Section 65B Certificate in Income Tax
Revenue vs. M/s.Vetrivel Minerals (VV Minerals) [WA (MD) No.119 to 123 of 2022]
Background of the Case
The case arose from a series of writ appeals filed by the Assistant Commissioner of Income Tax, challenging a common order passed by a Single Judge of the Madras High Court. The dispute stemmed from income tax assessments conducted against M/s. Vetrivel Minerals (VV Minerals) and M/s. Vijay Cements following search operations carried out in October 2018. The Income Tax Department had issued notices under Sections 153A and 143(2) of the Income Tax Act, 1961, and subsequently passed assessment orders in June 2021, making substantial additions to the income of the firms. The respondent filed writ petitions before the High Court, alleging violations of natural justice, including non-furnishing of crucial documents (such as 101 panchnamas) and reliance on statements recorded without allowing cross-examination. The Single Judge allowed the writ petitions, quashing the assessment orders and directing fresh assessments with specific procedural safeguards.
Arguments by the Appellant (Income Tax Department)
The Revenue, represented by its standing counsel, contended that the writ petitions should not have been entertained due to the availability of an alternative remedy under Section 246A of the Income Tax Act, which permits appeals before the Commissioner (Appeals). Relying on the Supreme Court’s decision in Commissioner of Income Tax v. Chhabil Dass Agarwal, the Revenue argued that High Courts should not interfere in tax matters when statutory appellate mechanisms exist. The Department also defended the validity of the assessment proceedings, asserting that all necessary documents had been made available to the respondent and that the principles of natural justice were substantially complied with. Additionally, the Revenue challenged the Single Judge’s finding that electronic evidence had to comply strictly with Section 65B of the Indian Evidence Act, contending that income tax proceedings are not bound by such technical rules of evidence.
Respondent’s Response (Respondent)
The respondent supported the Single Judge’s order, emphasizing that the assessment orders were passed in violation of natural justice. They highlighted that key documents, including panchnamas and statements of third parties, were not provided, depriving them of a fair opportunity to defend themselves. The respondent also argued that electronic evidence relied upon by the Department was inadmissible without certification under Section 65B of the Evidence Act. They maintained that the case fell within the exceptions outlined in Chhabil Dass Agarwal, warranting judicial intervention under Article 226 of the Constitution. The respondents further contended that the Single Judge’s directions for a fresh assessment were necessary to ensure a fair and transparent process.
Court Findings and Decision
The Division Bench of Madras High Court set aside the Single Judge’s order, ruling that the respondent should have exhausted the statutory appellate remedy before approaching the High Court. The Bench reaffirmed the principle laid down in Chhabil Dass Agarwal and earlier precedents, stressing that writ jurisdiction should not be invoked when an effective alternative remedy exists. While acknowledging the exceptions to this rule, such as cases involving blatant violations of natural justice, the Court held that the respondent had not demonstrated sufficient grounds to bypass the appeal process.
On the issue of electronic evidence, the Bench clarified that income tax authorities are not strictly bound by Section 65B of the Evidence Act, as assessment proceedings are quasi-judicial in nature and not governed by formal rules of evidence. However, the Court directed the Department to furnish copies of all 101 panchnamas to the respondent within three weeks, enabling them to pursue their appeals effectively. The respondent were granted four weeks thereafter to file appeals before the Commissioner (Appeals), with all legal and factual issues left open for adjudication, except the applicability of Section 65B.
In conclusion, the writ appeals were allowed, and the assessment orders were restored, subject to the respondent’ right to challenge them in appellate proceedings.
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Section 65B Certificate in Income Tax
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