Landmark Cases on Evidence, Onus and Natural Justice

A gift may not be accepted as genuine in the absence of natural love and affection between the donor and the recipient.

A High Court decision is relevant when the issue it addresses aligns with the facts of the current case. If the facts differ, the decision may not be applicable.

Additional evidence that is relevant and required for imparting justice must be admitted and appreciated by the appellate authorities.

The decision in CIT v. Jyoti Prakash Dutta stands for the proposition that if sales tax department findings have not been provided to the assessee, and the assessee has not been given an opportunity to cross-examine parties, and the assessee's books have not been rejected with sales and declared profits being reasonable, then no addition to income is liable to be made.

Where the statutory language is plain and unambiguous, external aids like precedents cannot be used to obscure or rewrite the legislative command.

When penalty proceedings are initiated, the onus shifts to the Revenue to prove that the assessee concealed income or furnished inaccurate particulars. The Revenue must demonstrate that the assessee offered an explanation for alleged concealment or inaccurate particulars.

The Assessing Officer must conduct a proper and thorough inquiry before rejecting the assessee's accounts or making additions under Section 68, as an inadequate inquiry can lead to unjustified additions.

Fresh evidence cannot be introduced in appellate proceedings to support a new argument or a new case, as this would circumvent the established assessment process.

A loose paper found during a search cannot be the sole basis for making an addition to income without corroborative material and evidence, especially if the Assessing Officer misinterprets figures without supporting evidence.

Additions on account of alleged on-money accepted by the assessee should be restricted to the profit element embedded within that on-money.

The opportunity for an assessee to be heard must be real, reasonable, and effective. A "paper opportunity" or one given for a very short duration violates the principles of natural justice.

Additions to income cannot be based solely on assumptions, suspicions, guesswork, or conjecture. Corroborative material must be brought on record to support any additions.

A statement made under section 132(4) is not conclusive and can be retracted under certain circumstances, but the time gap between the statement and its retraction is crucial in determining whether the retraction is valid.

The requirement of providing a reasonable opportunity of being heard must be upheld before an administrative, quasi-judicial, or judicial authority makes an order that results in adverse civil consequences for the affected party, and this cannot be overlooked for administrative convenience.

An assessment order based on mere conjecture and surmise, without proper analysis of the assessee's explanation and supporting documents, is legally untenable. The assessing officer must inquire into information received and analyze explanations offered by the assessee.

The prosecution must prove conspiracy, and the phrase 'in reference to their common intention' under Section 10 of the Indian Evidence Act has a broad scope, making anything said, done, or written by a co-conspirator after the conspiracy is formed admissible evidence against others.

Revenue authorities must find patent, latent, and glaring defects in the books of accounts before rejecting them. The Assessing Officer must examine the books and reach a conclusive finding that they are either incorrect or incomplete, considering the assessee's method of accounting.

Malpractices such as charging prices in excess of controlled prices cannot be attributed to an assessee unless there is specific material or evidence to prove their involvement.

Making an addition for the entire unaccounted receipts (on-money) is unjustifiable and against natural justice when there is incomplete evidence of both unaccounted income and unaccounted expenditure.

An assessee has a vested right to a personal hearing in faceless assessment proceedings under section 144B. The granting of a personal hearing is not discretionary and must be provided based on the facts of each case, upholding the principles of natural justice.

An assessee discharges the initial onus of proving the genuineness of purchases if they provide evidence like delivery challans and purchase bills, and payments are made through banking channels. In such cases, additions for bogus purchases cannot be made without contrary evidence from the Assessing Officer, and the case may not fall within the ambit of section 69C.

An arrangement that is legally permissible and reduces tax burden should not be automatically viewed with disfavour or considered illegitimate, especially in light of the Supreme Court's clarification of the McDowell case in Azadi Bachao Andolan.

For the presumption under Sections 118 and 139 of the N.I. Act to be drawn, the complainant must prove that they had the requisite funds for the loan, the cheque was issued for repayment, and the accused was obligated to make the payment.

