Landmark Cases on Evidence, Onus and Natural Justice

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.

The Income Tax Officer cannot fix a higher sales price without any evidence; a mere presumption that excess price could have been charged is insufficient to conclude that a higher price was charged.

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.

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.

Income tax authorities must produce evidence, such as a bank manager's letter, before the assessee to allow them to contest its contents, even though tax proceedings are not bound by strict rules of evidence.

Income Tax authorities cannot rely on a bank manager's letter as evidence unless it is produced before the assessee, giving them an opportunity to cross-examine the manager.

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.

The principles of natural justice are essential and can be invoked to aid legal justice when the latter fails due to technicalities, supplying omissions in formulated law. Natural justice and legal justice are not rigidly distinct; both aim to secure the substance of justice.

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.

Statements recorded during a search under Section 132(4) of the Income Tax Act cannot be used against an assessee unless the assessee is given an opportunity to cross-examine the persons whose statements were taken.

An Assessing Officer (AO) cannot add figures to an assessee's income merely based on loose papers without providing reasons, evidence, or material to support the conclusion that these figures represent income earned by the assessee, especially when no deeming provisions are invoked.

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 power of attorney holder can file a complaint and give evidence in proceedings under Section 138 of the Negotiable Instruments Act, as these proceedings are primarily civil in nature and the burden of proof lies on the accused.

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.

An assessee cannot claim a violation of principles of natural justice if they fail to avail the opportunities provided by the tax authorities. The failure to respond to notices and cooperate can lead to adverse consequences, including the dismissal of an appeal.