefore, cannot be considered to be free, fearless and voluntary.  Hence, such statements can be retracted on the ground that the same were  recorded under pressure and force : <em>Deepchand and Co. v. ACIT (1995) 51 TT]  421 (Bom.).<\/em><\/p>\n<h3>   15. Analysis of  Section 293 of the Income-tax Act <\/h3>\n<\/p>\n<p>  15.1 Section 293 of  the Income-tax Act, 1961, bars any civil suit &quot;to set aside or modify any  proceedings or order made under the Act&quot;. It is true that bar against  civil actions within the jurisdiction of a civil court under Section 9 of the  Civil Procedure Code, 1908, will not be lightly or readily inferred.<\/p>\n<p>  15.2 The philosophy  of Section 293 is that the section bars suit to section aside or modify an  assessment, even where an assessment is erroneous or wrong. Thus, no suit can  be brought in any civil court to set aside or modify an assessment.<\/p>\n<p>  15.3 Issue is whether  a tax proceedings can await till the outcome of a pending civil dispute. In <em>U.S.  Nayak v. CWT (1968) 68 ITR 171 (Mysore), <\/em>a suit was pending in the civil  court concerning transfer of the property. In the meantime, the value of the  property had appreciated and the assessee was called upon to pay tax on rhe  enhanced value which is the fair market value ignoring the amount invested. The  argument of the assessee was that the title in the suit is being disputed. The  High Court in this case came to the conclusion that a dispute pending would not  affect the valuation of the property which according to the Wealth Tax Act is  required to be made at a fair marker value.<\/p>\n<p>  15.4 ln <em>CWT v.  H.H. Smt. Rajkuverva (1972) 86 ITR 783 (Mysore),<\/em> here the dispute was  regarding ownership of certain shares and debentures and for which the matter  was pending final adjudication in the Court. In this case, the Court made a  distinction between &quot;classes of assets&quot; and came to rhe conclusion  that in respect of chose cases which are subject matter of dispute, valuation  could be made at a much lower rate.<\/p>\n<p>  15.5 In <em>Durga  Prasad Ramniwas Podar v. WTO (1985) 153 ITR 76 (Bom.),<\/em> there was dispute  regarding property and the final outcome of the civil dispute was that the  assessee lost title to the property. In this case, che court came to the  conclusion that since ultimately the assessee was not the owner of the  property, therefore, wealth tax on the same cannot be paid and the notice for  reassessment was quashed. In this case, the court recognised subsequent events  after the date of filing of the Return as well as the impact of civil disputes  on a particular assessment.<\/p>\n<p>  15.6 In <em>Mrs.  Korshedshapoor Chenai v. Asst. CED (1980) 122 ITR 21 (SC),<\/em> a right even  though in dispute was regarded as a valuable right for the purposes of estate  duty. The Supreme Court held that a right to enhanced compensation was property  and hence, liable for inclusion on the death of the person for the purposes of  estate duty.<\/p>\n<p>  15.7 In <em>CIT v.  Hindustan Housing and Land Development Trust Ltd. (1986) 161 ITR 524 (SC), <\/em>there  was a dispute regarding additional compensation awarded by the lower court. The  matter of compensation was in dispute and the court came to the conclusion that  the same is not assessable since the decree on the same is yet to be delivered  by the court.<\/p>\n<h3>   16. Evidence  collected from illegal search <\/h3>\n<\/p>\n<p>  16.1 It may be noted  &quot;that right of privacy&quot; has been accepted implicitly with right to  life and liberty guaranteed by Article 21 of the Constitution. It is in this  connection that reference is made to the law on admissibility of evidence  obtained in an illegal search u\/s. 132 of the LT. Act and the decision in <em>Pooran  Mall v. Director of Inspection (Investigation) (1974) 93 ITR 505 (SC).<\/em><\/p>\n<p>  16.2 The English Rule  of evidence is that the test to be applied, both in civil and criminal cases,  in considering whether evidence is admissible is whether it is relevant to the  matter in issue or not.<\/p>\n<p>  If it is, admissible the court is not concerned how the same  is obtained. This proposition was laid down in <em>England in Kuruma v. Queen  (1955) AC 197 (PC)<\/em> as well as in the United States in <em>Olmstead v. United  States (1928) 277 US 438.<\/em><\/p>\n<p>  16.3 Thus, taking the  law from England and America, the real test of admissibility of evidence lies  in its relevancy. Thus, the use of material obtained in an illegal search can  also be used against the assessee. It would not be opened to contend that the  information obtained as a result of illegal search is violative of right to  privacy. The result is that evidence obtained as a result of illegal search or  seizure can be used against the assessee.<\/p>\n<h3>  17. Attachment &ndash;  Schedule ii of the i.t. act and application of various  provisions of civil procedure code <\/h3>\n<\/p>\n<p>  17.1 So far as the provisions contained for attachment and sale of  property, there are various provisions of the Civil Procedure Code which are  imported in the Income-tax Act. They are summarised and listed as follows :<\/p>\n<p>  (a) Notice to defaulter requiring payment &ndash; Rule 2 of Schedule II;<\/p>\n<p>  (b) Execution of money decree &ndash; Rule 16 of Schedule II;<\/p>\n<p>  (c) Attachment of immovable property of defaulter after notice is  served &ndash; Rule 51 of Schedule II;<\/p>\n<p>  (d) Proclamation of sale &ndash; Rules 52, 53 and 55 of Schedule II;<\/p>\n<p>  (e) Rules to set aside sale on grounds of irregularity &ndash; Rule 61  of Schedule II;<\/p>\n<p>  (f) Orders confirming the sale are appealable &ndash; Rule 86 of  Schedule II;<\/p>\n<p>  (g) Right of  arrest and detention of defaulting assessee &ndash; Rules 73 to 81 of Schedule II;<\/p>\n<p>  (h) If the claim  of the party is one where a dispute arises as to ownership of the property  which is attached then the matter could be referred to a civil court by virtue  of Rule 16 of Schedule II.<\/p>\n<p>  17.2 The rules  contained in Civil Procedure Code apply to Part II of Second Schedule  concerning attachment of sale of movable property. Rule 23 deals with  attachment of movable property and Rule 26 prescribes the procedure for  attachment of debt not secured by a negotiable instrument and shares of a  company. As per Rule 32, if the property to be attached consists of interest of  defaulter in partnership property, the same shall also be attached by the IT.  Department.<\/p>\n<p>  17.3 One important  point which needs to be highlighted is that as per Rule 35 of the Second  Schedule, attachment of assets by seizure shall be made only after sunrise and  before sunset and not otherwise. References is also invited to Rule 36,  however, it may be pointed out that these Rules are being flouted.<\/p>\n<p>  17.4 Part III of  Second Schedule contains Rules governing attachment and sale of immovable  property. These Rules are all encompassed and embodied in the provisions of  Sections 222, 276 and 281B of the I.T. Act. All these sections are in tune with  the provisions of various orders of Civil Procedure Code which would apply to the  present case.<\/p>\n<h3>   18. Issue for  condonation of delay &ndash; Section 253 Limitation Act and Code of Civil Procedure <\/h3>\n<\/p>\n<p>  18.1 Section 253 of  the Income-tax Act gives power to Tribunal to condone delay. Judicial bodies  are empowered to condone delay if a litigant satisfies the court that there  were sufficient reasons for availing remedy after expiry of limitation. The  words occurring in the section are &quot;sufficient cause&quot; &ndash; Section  253(5). They should be liberally construed so as to advance substantial justice.  Like in Civil Procedure Code, the length of delay is immaterial and  acceptability of explanation is the main criteria for condonation of delay.<\/p>\n<p>  18.2 Recently, in <em>Sterlite  Industries v. ACIT (2006) 6 SOT 497 (Mum.)<\/em>, it was held that the expression  &quot;sufficient cause or reason&quot; used in Section 253(5) is in identical  position with the Limitation Act, 1963 and CPC and therefore the various  circumstances for sufficient cause should receive a liberal construction  provided the explanation given by the assessee does not smack of <em>mala fide<\/em> or dilatory strategy.<\/p>\n<p>  18.3 Similarly, in <em>Earthmetal  Electricals (P) Ltd. v. ITO (2005) 4 SOT 484 (Mum), <\/em>the Tribunal held that  courts and quasi-judicial bodies are empowered to condone delay if a litigant  satisfies the court that there were sufficient reasons for availing remedy  after the expiry of the period of limitation. Here also, the rules of Evidence  Act and Civil Procedure Code were considered by the Tribunal.<\/p>\n<h3> 19. Doctrine of <em>Res  Judicata<\/em> <\/h3>\n<\/p>\n<p>  19.1 The doctrine of  res judicata is pronounced in Section 9 of the CPC The same has limited  application in the Income-tax Act. This is- qualified by the proposition that  the A.O. is not bound by the rule of<em> res judicata<\/em> or estoppel, since he  can reopen or agitate on a question previously decided in a particular way but  can deviate from the same since fresh facts have come to light.