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TMI Blog2009 (4) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... Mahajan Sahu as no such confrontation was prayed for by the assessee at investigation stage. The question referred answered in negative, i.e., in favour of the dealer and against the Department. - ST. Rev. No. 161 of 2008 - - - Dated:- 6-4-2009 - CHAUHAN B.S. C.J. DR. AND MAHAPATRA B.N. , JJ. B.N. MAHAPATRA J. In this Sales Tax Revision Petition (earlier SJC No. 186 of 1995) this court vide order dated July 14, 1998 directed the Orissa Sales Tax Tribunal (hereinafter called, the Tribunal ) to refer the following question for adjudication: Whether the Tribunal was justified in holding that in the absence of prayer for confrontation at the investigation stage, such a prayer could not have been made before the Assistant Commissioner? Subsequently, the said SJC has been converted to Sales Tax Revision No. 161 of 2008. The facts and circumstances giving rise to the present revision petition are that the petitioner during the relevant time was a registered dealer under the Orissa Sales Tax Act, 1947 (hereinafter called, the OST Act ) and carrying on business in fertilizer, kerosene oil, salt, M.S. rod, etc., at Rampur in the district of Bolangir. For the year 1981 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer for fresh assessment after giving an opportunity to the dealer-appellant for confrontation with the alleged seized documents and the firm M/s. RSK and Sri Mahajan Sahu who gave statements regarding alleged business activities of Babulal Agrawal in paddy. Being dissatisfied with the order of the first appellate authority, the Department carried the matter to the Tribunal. The petitioner filed a crossobjection supporting the order of the first appellate authority. The learned Tribunal held that there was no justification for the first appellate authority to direct confrontation with purchasing dealer M/s. RSK and their books of account and Sri Mahajan Sahu, as no such confrontation was ever prayed for by the assessee at the investigation stage before the Vigilance Wing, Sambalpur, which is prior to initiation of proceedings under section 12(8) of the OST Act by the assessing officer. Mr. M. Agrawalla, learned counsel for the petitioner submits that the assessing officer cannot pass any assessment order arbitrarily violating the cardinal principles of natural justice. Before any adverse material is utilized against a dealer and asking him to shoulder a tax burden, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer in refusing to summon H for cross-examination by the assessee clearly constituted infraction of the right conferred on the assessee by the second part of the proviso to section 17(3) and that vitiated the orders of assessment made against the assessee. In Kishinchand Chellaram v. Commissioner of Income-tax, Bombay City II [1980] 125 ITR 713, the honourable apex court held that it was true that proceedings under the income-tax law were not governed by the strict rules of evidence, and, therefore, it might be said that even without calling the manager of the bank in evidence to prove the letter dated February 18, 1955, it could be taken into account as evidence. But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine the manager of the bank with reference to the statements made by him. This court, in Ferro Alloys Corporation Ltd. v. State of Orissa, represented through the Secretary, Department of Finance [1994] 92 STC 107; [1994] 77 CLT 248, held that where a material is sought to be utilized against an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty of the authorities to afford to the dealer an opportunity to cross-examine the third parties. In L. Abdulla Kunhi v. State of Kerala [2001] 122 STC 461 (Ker), it has been held that though under section 17(3) of the Kerala General Sales Tax Act, 1963 the officer is empowered to make best judgment assessment that assessment should be based on reasonable conclusions and it should not be arbitrary. The principles of natural justice also apply to such proceedings. The assessee in his objections has clearly stated that he wanted an opportunity to cross-examine the witnesses who provided information to the department. There has been a violation of the principles of natural justice in denying that opportunity to the assessee. Accordingly, the impugned order is liable to be set aside. In Prakash Chand Nahta v. Commissioner of Income-tax [2008] 301 ITR 134 (MP), it has been held that as the assessing officer had not summoned R in spite of the request made under section 131 of the Act, the evidence of R could not have been used against the assessee and in the absence of affording a reasonable opportunity of being heard by summoning the said witness the assessment order was vitiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first appellate authority, the petitioner requested for confrontation with the firm M/s. RSK along with its seized books of account and Mahajan Sahu. The petitioner filed an affidavit of Sri Mahajan Sahu before the first appellate authority wherein Sri Sahu categorically stated that one Sales Tax Officer took his signature on a statement without disclosing the facts of the statement, stating that he would be cited as witness and he also did not know any person, namely, Babulal Agrawala of Rampur personally or about his business activities. No doubt, the sales tax authorities under the Sales Tax Act are not precluded from collecting materials behind the back of a dealer and they may not disclose the source to the dealer. However, if they want to utilize any material collected behind the back of the dealer against him they are bound to confront the same to the dealer giving him opportunity to rebut the same. On such confrontation, if the dealer denies the allegation and demands for cross-examination of any witness, he must be afforded opportunity of cross-examination as cross-examination is one of the most effective methods of establishing the truth and exposing falsehood. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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