WHETHER IT IS COMPULSORY FOR REVENUE TO FOLLOW DIGITAL EVIDENCE INVESTIGATION MANUAL ISSUED BY CBDT?
Respected Members
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Short note of today's case law for quick reference:
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[2024] 463 ITR 560 (P&H)
[IN THE PUNJAB AND HARYANA HIGH COURT]
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MUNJAL BCU CENTRE OF INNOVATION AND ENTREPRENEURSHIP
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COMMISSIONER OF INCOME-TAX (EXEMPTIONS)
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1. The Digital Evidence Investigation Manual and regulations prescribed thereunder were issued by CBDT since the department had come across various difficulties, including invalidity of evidence, under various circumstances, the manual deals with the collection and preservation of digital data.
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2. The manual was issued in the year 2015 and in digital India, the entire department has been computerized and even ledger are maintained in the electronic form.
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3. It would be applicable throughout India since even a lay man in a corner of the country is required to follow the terms of the act with regard to e-filing etc.
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4. The department has also been making assessments in a faceless manner.
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5. It was clear that the manual issued by the CBDT was in terms of the powers available under section 119 of the Act and it will have statutory force.
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6. In chapter 2.7 of the manual it is provided that merely gathering electronic evidence is not sufficient.
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7. Efforts have to be made to corroborate the contents therein vis-a-vis other evidence such as material and oral.
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8. If any evidence is collected contrary to the Manual, the Act, the Rules and statute, certainly those actions of the Department can be challenged before any court of law and that would be an exception to the alternate remedy available to the assessee.
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9. In terms of rule 112 of the Income-tax Rules, 1962 at the time of search, there must be two independent witness, who should be from the same locality.
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10. In general, if any statement is made against the assessee, he is entitled to file a counter and he is entitled to cross examine the person, whose statement was relied upon by the Department.
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11. The right of cross examination is one of the most essential rights and whenever a request is made for cross examination of the witnesses to test the veracity of their statements, the authority has to necessarily grant the request.
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12. The SC in the Madras Refineries Ltd. v. Assistant Commissioner Central Assessment Circle IV, Chennai [2010] 28 VST 417 (Mad); 2010 SCC Online Madras 564, held that when a litigant approaches the High Court with a prayer to issue a particular writ and on an examination of the material facts, if it is found that he is not entitled to the writ, it is open to the High Court to issue an appropriate writ.
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13. The attempt of the court in such cases should be to mould the relief rather than dismiss the writ petition on account of a formal defect in couching the prayer.
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14. Technicalities have no say in exercise of the writ jurisdiction by the High Court.
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15. The court functions only for rendering justice.
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16. It would be attempt of the courts to avoid multiplicity of the proceedings.
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17. In the present case search was conducted on 27.01.2022 and one PY who was added an independent witness was not an inhabitant of the same locality but an officer of GST Department who conducted the inspection with regard to GST violation subsequent to the data search made by revenue.
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18. The collection of materials and preservation thereof at the place of the revenue was entirely suspicious and assessments were made by virtue of guess work and without any valid evidence in the eyes of law.
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19. That the revenue had not followed the procedure laid down in digital evidence investigation manual & collected 61,948 documents totally and out of these only 8,993 documents were complete and reliable.
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20. Court held that taking all aspects into consideration and to avoid multiplicity of proceedings, it would be appropriate to set aside all the assessment orders and remit the matter for fresh consideration.