<\/p>\n<p>  19.2 The principle of <em>res judicata<\/em> does not apply in Income-tax Act since the earlier decision  if it had a mistake deserves to be rectified or from the assessee&#8217;s point of view,  the Department cannot depart from an earlier decision since such departure  would result in injustice to the assessee. On same facts, the same position  should continue by virtue of &quot;doctrine of precedence&quot;.<\/p>\n<p>  19.3 Issue for  consideration is whether an admission made by the assessee in an assessment  proceeding can be used as an evidence against him in a subsequent year?  Similarly, a decision of civil court whether it could operate as a<em> res  judicata<\/em> or an estoppel to bind the department? If the High Court grants  probate or letters of administration in respect of the Will, can the department  still say that the Will is sham and not binding on the Department?<\/p>\n<p>  19.4 The Government  is bound by its promise based on &quot;doctrine of promissory estoppel&quot;.  Issue-for examination and consideration is can an undertaking given on the  floor of the Parliament or a speech made by the Finance Minister or an circular  issued by CBDT bind the Government?<\/p>\n<h3>  20. Conclusion <\/h3>\n<\/p>\n<p>  In<em> A. K. Gopalan v. State of Madras, AIR 1950 SC 27,<\/em> the Supreme Court held that &quot;the courts are not at liberty to declare an  Act void because in their opinion it is opposed to a spirit supposed to pervade  the Constitution but not expressed in words &#8230; It is difficult upon any  general principles to limit the omnipotence of the sovereign legislative power  by judicial interposition, except so far as the express <\/p>\n<p>  words of a written constitution give that authority&quot;.<\/p>\n<\/p>\n<h3>  21. Table of cases <\/h3>\n<\/p>\n<table border=\"0\" cellspacing=\"0\" cellpadding=\"0\">\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>      1. <\/td>\n<td width=\"154\" valign=\"top\">\n<p>Amar Natvarlal Shah<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>68 TTJ 51G (All)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Additions on the basis of loose papers not sustainable.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>2.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>V. V. S. Alloys Ltd.<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>68 TTJ 51G (All)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Additions on the basis of diary not sustainable.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>3.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Jaya Sherry<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>69 ITD 336 (Mum)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Addition on the basis of dumb diary not sustainable.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>4. <\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Pooja Bhatt<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>73 ITD 205 (Mum)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Addition based on rough notes not sustainable.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>5. <\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>T. S. Venkateshan<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>74 ITD 298 (Cal)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Writings on loose papers found with the third party cannot    be added as income of the assessee.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>6.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Monga Metals Pvt. Ltd.<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>67 TT] 247 (All)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Burden of proof and onus on the revenue to prove that    figures on the loose papers are assessee&#8217;s undisclosed income.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>7.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Satinder Kumar<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>(2001) 250 ITR 484 (P&amp;H)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Revenue relied upon impounded diary of property dealer    recording transactions, but information did not relate to the very property    under consideration and there was wide discrepancy in value. Court did not    rely upon noting in diary.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>8.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Arul Kumar Jain<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>(1999) 64 TTJ 786 (Del)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Additions on the basis of loose papers cannot be sustained,    unless there is corroborative material evidence.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>9. <\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Urmila Chandak v. ACIT<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>60 TTJ 758 (Mad)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Review \/ re-examination not possible.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>10.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Harak Chand N. Jain v. ACIT<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>(1998) 61 TTJ 223 (Mum)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>AO cannot make roving enquiries without fresh evidence. He    has no powers to override the rules of evidence.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>11.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Alok Agarwal v. DCIT<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>(2000) 67 TTJ 109 (Del)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>AO not permitted to go beyond materials discovered and has    to restrict to what is found at the time of search and cannot make roving    enquiries on unconnected matters.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>12.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Rameshwar Lal Ahuja v. ACIT<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>(2000) 67 TTJ 441 (Chad)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Re-appreciation of evidence can be done only where fresh    material is discovered.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>13.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Sunder Agencies v. DCIT<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>(1997) 63 ITD 245 (Mum)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Sec. l58BA does not provide a licence to the revenue for    making roving enquiry.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>14.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Indore Constructions Pvt. Ltd. v. ACIT<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>(1999) 71 ITD 128 (Ind)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Re-examination of original assessment not possible in Block    Assessment.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>15.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Essem Indra-Post Services v. ACIT<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>(2000) 72 ITD 228 (Hyd)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>Should not amount to review of order.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>16.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Sheela Aggarwal v. DCIT<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>(1999) 106 Taxman 227 (Mag) (Delhi)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>AO cannot make roving enquiries and investigations about    already completed assessments.<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"32\" valign=\"top\">\n<p>17.<\/p>\n<\/td>\n<td width=\"154\" valign=\"top\">\n<p>Davind Dhavan vs. ACIT<\/p>\n<\/td>\n<td width=\"125\" valign=\"top\">\n<p>(1999) 71 ITD 1 (Mum)<\/p>\n<\/td>\n<td width=\"279\" valign=\"top\">\n<p>No roving enquiry to be made on completed assessments.<\/p>\n<\/td>\n<\/tr>\n<\/table>\n<p>According to  Section 34 of the Indian Evidence Act, 1872, entries in books of account  regularly kept in the course of business, are relevant whenever they refer to a  matter into which the court has to enquire but such statements shall not alone  be sufficient evidence to charge any person with liability. From a plain  reading of Section 34 it is manifest that to make an enquiry relevant  thereunder it must be shown that it has been made in a book, that book is a  book of account, and that book of account has been regularly kept in the course  of business. From this it is also understood that even if the requirements are  fulfilled and the entry becomes admissible as a relevant evidence still the  statement made therein alone shall not be sufficient evidence to charge any  person with liability. From the above it is seen that the first part of the  Section speaks of relevancy of evidence and the second part speaks in a  negative way of its evidentiary value for charging a person with liability. <em>(C.B.I.  v. V.C. Shukla (1998) 3 sec 410 at 425).<\/em><\/p>\n<p>  It cannot be gainsaid that words &quot;account&quot;,  &quot;books of account&quot;, &quot;business&quot;, &quot;regularly kept&quot;  appearing in Section 34 are of general import. Necessarily, therefore, such  words must receive a general construction unless there is something in the Act  itself such as the subject matter with which the Act is dealing or the context  in which the words are used and to show the intention of the legislature that  they must be given a restrictive meaning. <em>(C.B.I. v. V.C. Shukla (1998) 3  SCC 410 at 425).