Tax authorities must provide the assessee with any evidence they intend to rely on, allowing the assessee an opportunity to contest it, even if the evidence is not strictly governed by rules of evidence.

Income Tax authorities must provide the assessee an opportunity to cross-examine a bank manager whose letter is used as evidence, allowing the assessee to controvert statements made in the letter.

Where a taxing provision allows for two reasonable interpretations, the interpretation that favours the assessee should be applied.

The onus of proving that the conditions for taxability are met is on the revenue. Specifically, the revenue must demonstrate an understatement of consideration, rather than requiring the assessee to prove a negative.

An assessment cannot be based on mere suspicion or guess work; the Assessing Officer must bring on record material evidence to prove that apparent is not real.

A statement from a third party cannot be relied upon in assessment proceedings without corroborative evidence. Adverse inferences cannot be drawn against the assessee from the statements of third parties without such corroboration.

The principle of natural justice is essential for legal justice, and it can supplement or correct legal justice when the latter fails due to technicalities or omissions in law.

An Assessing Officer's income escaping assessment action based on a loose sheet found in a related party's premises is justified if based on relevant material, even if a wrong presumption was used in the assessment order.

An assessee must be given an opportunity to cross-examine individuals whose statements were recorded during a search and are being used against them.

Additions to income cannot be made based solely on loose papers or entries without corroborative evidence or proof of the transaction's execution. The Assessing Officer must prove the contents of loose papers before making an addition.

Statements recorded under Section 133A, if alleged to be obtained under duress or fabricated, may not be the sole basis for making additions to income. Such allegations need to be addressed when the validity of the survey and the recorded statements are contested.

A document is not admissible as evidence if it is obtained through a violation of law. The Tribunal cannot consider evidence that was not legally obtained.

An assessment addition cannot be made solely on the basis of a retracted statement if it is not supported by corroborative material. The Assessing Officer must apply their mind to the retraction, even if the assessee fails to prove inducement.

If an asset or bank account is not proven to belong to the assessee or that the assessee is the beneficial owner, tax provisions cannot be applied against the assessee. The burden of proof lies entirely with the tax department, which cannot require the assessee to prove a negative.

A case where bail was refused in a money laundering case, relying on Section 45(1) of PMLA.

When an Assessing Officer seeks details of emails to determine the nature of services rendered, and these emails are not supplied by the assessee, the Assessing Officer cannot determine the nature of services and the matter may be remitted back.

The assessee has a right to inspect reports and documents relevant to their assessment and to present evidence in rebuttal, aligning with principles of natural justice.

The Assessing Officer should adopt a logical and unbiased approach during assessments, favouring the appellant when the facts support their position and ensuring that justice is not only done but also appears to be done.

An Income Tax Appellate Tribunal can verify if a product is distinct from its raw material by visiting the assessee's premises.

Statements made by an accused in custody are not voluntary and cannot be relied upon as substantive evidence if not read over to them.

Statements made on oath to banks regarding stock held and hypothecated by assessees cannot be disregarded, even if a practice of under-declaration is assumed to exist. Courts should not take judicial notice of such practices to allow assessees to resile from their sworn statements.

A judicial precedent is only authority for what it actually decides and not for propositions that may follow from observations made therein.

Revenue authorities and courts are bound by the ratio of judgments from the Supreme Court and the jurisdictional High Court, especially when rendered on identical facts.

The assessee bears the burden of proving that a transaction was a business advance and not a loan, particularly concerning Section 2(22)(e) of the Income Tax Act. Loans given to a shareholder for property purchase are taxable under Section 2(22)(e), even if repaid later.

When an assessee provides a plausible explanation supported by affidavits for cash deposits, the revenue must conduct proper verification before making adverse conclusions; otherwise, additions under Section 69A are unsustainable.

A conscious act by the assessee to hide information from the department is a key factor in upholding revenue assessments and penalties.