2018 (12) TMI 1990 - HC - Income Tax

Assessment u/s 153A - Proceedings on the basis of the statement made by one K. Srinivasalu, who was linked with the business concern under the name and style of SRS Mining - petitioner further contend that he was aware that the said K. Srinivasalu had retracted his statement and he was doubly sure that the entire proceedings of the Department were baseless - HELD THAT - The fact that the witness had turned hostile would only stand to the benefit of the petitioner as the entire evidence of the witness could be considered and this Court is unable to understand as to how it would be adverse to that of the petitioner. Even if the respondent was to rely on that part of the evidence of K. Srinivasalu which is in their favour they have to let in other reliable evidence to corroborate the same. During the course of the arguments, it was informed by the learned Senior Counsel that copies of the evidence had not been provided to the petitioner and this Court directs the respondents to give copies of the evidence to the petitioner. No infirmity in the order of the respondent in refusing the request for cross examination since the witness had turned hostile to the respondent's contentions. Needless to state that in the light of the amendment to Section 154 by insertion of Sub Section (2) by Act 2 of 2006 w.e.f. 16.04.2006, it is well open to the petitioner to work out his right in accordance with law on receipt of the evidence directed to be given. WP dismissed.

Issues:
1. Petitioner seeking a Writ of Certiorarified Mandamus to quash an order and cross examine witnesses.
2. Allegations of being made a scapegoat and illegal raid by Income Tax Department.
3. Notices issued under Sections 153A and 153C of the Income Tax Act.
4. Request for cross examination of a witness.
5. Refusal of cross examination by respondent.
6. Witness turning hostile.
7. Benefit of witness turning hostile.
8. Provision of evidence copies to petitioner.
9. Validity of respondent's order.
10. Interpretation of Section 154 with respect to the case.

Analysis:
1. The petitioner, a former Chief Secretary, filed a Writ Petition seeking to quash an order and cross examine witnesses relied upon by the respondent. Allegations of being made a scapegoat and illegal raid were made, emphasizing the petitioner's innocence and lack of involvement in the alleged offenses.

2. The Income Tax Department conducted a search and seizure operation related to the petitioner's son's affairs, leading to notices under Sections 153A and 153C of the Income Tax Act. The petitioner claimed the proceedings were baseless, citing the retraction of a key witness's statement.

3. The petitioner requested to cross examine the witness, but the respondent refused, citing the witness turning hostile during examination. The petitioner's counsel argued that denial of cross examination was detrimental to the case and disadvantaged the petitioner.

4. The court found the witness turning hostile could benefit the petitioner, allowing for a comprehensive evaluation of the evidence. The respondent was directed to provide copies of the evidence to the petitioner to ensure a fair proceeding.

5. The court upheld the respondent's decision to refuse cross examination, stating that the witness's hostility did not adversely affect the petitioner. The court highlighted the petitioner's right to utilize the evidence received in accordance with the law, as per Section 154 of the Income Tax Act.

6. Consequently, the Writ Petition was dismissed, with no costs imposed. The court emphasized the importance of following legal procedures and ensuring fairness in the examination of evidence.

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