<\/em><\/p>\n<p>  &quot;Book&quot; ordinarily  means a collection of sheets of paper or other material, blank, written, or  printed, fastened or bound together so as to form a material whole. Loose  sheets or scraps of paper cannot be termed as book for they can be easily detached  and replaced. Thus, spiral notebooks and spiral pads can be regarded as  &quot;books&quot; within the meaning of Section 34 of the Indian Evidence Act,  but not the loose sheets of paper contained in the files. Further to ascertain  that the books of account has been regularly kept, the nature of occupation is  an eminent factor to be considered. In order to charge any person with  liability it is not enough merely to prove that the books have been regularly  kept in the course of business and the entries therein are correct. It is also  necessary for the person relying upon those entries to prove that they were in  accordance with facts. In other words even correct and authentic entries in  books of account cannot without independent  evidence of their trustworthiness fix a liability upon a person. (<em>C.B.I. v.  V.C. Shukla 1998 3 Sec 410<\/em> at 425).<\/p>\n<p>  As per the decision of the Bombay High Court in <em>CIT v. Bhaichand H.  Gandhi (1983) 141 &middot; ITR 67, 69 (Bom)<\/em> a passbook supplied by the bank to the  assessee cannot be regarded as the &quot;book&#8217; of the assessee, that is a book  maintained by the assessee, or under his instructions.<\/p>\n<p>  c) AFFIDAVIT <\/p>\n<p>  As per the Blacks Law Dictionary 6th Edition, the term  &quot;affidavit&quot; means &#8211; &quot;a voluntary declaration of facts written  down and sworn to by the declarant before an officer authorised to administer  oaths, such as a notary public&quot;. As  per Section 3(3) of the General Clauses Act affidavit is defined as:<\/p>\n<p>  &quot;Affidavit&quot; shall include affirmation and declaration in the  case of person by law allowed to affirm or declare instead of swearing.<\/p>\n<p>  If an affidavit is filed by an assessee and he is neither cross-examined  on that point nor is he called upon by  the department to produce any &#8216; t documentary evidence, the assessee may assume  that the Income tax authorities are satisfied with the affidavit as sufficient  proof on that point in question. (<em>L. Sohan Lal Gupta v. CIT (1958) 33 lTR  786 at I 791(All))<\/em>. This is so because the rejection of an affidavit filed  by an assessee is not justified unless the deponent has either been discredited  in cross-examination or has failed to produce other supporting evidence when  called upon to do so. [<em>Mehta Parikh &amp; Co. v. CIT (1956) 30 ITR 181<\/em> at <em>187 (SC), Sri Krishna v. CIT (1983) 142 ITR 618 (All)<\/em>,<em> Dilip Kumar  Roy v. CIT (1974) 94 ITR 1 {Bom.)}.<\/em><\/p>\n<p>  For instance where a clear intention to waive the separate rights of the  assessee to the properties standing in his name is established by an affidavit,  the Income-tax authorities should come to the conclusion that the properties in  question belong to the family and not to the assessee (Laxmi Narayan Gadodia &amp; Co. (1943) 11 ITR 491  (Lah.)<\/p>\n<p>  The Mehta Parikh and Co. Case 30 ITR 181 cannot be construed to lay down  the proposition that unless the deponent is cross-examined, the affidavit  cannot be rejected. That decision lays down that if there is no material  whatsoever on record for doubting the veracity of the statements made in the  affidavit and if the deponent has also not been cross-examined for bringing out  the falsity of his statements, then the tribunal will not be justified in  doubting the correctness of the statements made by the deponent in the  affidavit.<\/p>\n<p>  A finding given by the appellate Tribunal without considering the  affidavit concerning a material evidence may not be sustainable at law even  though the Tribunal had considered other material on record. This is so because  an affidavit is a valid piece of evidence<em> (Hanutram Ram Prasad v. CIT (1978)  114 ITR 19,26 (Gauh).<\/em><\/p>\n<p>  Affidavits are either affirmed as true to knowledge, or from information  received provided the source of information is disclosed or as to what the  deponent belief to be true provided the grounds for such believe are stated. If  an affidavit lacks verification, it is of no use <em>(Sundar Industries v.  General Engineering Works, AIR 1982 Del. 220, 223).<\/em> In other words, if an  affidavit not properly verified it cannot be admitted in evidence<em> (A. K. K.  Nambiar v. Union of India, ITR 1970 SC 652, 654)<\/em> as it is no affidavit in  the eyes of Law <em>(State of Rajasthan v. Sindhi Film Exchange AIR 1974 Raj 31,  33).<\/em> The importance of verification is to test the genuineness and  authenticity of statements and also to make the deponent responsible for such  statements <em>(Narendra Kumar Saklecha v. Jagjivan Ram AlR 174 SC 1957).<\/em><\/p>\n<p>  In <em>Smt. Sudha Devi v. MP. Narayanan AIR 1988 SC 1381, 1383<\/em> the  plaintiff was not allowed to fill up the lacuna in the evidence by filing an  affidavit belatedly at the Supreme Court stage.<\/p>\n<p>  In the above case it was also said that affidavits are not included in  the definition of evidence in Section 3 of the Indian Evidence Act, 1872 and  can be used in evidence only if the court permits it to be used for sufficient  reasons.<\/p>\n<p>  d) Noting in diary, loose  paper, dumb <\/p>\n<p>  paper<\/p>\n<p>  In the case of <em>Central Bureau of Investigation v. V. C. Shukla &amp;  Ors. 1998 3 SCC 410<\/em> popularly known as Jain Hawala Case where Section 34 of  the Evidence Act, 1872 has been explained. In this case it is held that entries  in Jain Notebooks held on facts admissible under Section 34, but file  containing loose sheets of papers are not &#8221;book&quot; and hence entries  therein not admissible under Section 34. Further it was also held in this case  that entries in books of account shall not alone be sufficient evidence to  charge any person with liability. Entries even if relevant are only corroborative  evidence. Independent evidence as to trustworthiness of those entries is  necessary to fasten the liability. In view of these facts it was held by the  Honourable Supreme Court, that entries made in the Jain Hawala diaries are  under Section 34, but truthfulness thereof not proved by any independent  evidence. It was also held in this case that &quot;books&quot; ordinarily mean  a collection of sheets of paper or other material, blank, written, printed,  fastened or bound together so as to form a material whole. Loose sheets or  scraps of paper cannot be termed as &quot;book&quot; for they can be easily  detached and replaced. The Supreme Court further went on to state that even  correct and authentic entries in books of account cannot without independent  evidence of their trustworthiness fix a liability upon a person.<\/p>\n<p>  The Hon&#8217;ble Tribunal in the case of <em>S. P. Goyal v. Dy. CIT (2002) 82  ITD 85 (TM)<\/em> has held that mere entry on loose sheet of paper not supported  by actual cash cannot be considered to be sufficient evidence to treat the same  as Cash credits under Sec. 68. This decision has been arrived at by considering  the Supreme Court decision in the case of <em>CBI v. V.C. Shukla, <\/em>popularly  known as the Jain Hawala Case.<\/p>\n<p>  In the case of <em>Satnam Singh Chhabra v. Deputy CIT (2002) 74 TTJ (Luc)  976<\/em> held that loose paper cannot be construed as books and therefore  Section 34 of the Evidence Act would not apply and therefore it cannot be a  basis for addition. It was also held in this case that the loose paper found in  the premises of the assessee during search of which, the asseessee  categorically denied the authorship and the transaction noted therein, cannot  be considered as sufficient evidence. In the case of<em> S. K. Gupta v. DCIT  (1999) 63 TTJ (Del.) 532<\/em> also held that addition made on the basis of loose  sheet and torn papers found during the search were unwarranted. The case of P<em>rarthana  Construction (P) Ltd. v. DCIT (2001) 70 ITJ (Ahd.) 122<\/em> also states that  addition on the basis of loose papers without any corroborating evidence cannot  be the basis for addition.<\/p>\n<p>  In the case of <em>Ashwani Kumar v. ITO (1991) 39 ITD 183<\/em> held that  &quot;document&quot; which was found at the time of search and which did not  indicate whether the figures referred to quantities of money or to quantities  of goods, was a &quot;dumb&quot; document and no addition could be made on the  basis of such document. In this decision it was also held no addition could be  made on the basis of sample analysis report which showed that assessee sold  adulterated cement.<\/p>\n<p>  e)  Written and oral  statements<\/p>\n<p>  Written and Oral Statements are normally termed as admissions and these  provisions are found in Sections 17 to 31 of the Indian Evidence Act, 1872.  