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TMI Blog2025 (3) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... etails. On 27.04.2023, the petitioner had also sent a similar Letter to the Directorate General of Income Tax, Chennai requesting to conclude the assessment after due consideration of Fast Track Record of the petitioner etc. However, the impugned Assessment Order dated 29.04.2023 was passed in a hurried manner to avoid lapsing of the assessment due to the limitation prescribed under Section 153B of the IT Act. As such, there is a clear violation of the principles of natural justice, although the respondent cannot be wholly blamed as assessment orders have to be passed within the time stipulated in the statute. It is noticed that the directions issued by the 2nd respondent on 22.03.2023 also has not been fully complied with in the impugned order. Therefore, to balance the interest of the petitioner and the respondent Department, the impugned Assessment Order deserves to be quashed and the case deserves to be remitted back to the 1st respondent to pass a final order on merits. The request of the petitioner for cross examination of various suppliers and sub-contractors to whom payment were made by the petitioner also cannot be extended, if no statements have been relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153A of the IT Act was issued to the petitioner for the Assessment Years starting from 2016-2017 upto 2022-2023. The dispute in the present Writ Petitions pertains to the Assessment Year 2021-2022. 6. A Show Cause Notice dated 26.02.2023 was issued to the petitioner by the 1st respondent under Section 142(1) of the IT Act stating evidences of Bogus purchases of sand and gravel from unregistered dealers amounting to a sum of Rs. 58,70,58,032/- and Bogus Sub-Contractor expenses amounting to a sum of Rs. 80,02,09,950/- was claimed in the Return of Income filed by the petitioner for the A.Y. 2021-2022. 7. In response to the Show Cause Notice dated 26.02.2023 issued under Section 142(1) of the IT Act, the petitioner submitted a written submissions and raised objections to the proposed disallowance. Further, on 10.03.2023, the petitioner filed an application under Section 144A for a certain direction from the 2nd respondent and requested for personal hearing and to provide sufficient opportunity to prove the genuineness of the expenses proposed to be disallowed in the Show Cause Notice. 8. On 22.03.2023, directions were issued by the 2nd respondent. Paragraph No.4 of the directions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earth and examine the violation of provisions of Section 40A(3). (vii) The assessing officer shall call for the details of workorder/ quantum of sand/gravel/etc. utilized for each of the site along-with the completion certificate and cross verify the same with the expenses claimed. (viii) The assessing officer shall provide the opportunity for cross examination where-ever the sworn statements are relied upon. b. Subcontractor expenses: In respect of the claim of sub-contractor expenses. (i) The assessing officer shall call for all the bills/vouchers raised by the sub-contractors to demonstrate the genuineness of the expenses and examine the same. (ii) The assessing officer shall call for the work order/contract agreement in relation to the entrusted sub-contract and examine the same for genuineness of the works carried out/services received. (iii) The assessing officer shall call for the details of mode of payment to sub-contractors and examine the violation of provisions of Section 40A(3). (iv) The assessing officer shall call for the GST returns, TDS details in relation to the sub-contract payments and examined the compliance to the statutory provisions. (v) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner. 15. The learned counsel for the petitioner would further submit that for the other six Assessment Years, the Assessing Officer has issued notices under Section 142(2A) of the Act for audit. The same exercise may be carried out by the respondents, if the matter is remitted back to them. 16. On the other hand, the learned Senior Standing Counsel appearing for the respondents would submit that after the search was conducted between 20.07.2022 and 16.09.2022, Notices were issued under Section 153A of the IT Act for the respective Assessment Years and the impugned Assessment Order came to be passed for the Assessment Year 2021-2022 [impugned in W.P.(MD) No.11496 of 2023]. Since this Court has granted interim stay on 11.05.2023, the Department did not want to delay the proceedings for the rest of the assessment years and therefore, the benefit of cross-examination was allowed to the petitioner for the rest of the assessment years. 