Income tax Act, 1961: Word “evidence” and related expressions in the Income-tax Act, 1961 . A study which seems very important in view of presumptions being applied by tax authorities and courts even for discarding documentary evidences.

[DEV KUMAR KOTHARI]

Income tax Act, 1961:  Word  “evidence” and related expressions in the Income-tax Act, 1961 . A study which seems very important in view of presumptions being applied by tax authorities and courts even for discarding documentary evidences.

In entire IT Act, there seems  no mention of  Indian  Evidence  Act. This can be considered to take a view that application of provisions of the Indian Evidence Act, is not excluded while considering proceedings under the Income-tax  Act .Rather it can be said that the provisions of Indian Evidence Act are guiding principles about evidences  in every field.

Though in some situations rules of strict evidence or  liberal evidence may not apply.

In context of Income Tax Act also concept of ‘evidence’ is very important. Evidence is now being considered in liberal sense by including presumptions, surrounding circumstances, presumption as to certain facts, etc. Therefore, in depth study about concept of EVIDENCE is important. In this regard this  is a beginning.

Use of expressions in the  Income-tax  A, 1961:  

It appears that the word “evidence” is found at 36 places in entire IT Act, including history  relating  to amendments. These may still not be exhaustive and some points might have been missed in search in the Act.

The use of word evidence is in relation to many circumstances like:

Evidence to be furnished by assessee under provisions in ITR or reports  or during enquiry by authorities.

Evidence  furnished by assessee or parties having transactions with assessee.

Evidence relied on by assesse,

Evidence found during search and survey,

Asking  by authorities to produce evidence, or authorities to admit and consider evidence  to accept or reject evidence etc.

Evidence which can be rebutted by assesse or authority

‘Produce evidence’ is found at one place.

Obtaining evidence

Immunity for furnishing evidence.

Some usage of word evidence are captured in search within the Income-tax Act, 1961 including history about amenments:

In S.32A   -

and the assessee furnishes evidence to the satisfaction of the Assessing Officer as specified in that clause;]

if the assessee furnishes evidence to the satisfaction of the Assessing Officer that he had, before the 12th day of June, 1986.

IN S.43B  

such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return:] 

9. Prior to the omission, sub- section (2) read as under:" (2) Without prejudice to the provisions of any other law for the time being in force, where a person to who a summons is issued either to attend to give evidence or produce books of account

other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922

and any statement so recorded may thereafter be used in evidence in any proceeding under this Act.

In provisions relating to assessment and other proceedings:

Where a return has been made under section 139, the Assessing Officer may, without requiring the presence of the assessee or the production by him of any evidence in support of the return, make an ....

by requiring the presence of the assessee or the production of evidence in this behalf, the Assessing Officer shall serve on the assessee a notice requiring him, on a date to be therein specified, either to attend at the Assessing Officer' s office or to produce, or to cause to be there produced, any evidence on which the assessee may rely in support of the return:

On the day specified in the notice issued under sub- section (2) or as soon after- wards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points,

serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return: ³ Provided that no notice under this sub- section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished.]

(3) On the day specified in the notice issued under sub- section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him on the basis of such assessment.]

As regards sums mentioned at (b) above the evidence required would be a certificate from an accountant. As regards payment of interest referred to at (d) the evidence required would be either a certificate from the institution concerned or a certificate from an accountant.

(1) (a) in the absence of requisite evidence of the payment cannot be subsequently allowed under section 154. But where the sums referred to in the first proviso under section 43B had in fact been paid on or before the due dates mentioned therein, but the evidence therefore had been omitted to be furnished along with the return, the Assessing Officers can entertain applications under section 154 for rectification of the intimation under section 143 (1) (a) or orders under section 143 (3), as the case may be, and decide the same on merits.

but the evidence therefore had been omitted to be furnished along with the return, the Assessing Officers can entertain applications under section 154 for rectification of the intimation under section 143 (1) (a) or orders under section 143 (3), as the case may be, and decide the same on merits.

Explanation 2.- Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of this section."

response to a notice issued under sub- section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year.

Explanation 1-Production before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence, have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.

158BB. Computation of undisclosed income of the block period

(1) The undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed in accordance with the provisions of Chapter IV on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with Assessing Officer, as reduced by the aggregate of the total income, or as the case may be, as increased by the aggregate of the losses of such

(4) After examination of the records and the report of the Commissioner received under sub- section (1), and the report, if any, of the Commissioner received under sub- section (3), and after giving an opportunity to the applicant and to the Commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner under sub- section (1) or sub- section (3).