However as far as Income Tax Provisions are concerned, admissions are normally  in terms of written statements and the evidentiary value of the same could best  be explained by the following case laws:<\/p>\n<p>  An admission or acquiescence cannot be the foundation for an assessment, were the income  is returned under an erroneous impression or misconception of law <em>(Abdul Qayume  v. CIT (1990) 184 ITR 404 (All.) &amp; Absalom v. Talbot (1944) 26 Tax cases  166 at 192.<\/em> What is admitted by a party to be true must be presumed to be  true unless the contrary is shown <em>(Nathoo Lal v. Durga Prasad AIR 1954 SC  355, 358).<\/em> Thus an admission is not conclusive proof of the matter  admitted, though it may, in certain circumstances, operate as estoppel <em>(K.  S. Srinivasan v. Union of India, AIR 1958 SC 419, 427).<\/em><\/p>\n<p>  In the case of <em>ACIT v. Anoop Kumar (2005) 94 TTJ (Asr) 288,<\/em> it is  held that addition could not be made merely by relying on the statement  recorded under section 132(4) as there was no supportive material to justify  such addition. <\/p>\n<p>  In the case of <em>DCIT v. M.L. Jain (2005) 96 TTJ (Jd) 362<\/em> it is  held that no addition can be merely based on the statement recorded during  search under Section 132(4) of the assessee, for such a statement recorded does  not tantamount to any, money, bullion and jewellery or other valuable articles  found during the course of search.<\/p>\n<p>  From the above case laws the principle that emerges is that mere  statement\/ admission has no evidentiary value unless supported by corroborative  evidence leading to tangible assets. <\/p>\n<p>  f) Statement u\/s. 133A  r.w.s. 131:<\/p>\n<p>  The statement elicited during the survey operation had no evidentiary  value as held by the Kerala High Court in <em>Paul Matthews and Sons v. CIT 263  ITR 101 (Ker).<\/em> It is because Section 133A does not empower the AO to  examine any person on oath. Thus in contradistinction to the power u\/s. 133A,  Section 132(4) of the IT Act enables the authorised officer to examine a person  on oath and any statement made by such person during such examination can also  be used in evidence under the Income-tax Act. On the other hand whatever  statement recorded u\/s. 133A of the Income-tax Act is not given an evidentiary  value (263 ITR 101). Therefore a mere admission or an aquiescence cannot be a  foundation for an assessment and that any statement given during survey has no  effect as an &quot;admission&quot; nor can it be a statement on oath. U\/s. 131 there  must be pendency of proceedings before the concerned authority for invoking the  provisions of Section 131 as held by the Bombay High Court in the case of <em>G.  M. Breweries Ltd. v. Union of India (2000) 108 Taxman 547 (Bom).<\/em> It was  held by the Supreme Court in the case of <em>Shrimati Amiya Bala Paul v. CIT  (2003) 262 ITR 407 (SC)<\/em> that assessing officer cannot refer to valuation  officer in exercise of powers u\/s. 55A by using Sections 131 or 133.<\/p>\n<p>  The Bombay High Court in the case of <em>R. R. Gavit v. Sherbanoo Hasan  Daya (1986) 161 ITR 793 (Bom)<\/em> held that the purpose of examination on oath  u\/s. 132(4) is limited to seeking explanation or information in connection with  search and is not authorised to put questions in general.<\/p>\n<p>  g)  Electronic Records<\/p>\n<p>  As per Section 2(1)(t) &quot;electronic record&quot; means data, record  or data generated, image or sound stored, received or sent in an electronic <\/p>\n<p>  form or microfilm or computer generated microfiche.<\/p>\n<p>  Evidence  in this form can be both oral and documentary and electronic records can be  produced as evidence. The provisions relating to admissibility of such evidence  can be found in Section 65B of the Indian Evidence Act. As per this provision  any information contained in an electronic record which is printed in a paper,  stored, recorded, or copied in optical or magnetic media produced by a computer  (computer output put) shall be deemed to be also any document and shall be  admissible in any proceedings without further proof or production of the  original, as evidence of title of the contents of the original or any facts  stated therein of which direct evidence would be admissible. This is subject to  satisfaction of certain conditions stipulated in sub-section 2 of Section 65B.  Further that evidence, even in criminal matters, can also be by way of electronic  records. This would include video conferencing <em>(State of Maharashtra v.  Praful B. Desai 2003 Cri. J 2033 (SC)).<\/em><\/p>\n<p>  v) Presumption and Presume <\/p>\n<p>  A presumption is an inference of fact drawn from other known or proved  facts. It is a rule of law under which courts are authorised to draw a  particular inference from a particular fact.<\/p>\n<p>  Section 4 of the Evidence Act defines the terms &quot;May presume&quot;,  &quot;Shall presume&quot;, &quot;Conclusive proof&quot;. The definitions are as  under:<\/p>\n<p>  &quot;May presume&quot;- Whenever it is provided by this act that the  Court may presume a fact, it may either regard such fact as proved, unless and  until it is disproved, or may call for proof of it.<\/p>\n<p>  &quot;Shall presume&quot;- Whenever it is directed by this Act that the  Court shall presume a fact, it shall regard such fact as proved, unless and  until it is disproved.<\/p>\n<p>  &quot;Conclusive proof&quot;- When one fact is declared by this act to  be conclusive proof of another, the Court shall, on proof of the one fact,  regard the other as proved, and shall not allow evidence to be given for the  purpose of disproving it.<\/p>\n<p>  In this regard it must be clearly noted that a presumption is not in  itself evidence but only makes a <em>prima facie<\/em> case for a party in whose  favour it exists. It indicates the person on whom the burden of proof lies.  When the presumption is conclusive it obviates the production of any other  evidence to dislodge the conclusion to be drawn on proof of certain facts. Here  it must also be noted that all presumptions can be rebutted by evidence.<\/p>\n<p>  The above three expressions have been considered and analysed by the  Supreme Court in a very recent case of <em>P.R. Metrani v. CIT (2006) 287 ITR  209 (SC)<\/em> wherein it has been held in the following terms: Section 132(4A)  of the Income-tax Act, 1961, enables an assessing authority to raise a rebuttable  presumption that books of account, money, bullion, etc. found in the possession  of any person during a search, belong to such person and that the contents of  such books of account and other documents are true, and that the signatures and  every part of such books of account and other documents are signed by such  person or are in the handwriting of that particular person. Further in this  case it has also been held that the presumption under Section 132(4A) would not  be available for the purposes of framing a regular assessment.<\/p>\n<p>  On presumptions the following decisions may also be referred to :<\/p>\n<p>  <em>a) Satnam Singh Chhabra v.  DCIT (2002) 74 TTJ (Luck.) 976;<\/em><\/p>\n<p>  <em>b) DCIT v. M.L. Jain (2005)  96 TTJ (Jodh.) 362;<\/em><\/p>\n<p>  <em>c) Atul Kumar Jain v. DCIT  (1999) 64 TTJ (Del.) 786;<\/em><\/p>\n<p>  <em>d) Prarthana Construction  (P) Ltd. v. DCIT (2001) 70 TTJ (Ahd.) 122;<\/em><\/p>\n<p>  <em>e) S. K. Gupta v. DCIT  (1999) 63 TTJ (Del.) 532;<\/em><\/p>\n<p>  <em>f) S. P. Goyal v. DCIT  (2002) 82 ITD 85 (Mum) (TM).<\/em> <\/p>\n<p>  vi) Corroborative Evidence,  Substantial Evidence and Circumstantial Evidence :<\/p>\n<p>  Circumstantial Evidence<\/p>\n<p>  Evidence  of some collateral fact from which the existence or non-existence of some fact  in question maybe inferred as a probable consequence is termed circumstantial  evidence.<\/p>\n<p>  For  conviction on circumstantial evidence, the following conditions must be  fulfilled:<\/p>\n<p>  1) The circumstances from  which the conclusion of the guilt is to be drawn should be fully established.<\/p>\n<p>  2) The facts so established  should be considered not only with the hypothesis of the guilt of the accused,  that is to say, they should not be explainable on any other hypothesis except  that the accused is guilty.<\/p>\n<p>  3) The circumstances should  be of conclusive nature and tendency.<\/p>\n<p>  4) They should exclude every  possible hypothesis except the one to be proved.<\/p>\n<p>  5) There must be chain of  evidence so complete as not to leave any reasonable ground for the conclusion  consistent with the innocence of the accused and must show that in all human  probability the act must have been done by the accused.<\/p>\n<p>  <em>(Sharad Birdhichand Sharda v. State; AIR 1984 SC 1622)<\/em><\/p>\n<p>  <em>(Sudama Pandey v. State; AIR 2002 SC 293)<\/em> <\/p>\n<p>  Corroborative Evidence<\/p>\n<p>  Black&#8217;s Law Dictionary, 8th Edition defines corroborative evidence as  evidence that differs from but strengthens or confirms what other evidence  shows (esp. that which needs support). Circumstantial evidence is defined as  evidence based on inference and not on personal knowledge or observation (also  termed indirect evidence; oblique evidence). &quot;Some circumstantial evidence  is very strong as when you find a trout in the milk&quot;. (Henry David  Thoreau-Journal, 11th November 1850). &quot;Evidence of some Collateral fact,  from which the existence or non-existence of some fact in question maybe  inferred as a probable consequence, is termed Circumstantial evidence&quot;  William P. Richardson. The Law of Evidence, 3rd edition at page 68.