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TMI Blog1990 (10) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... 1984 as against Rs. 9,98,200 appearing to their credit in the books of the assessee. On being asked to reconcile the difference, the assessee by its letter dated 24-2-1988 (see page 6 of the assessment order) replied as follows : " We confirm that our trade balance with Elge Equipments Ltd. is Rs. 9,98,200 as on 31-12-1984. All our transactions with them are supported by proper vouchers. As such we are not in a position to offer comments regarding the alleged difference pointed out by you. We confirm that the 16 bills produced by us to support the expenditure on pasteuriser are the ones issued to us by M/s Elgi Equipments Ltd., and we have made payments to them only in discharge of these bills. We repeat that the payments made by us to M/s Elgi Equipments Ltd. are with reference to the 16 bills issued to us for re-conditioning our Pasteuriser. The bills produced by us are genuine and bona fide. " 3. The assessing officer called upon Elgi Equipments to explain its stand. One Sri Amuthalingam of Pasteur Division of Elgi Equipments in his letter written submission dated 5-3-1988 received on 8-3-1988 stated as follows : " The sixteen work estimate bills given to M/s Premier Brewe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of these bills at any time and we have also produced before you proof of despatch and account copy of transactions to substantiate our stand. You can also note from the documents taken by you that payments were received only after the regular invoice which went with the unit was raised. We confirm that we did supply of 1 No. Fully Automatic Tunnel Pasteurizer to M/s Premier Breweries Ltd., without any understanding that bills will be made to their convenience. We also confirm that our regular invoice for Rs. 9,50,251 dated 30-7-1985 is the correct bill raised to cover the supply of pasteurizer. The sixteen bills in question were given to them on their request to show them that the conversion and reconditioning would mean the same amount or even more than the new one. This is because, on inspection, we found that none of the components, raw materials, and gadgets could be used during conversion and reconditioning. This practically will mean putting new components, raw materials, and gadgets in the place of old one. Hence the new machine was supplied to M/s Premier Breweries Ltd. " 4. In his statement on oath dated 8-3-1988, Shri Amuthalingam stated as follows : " Today I ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idge, Coimbatore. (b) Lorry receipt dated 8-8-1985 from Highway Movers for despatch of 5 loads of Pasteuriser unit and Despatch chart dated 29-7-1985 and 31-7-1985 prepared by the clerk in charge of loading where the description of the material loaded is narrated. 8. Further she referred to certain expense bills claimed by P.B. Menon of SDS Engineering, a labour contractor of Elgi Equipments to show that the actual dismantling of the existing pasteurizer unit took place well beyond the accounting year ending on 31-12-1984, and the erection took place between 31-7-1985 to 21-9-1985. 9. She then referred to a certificate filed by Elgi Equipments to the effect that the new pasteurizing unit supplied by it on 31-7-1985 was commissioned on 23-11-1987. 10. From the above she concluded that no repair work was done as alleged by the assessee before 31-12-1984 and that there was a capital expenditure on a new pasteurizing plant incurred after the end of the accounting year and that the assessee had tried to take undue advantage of tax benefit by putting up a claim of revenue expenditure and thus disallowed a sum of Rs. 9,98,251 claimed under repairs. 11. The assessee carried the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to Shri Venkataraman, Chief Executive of the assessee. In such circumstances, it is difficult to conceive how the assessee could claim that there has been violation of natural justice ". Then it proceeded to take notice of a letter filed by Elgi Equipments in the course of penalty proceedings in which it was alleged that the assessee wanted that party to make 16 bills to match exactly with the amount raised in the invoice, in spite of the objection of the assessee that this letter came into existence after the assessment proceedings were over and that the assessee was still kept in dark about the contents of the letter. After observing that the 16 bills and the correspondence which the assessee pressed into service in its defence were scanty, the Tribunal was of the view that " procedure from transportation of material necessary for alleged repair and renovation work has to be the same and in such circumstances transportation had to be supported by gate pass. No such gate passes were available with the assessee ". Thus the Tribunal sustained the addition. 14. The Dy. Commissioner by her notice dated 21-3-1988 called upon the appellant to show cause as to why penalty should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent from the Sales Executive of Elgi Equipments Ltd., after the completion of assessment and that statement was also not put to the assessee. Unfortunately that very statement was furnished to the Tribunal in the quantum appeal by the Revenue and it was made use of against the assessee by the Tribunal when it sustained the disallowance. The evidence brought on record in its defence were either not considered or brushed aside lightly. Thus the case against the assessee has all gone on the one sided version of Elgi Equipments Ltd. Besides the affidavit of the Production Engineer of the assessee certifying to the completion of the repair work in the calendar year 1984 which was produced before the first appellate authority in the quantum appeal was never dealt with either in the quantum proceedings or in the penalty proceedings. Thus there is not only dismal failure of principles of natural justice but also non-consideration of the materials brought on record by the appellant resulting in mis-carriage of justice. Hence the order of penalty is fit to be quashed. 