245G. Inspection, etc., of reports 1 No person shall be entitled to inspect, or obtain copies of, any reports made by any income- tax authority to the Settlement Commission; but the Settlement Commission may, in its discretion, furnish copies thereof to any such person on an application made to it in this behalf and on payment of the prescribed fee: Provided that, for the purpose of enabling any person whose case is under consideration to rebut any evidence brought on record against him in any such report, the Settlement Commission shall, on an application made in this behalf, and on payment of the prescribed fee by such person, furnish him with a certified copy of any such report or part thereof relevant for the purpose.

245G. Inspection, etc., of reports 1 No person shall be entitled to inspect, or obtain copies of, any reports made by any income- tax authority to the Settlement Commission; but the Settlement Commission may, in its discretion, furnish copies thereof to any such person on an application made to it in this behalf and on payment of the prescribed fee: Provided that, for the purpose of enabling any person whose case is under consideration to rebut any evidence brought on record against him in any such report, the Settlement Commission shall, on an application made in this behalf, and on payment of the prescribed fee by such person, furnish him with a certified copy of any such report or part thereof relevant for the purpose.

245HA. ¹ Power of Settlement Commission to send a case back to the ² Assessing] Officer If the assessee does not co- operate

(1) The Settlement Commission may, if it is of opinion that any person who made an application for settlement under section 245C has not co- operated with the Settlement Commission in the proceedings before it, send, the case back to the ³ Assessing] Officer who shall thereupon dispose of the case in accordance with the provisions of this Act as if no application under section 245C had been made.

(2) For the purposes of sub- section (1), the ⁴ Assessing] Officer shall be entitled to use all the materials and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence had been produced before the ⁵ Assessing] Officer or held or recorded by him in the course of the proceedings before him.

(c) to whom a summons is issued under sub- section (1) of section 131 either to attend to give evidence or produce books of account or other documents at a certain place and time omits to attend or produce books of account or documents at the place or time; or

278D. ¹ Presumption as to assets, books of account, etc., in certain cases

(1) Where during the course of any search made under section 132, any money, bullion, jewellery or other valuable article or thing (hereafter in this section referred to as the assets) or any books of account or other documents has or have been found in the possession or control of any person and such assets or books of account or other documents are tendered by the prosecution in evidence against such person or against such person and the person refer- red to in section 278 for an offence under this Act, the provisions of sub- section (4A) of section 132 shall, so far as may be, apply in relation to such assets or books of account or other documents.

(2) Where any assets or books of account or other documents taken into custody, from the possession or control of any person, by the officer or authority refer- red to in clause (a) or clause (b) or clause (c), as the case may be, of sub- section (1) of section 132A are delivered to the requisitioning officer under sub- section (2) of that section and such assets, books of account or other documents are tendered by the prosecution in evidence against such person or against such person and the person referred to in section 278 for an offence under this Act, the provisions of sub- section (4A) of section 132 shall, so far as may be, apply in relation to such assets or books of account or other documents.]

(3)  Where any proceeding has been taken against any person under sub- section (1), any statement made or account or other document produced by such person before any of the income- tax authorities specified in ³ clauses (a) to (g)] of section 116 shall not be inadmissible as evidence for the purpose of such proceedings merely on the ground that such statement was made or such account or other document was produced in the belief that the penalty imposable would be reduced or waived, ⁴ under section 273A]

279B.  Proof of entries in records or documents Entries in the records or other documents in the custody of an income- tax authority shall be admitted in evidence in any proceedings for the prosecution of any person for an offence under this Chapter, and all such entries may be proved either by the production of the records or other documents in the custody of the income- tax authority containing such entries, or by the production of a copy of the entries certified by the income- tax authority having custody of the records or other documents under its signature and stating that it is a true copy of the original entries and that such original entries are contained in the records or other documents in its custody.]

290. Indemnity Every person deducting, retaining, or paying any tax in pursuance of this Act in respect of income belonging to another person is hereby indemnified for the deduction, retention, or payment thereof.

Power to tender immunity from prosecution

291 Power to tender immunity from prosecution

(1) The Central Government may, if it is of opinion (the reasons for such opinion being recorded in writing) that with a view to obtaining the evidence of any person appearing to have been directly or indirectly concerned in or privy to the concealment of income-, or to the evasion of payment of tax on income  it is necessary or expedient so to do], tender to such person immunity from prosecution for any offence under this Act or under the Indian Penal Code, 1860 (45 of 1860 ), or under any other Central Act for the time being in force and also from the imposition of

any penalty under this Act on condition of his making a full and true disclosure of the whole circumstances relating to the concealment of income or evasion of payment of tax on income.

the circumstances in which, the conditions subject to which and the manner in which, the  Deputy Commissioner (Appeals)]  or the Commissioner (Appeals)] may permit an appellant to produce evidence which he did not produce or which he was not allowed to produce before the  Assessing] Officer;]