<\/p>\n<p>  Corroboration need not be direct evidence of commission of crime, it may  be circumstantial <em>(Hussain v. Dalip Singhji AIR 1970 SC 45).<\/em> <\/p>\n<p>  It has been held in England that the Jury is entitled to consider  whether silence of accused when charged with the offence is or is not some  corroboration <em>(R v. Felghenbaum, 1919, 1KB 431).<\/em><\/p>\n<p>  Substantial Evidence<\/p>\n<p>  &quot;Substantial Evidence&quot; means evidence that a reasonable mind  could accept as adequate to support a conclusion. Evidence offered to help  establish a fact in issue, as opposed to evidence directed to impeach or to  support a witness&#8217;s credibility is also called as Substantial Evidence. <\/p>\n<p>  From the above it can be seen that substantial evidence has more  persuasive value than the other two. However, all the three, corroborative,  circumstantial and substantial evidence have its own value based on the  particular situation in which that evidence is used and also based on the law  in which the Court is deciding. There is no any hard and fast rule that the  particular evidence is more valuable in the matters of Taxation Laws. All these  evidences have its own persuasive value in the proceedings, which is before an  assessing authority.<\/p>\n<p>  The word &quot;evidence&quot; as used in Section 143(3) of the  Income-tax Act, 1961 and obviously cannot be confined to direct evidence. The  word comprehensive enough to cover circumstantial evidence <em>(Paras Dass Munna  Lal v. CIT (1937) 5 ITR 523 at 526 (Lahore).<\/em> The word evidence has been  used in that section in a wider sense (CIT v. Khemchand Ramdas (1940) 8 TIR  159, 176 (Sind) or the generic sense, and not in the arrested sense as to be  either oral or documentary or both <em>(CIT v. Metal Products of India (1984)  150 ITR 714, 717 (Punj).<\/em> The use of the word &quot;material&quot; or  &quot;material gathered&quot; in section 143(3) shows that the Assessing  Officer not being a Court can rely upon material, which may not strictly be  evidence admissible under the Indian Evidence Act for the purpose of making an  assessment order. Thus not only in respect of the relevancy but also in respect of proof the material, which can  be taken into consideration by the assessing officer and other authorities  under the IT Act is far wider than the evidence which is strictly relevant  under the Evidence Act <em>(Addl. CIT v. Jay Engineering Works Ltd. (1978) 113  ITR 389, 391 (Del. HC).<\/em><\/p>\n<p>  Material or evidence on which taxing authorities may rely under the IT  Act is not confined to direct testimony in the shape of statements made by  witnesses. All relevant circumstances which have a bearing in this issue which  are revealed in the course of assessment would be covered by the expression  material or evidence on which the Income Tax officer could rely <em>(Mangalchand  Gobardhan Das v. CIT (1954) 26 ITR 706, 710, 711 (Assam). <\/em>The material on  which reliance may be placed by the assessing officer may be within his own  knowledge and might have been derived by him from hearsay or from information  of a most authentic character. However the assessing officer should bring this  evidences to the attention of the assessee and the Rules of Natural Justice are  not to be violated. <em>(Seth Gurmukh Singh v. CIT (1944) 12 ITR 393, 425 (Lah). <\/em>At the same time material gathered in the assessment proceedings of one  person is not legal evidence in the assessment of another person <em>(N. S.  Choodamani v. CIT (1959) 35 ITR 676 (Ker)).<\/em> Similarly evidence brought on  record without the knowledge of the assessee and used against him without  giving him an opportunity to rebut it offends the principle of natural justice <em>(MO  Thomakutty v. CIT (1958) 34 ITR 50l (Ker)).<\/em><\/p>\n<p>  vii) Proved, Disproved, Not  Proved<\/p>\n<p>  Section 3 of the Indian Evidence Act defines the terms &#8216;Proved&#8217;,  &#8216;Disproved&#8217; and &#8216;Not Proved&#8217; as follows:<\/p>\n<p>  &#8216;Proved&#8217; &#8211; A fact is said to be proved when, after considering the  matter before it, the Court either believes it to exist, or considers its  existence so probable that a prudent man ought, under the circumstances of the  particular case, to act upon the supposition that it exists.<\/p>\n<p>  &#8216;Disproved&#8217; &#8211; A fact is said to be disproved when, after considering the  matters before it, the Court either believes that it does not exist, or  considers its non-existence so probable that a prudent man ought, under the  circumstances of the particular case, to act upon the supposition that it does  not exist.<\/p>\n<p>  &#8216;Not Proved&#8217; &#8211; A fact is said to be Not Proved when it is neither proved  nor disproved.<\/p>\n<p>  viii) Burden of Proof and Onus  of Proof<\/p>\n<p>  &quot;Burden of proof&quot; really means two different things. It means  sometimes that a party is required to prove an allegation before judgement can  be given in its favour; it also means that on a contested issue, one of the two  contending parties has to introduce evidence. The burden of proof is of  importance only where by reason of not discharging the burden, which was put  upon it, a party must eventually fail. Where, however parties have joined issue  and have led evidence and the conflicting evidence can be weighed to determine  which way the issue can be decided, the abstract question of burden of proof  becomes academic <em>(Narayan Bhagwantrao Gosavi Balajiwale v. Gopal Vinayak  Gosavi AIR 1960 SC 100, 105).<\/em><\/p>\n<p>  The question of <em>onus<\/em> <em>probandi<\/em> is certainly important in  the early stages of a case. It may also assume importance where no evidence at  all is led on the question in dispute by either side; in such a contingency the  party on whom the onus lies to prove a certain fact must fail. Where, however,  evidence has been led by the contesting parties on the question in issue,  abstract considerations of onus are out of place; the truth or otherwise of the  case must always be adjudged on the evidence led by the parties<em> (Kalwa  Devadattam v. UOI (1963) 49 ITR 165, 175 (SC)).<\/em> In other words onus as a  determining factor comes into play when there is either no evidence on either  side or where it is actually worthless or equally balanced.<\/p>\n<p>  Initial onus is on the Department to prove each item, which is liable to  be taxed as revenue receipt, but the extent of the burden always depends upon  the nature of the income and the circumstances in which it was made. Once the  assessee gives an explanation which in the opinion of the Income Tax Department  is not true and which could not reasonably be true, the burden is on him to  prove that what he has stated is true and whatever burden is on the department  stands shifted thereafter <em>Juggilal Kamlapat v. CIT (1964) 52 I1R 811,  822(All)).<\/em> In all cases in which a receipt is sought to be taxed as income,  the burden lies upon the department to prove that it is within the taxing  provision. Where, however, a receipt is of the nature of income, the burden of  proving that it is not taxable because it falls within an exemption provided by  the Act lies upon the assessee. <em>(Parimisetti Seetharamamma v. CIT (1965) 57  ITR 532, 536 (SC)).<\/em><\/p>\n<p>  There is an essential distinction between &#8221;burden of proof&quot; and  &quot;onus of proof&quot;. Burden of proof lies on the person who has to prove  a fact and it never shifts, but the onus of proof shifts. Such a shifting of  onus is a continuous process in the evaluation of evidence.<em> (A. Raghavamma  v. A. Chenchamma AIR 1964 SC 136, 143).<\/em><\/p>\n<p>  Onus of proof in the case of an assessment is the same as what is stated  herein above. However in the case of Cash Credits, unexplained investments etc.  which is deeming provision and here it is the assessee who has to explain the  credit or investments and hence the onus lies on the (assessee not only to say  that it is correct but also to prove that it is correct. When a cash credit  entry appears in the assesseee&#8217;s books of account, the assessee has a legal  obligation to explain the nature and source of such credit <em>(Sreelekha  Banerjee v. CIT (1963) 49 ITR 112, 117 (SC)<\/em>. If the assessee offers an  explanation about the cash credit, the Income Tax department can put the  assessee to proof of his explanation and if the assessee fails to tender  evidence or avoid an enquiry, then the assessing officer is justified in  rejecting the explanation and holding that the income is from an undisclosed  source. The assessing officer is not required to specify or prove what that  source is, which from the nature of the case must be known only to the  assessee. <em>(Seth Kalekhan Md. Hanif v. CIT (1958) 34 ITR 669 at 674 affirmed  in (1963) 50 ITR 1 (SC)<\/em>. The Supreme Court modified the Ir above decision  later in the case of Parimisetti <em>Seetharamamma v. CIT (1965) 57 ITR 532, 537  (SC).