DEEN DAYAL MEDICAL AND EDUCATIONAL TRUST,THIRUVALLUR vs. ADDL. CIT, CHENNAI

11.2 In response to that query, the assessee trust in its reply filed vide letter dated 18.3.2014 has submitted that they have not received any capitation fees from any students. It was stated that Shri G. Prabhu is not an employee of the trust and that his statement cannot be accepted as evidence against their trust. Such submissions are not tenable. It may be mentioned here that, such sworn statement was recorded from Shri G. Prabhu on 5.8.2011, during the course of search in the premises of the assessee trust and after confronting him with certain seized documents, seized from the premises of the assessee trust. As recorded in that statement, he was the Finance Manager of M/s D.D Medical College and Hospital, since December 2010 and was looking after the accounts department of the college and hospital. Further, it is pertinent to mention here that in their letter dated 02.03.2016, signed by trustee Ms.T.D. Sonia, filed in response to notice vide letter dated 16.02.2016, it has been stated that Shri G. Prabhu was a consultant of the organization. Under these circumstances, such contention of the assessee trust that he was not their employee is not acceptable. Further, though during the resent proceedings, the assessee trust has filed a letter shown as obtained from Shri G.Prabu, purportedly signed by him on 5.8.2011, addressed to the Chairman, DD Medical College & Hospital, wherein it is stated that during the time of search in the premises of DD Medical College and DD Hospitals on 4" & 5h August, 2011, his presence was Compelled by Income-tax Authorities by use of Police force and he was brought to the premises of that college and hospital and was forced by the Income-tax Authorities to sign many documents, as in the capacity of Finance Manager of their organization, he was helpless at that time and had no choice other than to sign in the documents, in the fear of the Income-tax Authorities, the same cannot be accepted, being wholly an afterthought. It may be mentioned here, had such contention, as made in that letter now filed by the assessee trust during the present proceedings, been true, the said person Shri G. Prabhu would have filed such letter before the concerned authorities immediately after the search. Under these circumstances and for the reasons stated above, no cognizance can be taken of that letter now filed by the assessee, and hence the same is rejected.

11.3 Further, in their letter dated 18.3.2014, the assessee trust has stated that the statement made by Shri G. Prabhu cannot be accepted against the trust without allowing opportunity to cross examine him. In this context, it is stated that as per such statement given by Shri G.Prabhu, he has only clarified regarding various entries as found in the seized documents, which were seized during the course of search in the premises of DD Medical College, belonging to the assessee trust. Further, in this context, it may be stated that in the decision in the case of CIT Vs T. Devasahaya Nadar vs CIT (1964) 51 ITR 20, it was held by the Hon'ble Madras High Court that cross examination of the witness is not always necessary. The Hon'ble High Court held that it cannot be said as a general proposition of law that any evidence upon which the department might rely should have been subjected to cross examination. It was further held that in fairness to the assessee, he should be told what is against him, so that he may, if he can, displace it. The Hon'ble Jurisdictional High Court further held that, it is no denial of natural justice, if the Income-tax Officer refuses to produce an informant for being cross examined by the assessee. Having regard to the facts and circumstances of the case and the statement given by Shri G. Prabhu, only replying to queries raised, with reference to the entries found in such seized documents, during the course of search in the premises of the assessee trust, his cross examination,, as requested for by the assessee trust, in my view, is not necessary.”

2.2 The ld.counsel for the assessee stated that during the period when the order cancelling registration earlier granted to the trust u/s.12AA of the Act passed on 30.09.2016, the managing trustee of the trust was in police custody and this fact has been acknowledged by the Tribunal not once, twice, first in the case of Shri T.D. Naidu in and subsequently in assessee’s own in ITA Nos.854 to 856/CHNY/2022, wherein the Tribunal considering the facts in entirety set aside the assessment by observing in paras 5 & 6 as under:- 5. Having heard both the parties and after perusal of the records, we note that the AO has passed an ex parte / best judgment assessment u/s.144 of the Act. It is noted that the Managing Trustee of the assessee Trust, Shri T.D.Naidu, was the key person, who was running the affairs of the assessee Trust; and pursuant to search in the premise of the assessee on 04.08.2011, the AO initiated proceedings u/s.153A of the Act against the assessee, which resulted in the AO framing the assessment u/s.153A r.w.s.144 of the Act and computed the total income at Rs.97,20,500/- for AY 2006-07; and likewise in other AYs 2007-08 & 2008-09. The assessee has brought to our notice that the relevant documents pertaining to the income/expenditure of the Trust has been taken into custody by law enforcement agencies viz., ED, CBI, etc. and Shri T.D.Naidu was in judicial incarceration during the assessment proceedings. Taking note of these factual back ground, this Tribunal in the assessee’s own case for AY 2010-11 has already restored assessment back to the file of the AO as well as that of Shri T.D.Naidu for de novo assessment. In such a scenario, we relying on the decision of the Hon’ble Supreme Court in the case of TIN Box Company v. CIT reported in [2001] 249 ITR 216 (SC), wherein, the Hon’ble Supreme Court has held that if the assessee did not get proper opportunity before the AO, then the assessment need to be restored back to the file of the AO for de novo assessment. It would be gainful to take note of the Hon’ble Supreme Court order which reads as under:

1. 1. It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : "We will straightaway agree with the assessee's submission that the Income tax Officer had not given to the assessee proper opportunity of being heard."

2. That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order must be made after the assessee has been given a reasonable opportunity of selling out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard.

4. In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the assessee.

5. The appeals are allowed. The order under challenge is set aside. The assessment order, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated. No order as to costs.

3. When confronted, the ld.CIT-DR could not controvert the above fact situation.

Order pronounced in the open court on 12th August, 2024 at Chennai. (महावीर "सह ) (एस.आर. रघुनाथा) (MAHAVIR SINGH) (S.R. RAGHUNATHA) उपा"य" /VICE PRESIDENT लेखा सद"य/ACCOUNTANT MEMBER चे"ई/Chennai, "दनांक/Dated, the 12th August, 2024