17. It is further submitted that in the Return of Income filed by the petitioner on 31.12.2021, the petitioner had declared a total income of Rs. 78,77,08,610/- only. It is submitted that in the return that was filed, the petitioner claimed the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions, the learned Senior Standing Counsel for the respondents has placed reliance on the following decisions: (i) Income Tax Officer Vs. M.Pirai Choodi reported in (2010) 15 SCC 283 (ii) Conybio Healthcare (India) Pvt. Ltd. Vs. Commissioner of Customs, Chennai 2023 reported in (383) E.L.T. 434 (Mad.) (iii) M.Vivek Vs. Deputy Commissioner of Income Tax, Central Circle-2(i/c), Trichy reported in (2021) 432 ITR 53 (Madras) 23. The learned counsel for the petitioner submits that the decision of the Hon'ble Supreme Court in Income Tax Officer Vs. M.Pirai Choodi (2010) 15 SCC 283 on the other hand come to rescue of the petitioner, inasmuch as there, the assessment order came to be quashed. The Hon'ble Supreme Court has allowed the party to move the appeal. 24. Additionally, the learned counsel for the petitioner submits that there has been a considerable delay in furnishing the seized records. It is submitted that the petitioner had also requested time for producing the records from the Vahan Web Portal to substantiate that the petitioner had indeed transported the gravel and sand in the vehicles which were registered in the RTO. 25. It is submitted that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .09.2008. 17. Therefore, the Review Application filed by the respondent, the Commissioner of Customs and the miscellaneous applications for interim reliefs were rightly considered by the learned Single Judge by modifying the order. 18. That apart, the petitioner cannot force the Department to summon petitioners own directors/employees for cross-examination. The Department has merely relied upon the documents authored by those directors/employees. If it is the case of the appellant that documents relied upon were fabricated, it is open for the appellant to produce them as a witness and let in evidence. 19. The Appellant cannot force the department to issue summons to its directors/employees to scuttle the adjudication proceedings. The question of cross examination of a witness will arise only where statements of such witnesses are relied upon in the show cause notices issued. 20. That apart, under the Customs Act, 1962, strict rules of evidence under the provisions of Indian Evidence Act, 1872, do not strictly apply to quasi judicial proceedings namely before the Adjudicating Authority under the Act. Finding of facts and conclusion thereon is to be determined on the principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stries Vs CCE referred to supra." 28. The facts on record indicate that the petitioner was issued with the following Show Cause Notices dated 26.02.2023, 13.04.2023 and 22.04.2023. The petitioner had also replied to the Show Cause Notice dated 26.02.2023 in detail vide Letters dated 07.03.2023 and 23.03.2023 and with respect to Show Cause Notice dated 13.04.2023, the petitioner had replied vide Letter dated 19.04.2023. 29. As far as the last mentioned Show Cause Notice dated 22.04.2023 is concerned, it is the final Show Cause Notice which proposes to disallow the sum of Rs. 58,70,58,032/- out of Rs. 243,23,23,836/-. It pertains to the purchase of sand and gravel from unregistered dealers. A sum of Rs. 80,02,09,950/- out of Rs. 121,46,09,615/- pertains to the amount paid to various sub-contractors as in Annexure I to Show Cause Notice dated 22.04.2023. Annexure I to Show Cause Notice dated 22.04.2023 was not however sent along with the said Show Cause Notice dated 22.04.2023 to the petitioner. 30. The petitioner received the Annexure I to the Show Cause Notice dated 22.04.2023 later vide Notice dated 24.04.2023 which was issued by the 1st respondent under the subject 'Furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT Act and the consequential Penalty Orders dated 31.03.2024 passed under Section 270A and 271AAD(1)(i) of the IT Act respectively are quashed and the cases are remitted back to the 1st respondent to pass a fresh Assessment Order on merits, within a period of six months from the date of receipt of a copy of this order. 37. It is made clear that the impugned orders which are quashed by this Court shall be treated corrigendum to the Show Cause Notices. The petitioner shall keep a consolidated reply for each of the proceedings and file the same as and when the portal is open enabling the petitioner to upload the reply. As far as cross-examination is concerned, the petitioner will be entitled to cross-examine only those third party contractors/suppliers whose statements were relied upon by the Department. 38. Since the impugned Assessment Order dated 29.04.2023 is quashed, the impugned Penalty Orders dated 31.03.2024 issued under Sections 270A & 271AAD(1)(i) of the IT Act impugned in W.P.(MD)Nos. 9763 & 9827 of 2024 respectively are also quashed. Liberty is granted to the 1st respondent in W.P.(MD)Nos.9763 & 9827 of 2024 to pass fresh orders subject to the Final Assessment Order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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