<\/em> In this case it was laid down that the burden of proof held in the  earlier two cases to be upon the assessee to prove the source, nature and  character of the credit would not apply to a case, where the source of the  receipt is disclosed by the assessee and there is no dispute about the truth of  that disclosure and in such event, the income tax authorities would not be  entitled to raise an inference that the receipt is assessable to Income- tax on  the ground that the assessee had failed to lead all the evidence in support of  his contention that it is not within taxing provision. <em>(Ganesh Prasad v. CIT  (1968) 67 ITR 344, 348 (All))<\/em>. <\/p>\n<p>  Onus when discharged or shifted<\/p>\n<p>  It has consistently been laid down that when assessee claims that he had  borrowed money from a third party, the initial onus lies on the assessee to  establish &#8211; a) the identity of the third party, b) the ability of the third  party to advance money; and <em>prima facie<\/em> that the loan is a genuine one.  The mere production of a confirmation letter is not sufficient to prove that  the alleged loan is genuine <em>(Bharati (P) Ltd. v. CIT (1978) 111 ITR 951  (Cal). <\/em>If the assessee establishes the aforesaid three pre-conditions, it  wou<em>ld be for the department to disprove the same (CIT v. Baishnab Charan  Mohanty (1995) 212 ITR 199 (Orissa).<\/em><\/p>\n<p>  Burden of proof in the case of Search and Seizure<\/p>\n<p>  In Search and Seizure cases the burden of proof is on the assessee in  view of the presumptions provided under section 132 (4A) of the IT Act. However  it should be noted that such e presumption is rebuttable. Moreover the  presumption envisaged is only a factual presumption. The burden of proof to  explain the ownership of assets is on the assessee in respect of assets found  in assessee&#8217;s possession. But where the property is in joint possession with  wife, who also doing business and has disclosed the assets found during search  in assessees premises and such income has also been taxed in wife&#8217;s hands, the  burden of proof on the accused stand discharged <em>(District Superintendent of  Police, Chennai v. Inbasagaran K (2006) 282 ITR 435 (SC). <\/em>While there is a  presumption that the documents found belongs to assessee, there is no further  resumption that such document is also in the handwriting of the assessee. The  burden of proof that the investment in the asset not recorded in the books of  account is on the revenue. <em>(Ushakant Patel v. CIT (2006) 282 ITR 553 (Guj)).<\/em><\/p>\n<p>  In respect of cash found, the burden to explain the source is on the  assessee. Where the explanation is not supported, the inference that this  undisclosed income follows. In the case of <em>Vikhram v. ACIT (2006) 285 ITR  256 (Del.),<\/em> the assessee found in possession of large amount of cash  explained the amount as belonging to Congress I Party, of which he was a member  but both President and Secretary of the party denied any concern with the cash  found in the possession of the assessee. The High Court confirmed the addition  on the basis of the Law on Burden of Proof under Section 110 of the Indian  Evidence Act and the requirement of Section 69A of the Income-tax Act, besides  the law laid down by the Supreme Court in <em>Chuharmal v. CIT [1988] 172 ITR  250 (SC)<\/em> as regards burden of proof in respect of assets found in  assessee&#8217;s possession.<\/p>\n<p>  ix) Examination-in-Chief <\/p>\n<p>  U\/s. 137 of the Evidence Act Examinations are as under:<\/p>\n<p>  Examination-in-Chief  &ndash; The examination of a witness by a party who calls him shall be called his  Examination-in-Chief.<\/p>\n<p>  Cross-Examination  &ndash; The examination of a witness by the adverse party shall be called his cross  examination.<\/p>\n<p>  Re-Examination  &ndash; The examination of a witness, subsequent to the cross-examination, by the  party who called him, shall be called his <\/p>\n<p>  re-examination.<\/p>\n<p>  Section  138 says the order of examinations and it also directs that the examination and  cross-&shy; Examination must relate to relevant facts, but the cross-examination  need not be confined to the facts to which the witness testified on his  Examination-in-Chief.<\/p>\n<p>  David  Paul Brown of the Philadelphia Bar has laid down certain rules for  Examination-in&shy; chief and cross-examination and they are acknowledged by  competent authorities to be safe guides. They are reproduced below:<\/p>\n<p>  Paul  Brown&#8217;s &quot;Golden Rules&quot; for Examination-in-Chief<\/p>\n<p>  1) If they are bold, and may  injure your cause by pertness or forwardness, observe a gravity and ceremony of  manner towards them which may be calculated to repress their assurance.<\/p>\n<p>  2) If they are alarmed or  diffident, and their thoughts are evidently scattered, commence your  examination with matters of a familiar character, remotely connected with the  subject of their alarm, or the matter in issue as, for assistance &ndash; Where do  you live? Do you know the parties? How long have you known them? and the like.  And when you have restored them to their composure, and the mind has regained  its equilibrium, proceed to the more essential feature of the case, being  careful to be mild and distinct in your approaches, lest you again trouble the  fountain from which you are to drink.<\/p>\n<p>  3) If the evidence of your  witnesses be unfavourable to you (which should always be careful guarded  against), exhibit no want of composure;  for there are many minds that form opinions of the nature or character of  testimony chiefly from the effect which it may produce upon the counsel. <\/p>\n<p>  4) If you perceive that the  mind of the witness is imbued with prejudices against your client, hope but  little from such quarter &ndash; unless there be some facts which are essential to  your client&#8217;s protection, and which that witness alone can prove; either do not  call him, or get rid of him as soon as possible. If the opposite counsel  perceive the bias to which I have referred, he may employ it to your own ruin.  In judicial inquiries, of all possible evils, the worst and the hardest to  resist is an enemy in the disguise of a friend. You cannot impeach him you  cannot cross-examine him &ndash; you cannot disarm him &ndash; you cannot indirectly, even,  assail him; and if you exercise the only privilege that is left to you and call  other witnesses for the purposes of explanation, you must bear in mind that  instead of carrying the war into the enemy&#8217;s country, the struggle is still  between sections of your own forces, and in the very heart, perhaps of your own  camp. Avoid this by all means.<\/p>\n<p>  5)  Never call a witness whom  your adversary will be compelled to call. This will afford you the privilege of  cross-examination &ndash; take from your opponent the same privilege it thus gives to  you- and, in addition thereto not only render everything unfavourable said by  the witness doubly operative against the party calling him, but also deprive  that party of the power of counteracting the effect of the testimony.<\/p>\n<p>  6)  Never ask a question  without an object nor without being able to connect that object with the case,  if objected to as irrelevant.<\/p>\n<p>  7) Be careful not to put  your question in such a shape that, if opposed for informality, you cannot  sustain it, or, at all events, produce strong reason in its support. Frequent  failures in the discussion  of points of evidence enfeeble your strength in the  estimation of the jury, and greatly impair your hopes in the final result. <\/p>\n<p>  8)  Never object to a question from your adversary without being  able and disposed to enforce the objection. Nothing is so monstrous as to be  constantly making and withdrawing objections; it either indicates a want of  correct perception in making them, or a deficiency of real or of moral courage  in <em>not making them good.<\/em> <\/p>\n<p>  9)  Speak to your witness  clearly and distinctly as if you were awake and engaged in a matter of interest  and make him also speak distinctly and to your question. How can it be supposed  that the court and jury will be inclined to listen, when the only struggle  seems to be whether the counsel or the witness shall first go to sleep?<\/p>\n<p>  10) Modulate your voice as  circumstances may direct. &quot;Inspire  the fearful and repress the  bold&quot;.<\/p>\n<p>  11) Never begin before you are  ready and always finish when you have done. In other words, do not question for  question&#8217;s sake, but for an answer.<\/p>\n<p>  Common  causes v. uoi (Sahara Diaries  case). itatonline.org<\/p>\n<p>  <strong>Entries in loose papers\/ sheets are irrelevant and inadmissible as  evidence. Such loose papers are not &ldquo;books of account&rdquo; and the entries therein  are not sufficient to charge a person with liability. Even if books of account  are regularly kept in the ordinary course of business, the entries therein  shall not alone be sufficient evidence to charge any person with liability. It  is incumbent upon the person relying upon those entries to prove that they are  in accordance with facts.