17. Shri A.D. Menon, the learned departmental representative, assailed the contentions of the learned counsel for the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85 and 31-7-1985. 9. SDS Engineering Bills 1677/29-3-1986 (Tr. exps. for erection) 10. SDS Engineering Bills 1678/29-3-1986 (Lab. charges for dismantling) 11. Elgi's muster roll in Form 25. After the assessment : 1. Dy, Commissioner's letter to Elgi Equipments Ltd. dated 1-6-1988 not even produced before the Hon'ble Tribunal in the departments paper book. 2. Elgi's letter dated 5-3-1988 to Dy. Commissioner(A). 3. Elgi's letter dated 10-6-1988 to Dy. Commissioner(A). " We have gone through the order of the Tribunal in quantum appeal, in the light of the objections raised by Shri A.D. Menon. 20. Having regard to rival submissions and materials on record we find substance in the grievance of the appellant. In para 4 of its order in the quantum appeal the Tribunal while summarising the arguments of the revenue had stated at page 7 that-- " The learned departmental representative was fair enough to accept that Shri Amuthalinga, Sales Officer of M/s Elgi Equipments Ltd., and Shri P.B. Menon of STS Engineer, the lorry contractors of the assessee were examined behind the back of the assessee but according to him their statements have not in any way affected or influenced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lord Wright once said : [General Medical Council v. Spackman [1943] A.C. 627 at page 644 ; and see Ananunthodo v. Oilfields Workers Trade Union [1961] A.C. 945 at page 956 (Lord Denning)] : If the principles of natural justice are violated in respect of any decision it is, indeed, immaterial whether the same decision would have been arrived at in the absence of the departure from the essential principles of justice. The decision must be declared to be no decision. The dangers were vividly expressed by Megarry J. criticising the contention that 'the result is obvious from the start' : (John v. Rees [1970] Ch. 345 at 402 ; Cf. Fulbrook v. Berkshire Magistrates' Courts Committee [1970] 69 L.G.R. 75 at page 97. And now see R.V. Secretary of State for the Environment exp. Brent L.B.C. [1982] 2 W.L.R. 693 at page 734, rejecting the 'no difference' argument). As everybody who has anything to do with the law well known, the path of the law is strewn with examples of open and shut cases, which, somehow, were not ; of unanswerable charges which, in the event, were completely answered ; of inexplicable conduct which was fully explained ; of fixed and unalterable determinations that, by dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the cross-examination without the benefit of copies of all the relevant statements and documents would be an empty ritual work. In the light of these facts, we reject the contention of the revenue. On the basis of materials available before us we hold that there was failure to comply with the principles of natural justice. 25. In Ponkunnam Traders v. Addl. ITO [1972] 83 ITR 508, it was held by the Kerala High Court that the failure to conform to the principle of natural justice of audi alteram partem would make a judicial or quasi-judicial order void. Justice Shri K.K. Mathew of the Kerala High Court (as he then was before his elevation to the Supreme Court) dealt at length on the principles of natural justice and the consequences flowing from the violation of such principles by referring to a number of decisions at pages 512 to 518 in the case cited supra. The learned Judge approvingly quoted the decision of the Privy Council in Annamunthodo v. Oilfields Workers' Trade Union [1961] 3 All ER 621 at page 521 where Lord Denning said : " Counsel for the respondent union did suggest that a man could not complain of a failure of natural justice unless he could show that he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be decided against him, and to inspect the documents which are relied upon for the purposes of being used against him, to have the witnesses who are to give evidence against him examined in his presence and have the right to cross-examine them, and to lead his own evidence, both oral and documentary, in his defence. The process of a fair hearing need not, however, conform to the juridical process in a court of law, because judicial adjudication of causes involves a number of technical rules of procedure and evidence which are unnecessary and not required for the purpose of a fair hearing within the meaning of audi alteram partem rule in a quasi-judicial or administrative inquiry. If we look at clause (2) of Article 311 in the light of what is stated above, it will be apparent that that clause is merely an express statement of the audi alteram partem rule which is implicitly made part of the guarantee contained in Article 14 as a result of the interpretation placed upon that Article by recent decisions of this Court. " 28. Thus, the principles of natural justice are lifted to the high pedestal of fundamental rights guaranteed under Article 14 of the Constitution, any violation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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