Landmark Cases on Evidence, Onus and Natural Justice

Adjudicating authorities cannot rely on witness statements as the basis for an order without allowing the assessee to cross-examine those witnesses. Failure to do so constitutes a violation of natural justice and renders the order a nullity.

Additions to income cannot be made based on mere conjectures and surmises without supporting evidence. The Assessing Officer cannot selectively consider credit entries while ignoring corresponding debit entries.

An insurer can avoid liability by proving not only that the driver lacked a valid license but also that the breach was willful and fundamental to the accident. The insurer bears the onus of proving such a willful breach.

A dissenting judgment, even if not explicitly refuted by the majority, does not lay down a legal principle of general applicability that binds all courts under Article 141 of the Constitution if it concerns a question of sentence depending on specific facts.

A party cannot be deprived of a basic fundamental right available to them under the law.

When an assessment order is based solely on third-party statements, and an adverse inference is drawn against the assessee, the assessee must be granted an opportunity to cross-examine the witnesses. If no such opportunity is given, the assessment order should not be set aside entirely, but the Assessing Officer should be directed to provide the assessee with an opportunity for cross-examination.

Adding income that is already accounted for in the books of account amounts to double addition and is therefore unjustified. Such additions are only permissible if the income remains unaccounted.

Material gathered during the assessment proceedings of one person cannot be considered legal evidence in the assessment of another person. Such use of evidence without providing an opportunity to rebut violates natural justice.

Where an issue is debatable, the view favorable to the assessee should be adopted. The law is well settled in this regard.

A retraction of a statement made during a survey operation or assessment without cogent evidence is not considered valid.

The initial burden is on the revenue to establish that a receipt is taxable income, but this burden can shift to the assessee if sufficient evidence is presented.

Sales outside the books of account cannot be added if the information pertains only to packing of goods and not suppressed production or sales.

Statements recorded during a survey are not conclusive evidence and can be challenged, especially when retracted and explained.

In cases involving circumstantial evidence, the totality of circumstances must be considered to determine whether a particular act is proved. This combined effect of all circumstances is determinative.

Additions based on seized documents cannot be sustained if the assessee is not a party to those documents and statements recorded do not implicate the assessee in receiving funds beyond acknowledged amounts. The burden of proof lies with the Revenue to establish the nexus between the assessee and the transactions.

Information gathered as a result of an illegal search and seizure can be used in assessment proceedings, provided its value and admissibility are assessed according to the law of evidence.

A conviction for conspiracy cannot be maintained solely on the evidence of co-accused without any other corroborating incriminating evidence. Statements of co-conspirators under Section 10 of the Evidence Act are only admissible if a conspiracy is established.

Authorities must decide appeals on merit in accordance with principles of natural justice, even if the assessee appears disinterested.

A tribunal decision can be relied upon as a judicial precedent on the issue of 'satisfaction'.

Loose papers without independent corroboration are considered 'dumb documents' and cannot be used as the sole basis for an income tax addition.

Where no evidence is brought on record to show that excess consideration was paid over and above the sale consideration recorded in the registered sale deed, the registered sale deed's consideration is considered correct and final.

Mere identification of a donor and showing the movement of a gift amount through banking channels is insufficient to prove the genuineness of a gift. The assessee bears the onus to establish not only the identity of the donor but also their capacity to make the gift.

An assessee must substantiate claimed losses with credible evidence to discharge the primary onus upon them; failure to do so can lead to the setting aside of the Tribunal's order.

When an accused raises the issue of the complainant's financial capacity to advance a loan as a probable defence, the onus shifts back to the complainant to prove their financial capacity by leading evidence, especially in cases involving cash loans and subsequent cheque issuance, even with the presumption under Section 139 of the N.I. Act operating in their favour.

Rejection of an assessee's explanation without considering important evidence is an error of law. This principle emphasizes the importance of due process and proper consideration of all relevant facts during tax assessments.

A best judgment assessment is not arbitrary and must be guided by principles of justice, equity, and good conscience. It cannot be made capriciously or in disregard of the material on record.

The administration of law must adopt the general exception of impossibilities when considering particular cases, not compelling the impossible.

Additions to income cannot be made solely based on uncorroborated notings found on loose sheets and papers.

An appellate tribunal should not ignore the contents of an affidavit filed before a lower authority, which was the basis for relief, as an affidavit is a valid piece of evidence that can be acted upon in assessment or appellate proceedings.

The nomenclature given to entries in the books of accounts is not relevant for ascertaining the real nature of a transaction. The tax authorities must ascertain the true nature of the transaction irrespective of how it is recorded in the books.

The Supreme Court's exercise of powers under Article 32 read with Article 142 to prevent environmental degradation and uphold Fundamental Rights under Article 21 is a fundamental issue. The case discusses sustainable development principles, derived from Articles 21, 48-A, and 51-A(g) of the Constitution, and the option to impose future bans on activities like mining.

An assessee establishes the genuineness of purchases by providing all necessary information, including supplier details, payment through account payee cheques, and verification of exported goods by customs authorities, unless the Assessing Officer has positive material to show otherwise.

An order made in violation of the rule of audi alteram partem (the right to be heard) is null and void and can be struck down as invalid. This applies to quasi-judicial or administrative decisions.

Tribunals should not set aside an order passed by the CIT(A) without cogent reasons, and doing so without such reasons is arbitrary and unreasonable. However, the Supreme Court has affirmed this principle while dismissing an SLP on grounds of delay.

The burden of proving that a transaction is benami rests on the person asserting it to be so. Mere suspicion or presumption is insufficient; concrete evidence is required.

Additions made based solely on third-party statements without corroborative evidence or opportunity for cross-examination are invalid. Additions on the same transactions in the hands of the firm and individuals amount to double taxation.

The Assessing Officer must conduct an enquiry to verify evidence furnished by an assessee to discharge the initial onus under Section 68, and cannot merely rely on a perfunctory assessment.

An Assessing Officer must conduct an enquiry to verify evidence submitted by an assessee to discharge the initial onus under Section 68, and cannot solely rely on issuing notices under Section 133(6).

Additions to income cannot be made on the basis of suspicion, conjecture, or surmise; actual consideration passed is paramount. Evidence used against an assessee must be supplied upon request.

The Commissioner (Appeals) violates natural justice and mandatory Rule 46A(3) by admitting additional evidence without giving the Assessing Officer an opportunity to verify or refute it, requiring re-adjudication.

Production of additional evidence at the appellate stage is not a matter of right for a litigant, but is within the discretion of the court, to be exercised judiciously.

A partnership firm is not a legal entity separate from its partners; it is merely a compendious name for the partners. Consequently, an opportunity of hearing extended to the firm is considered an opportunity extended to all its partners.

Public authorities holding power in trust for the public must exercise those powers when circumstances warrant, as there is no discretion to withhold their use. This principle has Supreme Court approval.

The department cannot arbitrarily reject the assessee's books of account and estimate income at a higher figure without proving that the books do not reflect the true income.

Additions to income are justified when made based on an admission by the assessee, even if the assessee later attempts to retract that admission.

Entries found on loose papers during a search cannot, on their own, be considered material for making an addition to income. Such additions require corroborative evidence and proper inquiry.

Where an assessee provides documentary evidence of share transactions, the Assessing Officer must investigate any potential fallacies in that evidence rather than making an assumption of guilt.

An assessee discharges its onus to substantiate purchases when it files primary supporting documents, shifting the burden to the Assessing Officer to disprove them, especially when the AO relies solely on VAT authorities' findings.