<\/strong> <\/p>\n<p>  Entries in books of account are not by themselves sufficient to charge  any person with liability, the reason being that a man cannot be allowed to  make evidence for himself by what he chooses to write in his own books behind  the back of the parties. There must be independent evidence of the transaction  to which the entries relate and in absence of such evidence no relief can be  given to the party who relies upon such entries to support his claim against  another.<\/p>\n<p>  The supreme court laid down the following principles.<\/p>\n<p>  (i) Entries in loose  papers\/sheets are irrelevant and not admissible under Section 34 of the  Evidence Act. It is only where the entries are in the books of account  regularly kept, depending on the nature of occupation, that those are  admissible;<\/p>\n<p>  (ii) As to the value of entries  in the books of account, such statement shall not alone be sufficient evidence  to charge any person with liability, even if they are relevant and admissible,  and that they are only corroborative evidence. Even then independent evidence  is necessary as to trustworthiness of those entries which is a requirement to  fasten the liability;<\/p>\n<p>  (iii) The meaning of account  book would be spiral note book\/pad but not loose sheets;<\/p>\n<p>  (iv) Entries in books of  account are not by themselves sufficient to charge any person with liability,  the reason being that a man cannot be allowed to make evidence for himself by  what he chooses to write in his own books behind the back of the parties. There  must be independent evidence of the transaction to which the entries relate and  in absence of such evidence no relief can be given to the party who relies upon  such entries to support his claim against another;<\/p>\n<p>  (v) Even if books of account  are regularly kept in the ordinary course of business, the entries therein  shall not alone be sufficient evidence to charge any person with liability. It  is not enough merely to prove that the books have been regularly kept in the  course of business and the entries therein are correct. It is further incumbent  upon the person relying upon those entries to prove that they were in  accordance with facts;<\/p>\n<p>  (vi) The Court has to be on  guard while ordering investigation against any important Constitutional  functionary, officers or any person in the absence of some cogent legally  cognizable material. When the material on the basis of which investigation is  sought is itself irrelevant to constitute evidence it is not admissible in  evidence.<\/p>\n<p>  It is essential to appreciate Section 34 of the Indian Evidence Act,  1872 which reads as follows:<\/p>\n<p>  Entries in books of account, including those maintained in an electronic  form when relevant- Entries in books of account, including those maintained in  an electronic form regularly kept in the course of business are relevant  whenever they refer to a matter in to which the Court has to enquire, but such  statements shall not alone be sufficient evidence to charge any person with  liability .<\/p>\n<p>  Illustration &ndash; A sues B for Rs. 1,000\/- and shows entries in his account  &ndash; books showing be to be indebted to him to this amount. the entries are  relevant but are not sufficient, without other evidence, to prove the debt.<\/p>\n<p>  Admissibility &ndash; Entries in books of account regularly kept in the course  of business are admissible though they by themselves cannot create any  liability:- <em>Ishwar Dass v. Sohan Lal AIR 2000 SC 426.<\/em> Unbound sheets of  paper are not books of account and cannot be relied upon. <em>Dharam Chand Joshi  v. Satya Narayan Bazaz AIR 1993 GAU 35.<\/em><\/p>\n<p>  Issues arising in Sahara Diaries case.<\/p>\n<p>  1. If entries in loose  papers\/ sheets are irrelevant and not admissible as per Section 34 of the  Evidence Act, then loose papers\/ sheets found at the time of <strong>search and  seizure <\/strong>could be taken into account ? In a number of search cases additions  are made on the basis of writings and entries on loose sheets, Thus based on  the SC judgment whether asseesee can argue that these writings have no  evidentiary value, more particularly when they are on loose papers and writings  not recorded in books of account.<\/p>\n<p>  2. Entries are made in  books of account and certain expenditure is recorded depending on nature of  occupation and work. <strong>Explanation 1 to section 37<\/strong> refers to expenditure  incurred which is an offence or prohibited by law however if the expenditure so  incurred in paying bribes and amounts for security then can such an amount be  disregarded taking into consideration a holistic view. If a bribe is paid to  get the work smoothly and expeditiously done in the light of the above whether  the amount would be sustainable or not.<\/p>\n<p>  3. Entries in books of  account alone are not sufficient evidence but there must be collaborative  evidence in this connection <strong>issue of bad debts<\/strong> arises and the decision  to write off the bad debts as an when the assessee thinks that the same has  become irrecoverable. In such circumstances the writing off cannot be  questioned by the AO based on the rationale of the SC judgment.<\/p>\n<p>  4. On conclusiveness it is  held that a man cannot be allowed to make evidence for himself by whatever he  chooses to write in his own books behind the back of the parties. Here the role  of <strong>Confirmation Letters<\/strong> assumes importance in number of cases even  though loans are given confirmation is not available on record .That merely  because there are other evidences but no confirmation letters is the amount to be totally disregarded<\/p>\n<p>  5. It is also laid down  even if books of account are regularly kept the entries therein shall not alone  be sufficient evidence to charge any person with liability. On the question of <strong>cash  loans or inter-party<\/strong> transactions the nature of evidence will vary from  case-to- case.<\/p>\n<p>  6. It is also provided that  it is incumbent upon the person relying upon the entries to prove that they  were in accordance with facts. The issue arises when there are allegations of <strong>back  dated assessment order or notices issued after due date<\/strong> this is in  conjunction with functioning of officers and Government Constitutional  functionaries. In practicality it would be almost impossible for an individual  assessee to overcome this particular barrier.<\/p>\n<p>  7. The judgment notices  that it would be in admissible if entries are on random papers at any given  point of times. Thus in a search and seizure action random papers and writings  including figures of alleged <strong>cost of construction of house or trading in  shares or derivative<\/strong> are found thus on the basis of this judgment it  follows that they are inadmissible evidence and cannot be considered in making  additions.<\/p>\n<p>  8. The judgment also deals  with matters done which may have co-relations with random entries. In this  connection reference to <strong>undisclosed income of another person in Section  158BD<\/strong> assumes significance. Issue arises as to how the other person would  react and deny the entries in the books of account of the searched person.<\/p>\n<p>  9. One of the basis in the  judgment refers to fictitious entries in absence of cogent and admissible  material on record. This would make <strong>entries recorded in diaries<\/strong> an issue  whether to be admitted or not an evidence which is against the particular  person has to be discharged beyond reasonable doubt and a liability cannot be  fastened based on needle of suspicion.<\/p>\n<p>  Evidence  not produced before it  authorities and Writ Petition<\/p>\n<p>  At the time of assessment, the assessee has not given any information or  material evidence to the AO by which the entry could be verified. The AO  therefore made an addition. The assessee filed a revision petition before the  CIT, who recorded that the assessee was given sufficient opportunity to present  evidence but he failed to do so. The addition was confirmed. The assessee filed  a writ petition claiming that there was sufficient factual material and  evidence with him.<\/p>\n<p>  In <em>Charanjit Singh v. CBDT (2016) 388 ITR 469 (P&amp;H) (HC)<\/em> it  was held that the factual metrix was required to be established by producing  material evidence before IT authorities. As the assessee was unable to give  evidence or materials neither did the assessee prove that he was prevented from  producing evidence, the writ petition cannot be entertained. It was held that  the assesse could not be allowed de novo trial under the garb of allowing one  more opportunity, that absence of any material on record cannot give assessee a  right to file a writ petition the Court relied upon decisions of the SC that  wherever disputed questions of fact are raised in writ proceedings, writ was  not an appropriate remedy.<\/p>\n<p>  <em>Bhaghubai D. Khalasi v. State of Gujarat (2007) 4 SCC 241 <\/em><\/p>\n<p>  <em>Dwarka P. Agarwal v. B.D. Agarwal AIR (2003) SC 2686 <\/em><\/p>\n<p>  <em>Mukesh Kumar Agarwal v. State of UP (2009) 13 SCC 693<\/em> <\/p>\n<p>  Records destroyed resort to RTI<\/p>\n<p>  In<em> Franchise India v. ACIT (2016) 388 ITR 563 (P&amp;H) (HC) <\/em>the  records were destroyed in fire accident and the assessee had lodged a police  complaint. However the records were made available to the assessee under Right  to Information Act 2005. In a reopening matter the assessee challenged that  there was violation of principles of natural justice. The Court held that when  the entire records, as asked for by the assessee, were made available then  there was no need to go into the technicalities or the issue of natural justice  or prejudice caused.<\/p>\n<p>  <em>Safem and Nexus qua<\/em> evidence<\/p>\n<p>  In connection with  Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976  the legislative object is to ensure that the properties purchased out of  smuggling activities or by illegal means in violation of the foreign exchange  regulations cannot be permitted to be enjoyed by a convict or detenue or  relative holding property as benami.<\/p>\n<p>  It is only when link or  nexus of the properties with the convict has connection to income from such  illegal activity which is established the only properties standing in the name  of a relative can be forfeited. In competent authority <em>SAFEM v. M. Khadar  Mouideen (2016) 387 ITR 390 (Mad.) (HC).<\/em> The Court laid down a ratio that  nexus has to be shown between properties and convict and income from illegal  activities and the establishment of material and evidence for such acquisition  before forfeiture.<\/p>\n<p>  Whether an  enquiry where no proceedings are pending by an authority amounts to violation  of fundamental rights<\/p>\n<p>  Constitutional validity of  amendment to Section 133(6) by adding the words &ldquo;enquiry or&rdquo; which granted  power to call for information by IT authorities even when no proceedings are  pending against an assessee came up <\/p>\n<p>  for consideration in <em>Pattambi Service Co-operative Bank Ltd. v. Union of  India (2016) 387 ITR 299 (Ker.) (HC).<\/em><\/p>\n<p>  It was held that right of  privacy should be balanced with larger public and economic interest of the  nation and that the right to privacy could not be extended to militate against  the right of the State information under its fiscal administration.<\/p>\n<p>  IT authorities asked  co-operative service banks to give details of transactions of persons having  deposit of ` 5 lakhs and interest income exceeding ` 10,000\/- in service Co-operative Bank. The  contention was such an enquiry was a roving and fishing enquiry seeking  information even when no proceedings are pending against such persons and that  the investigation infringes into the customers private financial affairs and  further the relationship between a banker and its customers is fiduciary in  nature and thus parting such information is arbitrary and invasion of rights to  privacy.<\/p>\n<p>  The Division Bench of the  Kerala High Court upheld the Constitutional validity on the ground that the  avowed object was to get financial transaction which could be associated with  black money and the intention was to curb the menace of illegal transactions.<\/p>\n<p>  However, when there is a  conflict between welfare legislation and tax legislation, the welfare legislation  will prevail as laid down in Managing Director<em> TNSTC Limited v. Chinna Durai  (2016) 385 ITR 656 (Mad.) (HC).<\/em><\/p>\n<p>  The Motor Vehicles Act,  1988 is an Act for compensating accident victims who have suffered bodily  disablement or loss of life. In the compensation, so given TDS sought to be  deducted by IT Department. To this effect, a circular was also issued dated  14-10-2011. That TDS is to be deducted on the award amount and interest  accrued. The Madras High Court following the decision of Himachal Pradesh High  Court concluded that TDS cannot be deducted since the compensation and interest  thereon do not fall under the term &ldquo;income&rdquo; as defined under the IT Act.<\/p>\n<div class=\"journal3\"><em>[Source: Paper presented at Two Day National Tax  Conference held on 22nd &amp; 23rd April, 2017 at Anand, Gujarat]<\/em> <\/div>\n<\/p>\n<div class=\"journal3\"><em>Reproduced with permission from the AIFTP Journal<\/em> <\/div>\n<table width=\"103%\" border=\"1\" cellpadding=\"5\" cellspacing=\"0\" bgcolor=\"#FFFFCC\">\n<tr>\n<td><strong>Disclaimer: <\/strong>The  contents of this document are solely for informational purpose. It does not  constitute professional advice or a formal recommendation. While due care has  been taken in preparing this document, the existence of mistakes and omissions  herein is not ruled out. Neither the author nor itatonline.org and its  affiliates accepts any liabilities for any loss or damage of any kind arising  out of any inaccurate or incomplete information in this document nor for any  actions taken in reliance thereon. No part of this document should be  distributed or copied (except for personal, non-commercial use) without  express written permission of itatonline.org<\/td>\n<\/tr>\n<\/table>\n<p> <script charset=\"utf-8\" type=\"text\/javascript\">\namzn_assoc_ad_type = \"responsive_search_widget\";\namzn_assoc_tracking_id = \"itatonlineorg-21\";\namzn_assoc_marketplace = \"amazon\";\namzn_assoc_region = \"IN\";\namzn_assoc_placement = \"\";\namzn_assoc_search_type = \"search_widget\";\namzn_assoc_width = \"auto\";\namzn_assoc_height = \"auto\";\namzn_assoc_default_search_category = \"\";\namzn_assoc_default_search_key = \"income tax \";\namzn_assoc_theme = \"light\";\namzn_assoc_bg_color = \"FFFFFF\";\n<\/script><br \/>\n<script src=\"\/\/z-in.amazon-adsystem.com\/widgets\/q?ServiceVersion=20070822&#038;Operation=GetScript&#038;ID=OneJS&#038;WS=1&#038;MarketPlace=IN\"><\/script><\/p>\n<div align=\"center\">\n<div class=\"\"><\/div>\n<\/div>\n<p><a name=\"link\" id=\"link\"><\/a><br \/>\n<script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script><br \/>\n<!-- responsive --><br \/>\n<ins class=\"adsbygoogle\"\n     style=\"display:block\"\n     data-ad-client=\"ca-pub-6440093791992877\"\n     data-ad-slot=\"6406297397\"\n     data-ad-format=\"auto\"><\/ins><br \/>\n<script>\n(adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><\/p>\n<div class=\"journal2\">\n<a href=\"https:\/\/www.itatonline.org\/articles_new\/?attachment_id=4283\/#dlcenter\" rel=\"attachment wp-att-4283\">Download Importance of Evidence Act in Income-tax proceedings<\/a><\/div>\n<p><script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script><br \/>\n<!-- responsive --><br \/>\n<ins class=\"adsbygoogle\"\n     style=\"display:block\"\n     data-ad-client=\"ca-pub-6440093791992877\"\n     data-ad-slot=\"6406297397\"\n     data-ad-format=\"auto\"><\/ins><br \/>\n<script>\n(adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><\/p>\n<p><script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script><br \/>\n<!-- link-ad --><br \/>\n<ins class=\"adsbygoogle\"\n     style=\"display:block\"\n     data-ad-client=\"ca-pub-6440093791992877\"\n     data-ad-slot=\"3536175798\"\n     data-ad-format=\"link\"><\/ins><br \/>\n<script>\n(adsbygoogle = window.adsbygoogle || []).push({});\n<\/script><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Shri Firoze B. Andhyarujina, Sr. Advocate, has explained the entire law relating to the interplay between the Income-tax Act and the Evidence Act with particular reference to retraction of recorded statements and affidavits, cross-examination, drawing of presumptions etc. All the important judgements on the topic, including the latest Supreme Court judgements, have been discussed threadbare. The discussion will prove invaluable to all taxpayers and tax professionals. A pdf copy of the article is available for download<\/p>\n<div class=\"read-more\"><a href=\"https:\/\/itatonline.org\/articles_new\/why-is-the-evidence-act-so-critical-for-income-tax-proceedings-entire-law-explained-with-all-imp-judgements\/\">Read more &#8250;<\/a><\/div>\n<p><!-- end of .read-more --><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[26,25,9],"class_list":["post-4274","post","type-post","status-publish","format-standard","hentry","category-articles","tag-evidence-act","tag-firoze-b-andhyarujina","tag-income-tax-act"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/articles_new\/wp-json\/wp\/v2\/posts\/4274","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/articles_new\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/articles_new\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/articles_new\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/articles_new\/wp-json\/wp\/v2\/comments?post=4274"}],"version-history":[{"count":0,"href":"https:\/\/itatonline.org\/articles_new\/wp-json\/wp\/v2\/posts\/4274\/revisions"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/articles_new\/wp-json\/wp\/v2\/media?parent=4274"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/articles_new\/wp-json\/wp\/v2\/categories?post=4274"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/articles_new\/wp-json\/wp\/v2\/tags?post=4274"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}