TMI Blog1997 (6) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal that one of the applicants, Shri Lalit Suri be allowed to address the Tribunal before Shri Sharma proceeded with his submissions. Permission was granted to Shri Lalit Suri. 3.1 Shri Lalit Suri at the outset submitted that the assessees, who are members of his family have been denied natural justice and injustice has been done to them. He submitted that they got no opportunity to substantiate the gifts as mentioned in letter dated21st March, 1995filed before the Assessing Officer. He submitted that the Assessing Officer passed the assessment order without affording any opportunity to the assessees to lead evidence to prove the gifts. He submitted that by the time the assessment order was passed on 27th March, 1995 all evidence relating to the gifts was available with the assessee. He submitted that the Assessing Officer did not ask for evidence and that if opportunity of proving the gifts was afforded, the assessee would have proved the same. He further mentioned that the orders of the tax authorities are totally biased and that he had lodged complaints against the tax authorities and he was given to understand that they will not hear his case further. At this stag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s unilaterally or suo motu; the assessee has to be called upon to do so. Having offered to discharge and not being asked to do so, make the premise of decision incorrect. He further submitted that Rule 46A of the Income-tax Rules, 1962 and rule 29 of the said Rules operate in different fields. Though the Tribunal has held that rule 46A was rightly applied by the CIT (Appeals) in not admitting the additional evidence, the said finding did not preclude the Tribunal from deciding application filed by the assessee under rule 29 for admission of the very same evidence before the Tribunal in exercise of its powers. He submitted that the said application was on record and in the course of hearing before a different combination it was pressed. The Bench, as was then constituted, asked the respondent to file a counter and the applicant to file a rejoinder and the same are on record. He, therefore, submitted that the real question was as to whether the Tribunal was justified in passing order under section 254 when application under rule 29 was pending. He stressed that it was a legal necessity for the Tribunal to dispose of application under rule 29 which is on record of the Tribunal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the assessees' application. He also referred to rule 18(4) of the ITAT Rules, 1963 and submitted that only on ground of technical objections the crucial evidence, which could have proved the gifts, has not been looked into. He referred to the decision of Hon'ble Supreme Court in the case of Natho Singh v. Financial Commissioner Taxation AIR 1976 SC 1053, sub-paragraph (D) of para 10, where the Hon'ble Supreme Court have observed that, " the Court should see whether the evidence on record is sufficient to decide the issue if not, the Court will be justified in admitting additional evidence and that if such additional evidence is not admitted, the order will be arbitrary ". He emphasised that the poor material on record, apart from the said additional evidence, could not enable the Tribunal to decide the issue involved in these appeals. 4.1 The learned counsel emphasised that it was sufficient for the assessee to make a mere mention before the Assessing Officer that the amounts have been received by way of gifts. He submitted that in the computation sheet of income filed with the return, it has also been mentioned that the monies have come through foreign exchange. He furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued before another combination. He submitted that order on petition under rule 29 must precede before regular appeal could be disposed of. He submitted that the application under rule 29 was argued earlier before another combination. He submitted that even if the said applications had not been argued before the present combination of Members, the same were argued before another combination and making of an order on the said applications must precede the disposal of main appeals. He submitted that earlier counsel was under the impression that the appeals had not been heard on merits. He again emphasised that fundamental error has crept into the order of the Tribunal, inasmuch as the Bench has left its work unfinished in making an order on the said application filed under rule 29. He referred to paragraph 6 of miscellaneous application dated2-4-1997and submitted that the first mistake apparent from record is that the Tribunal has not disposed of application under rule 29. He emphasised that there is no record that the said applications were not pressed before the Bench. He submitted that the Tribunal should have recorded that rule 29 applications were not argued in the order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same should be recalled so as to hear the application under rule 29 and give a decision thereon. He emphasised that the interest of justice required that the parties be given reasonable opportunity and that the legitimate claim of the assessees is not rejected merely on technical grounds. He prayed that let there be no feeling that the assessees have lost because the Tribunal did not allow pleading on the application made under rule 29. He added that in the present cases there has been miscarriage of justice and that if the revenue was being too technical, it was legitimate claim of the assessee also to be technical about the decision on application under rule 29. 9. In reply, Shri Syali, the learned Advocate for the revenue pointed out that as regards the letter dated21st March, 1995, the same has been read, understood and adjudicated upon by the Tribunal. He referred to paragraphs 5.3, 9.1, 9.2, 9.8 and 10. In particular he invited our attention to the conclusion of the Tribunal in paragraph 9.1, which reads as under : " On 20/21-2-1995, the Assessing Officer again sought a clarification and pointed to the appellants that the burden of proof regarding the nature and source of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage, then how they can allege that the Tribunal has committed a mistake apparent from record. Shri Syali pointed out that there is a shift of stand from " not having argued " to " not being allowed to argue "; whereas the fact is that not only arguments were addressed by the learned counsel for the petitioner on merit on the very first day, i.e.,2-12-1996, but again, after the counsel for the Department met those arguments, on6-12-1996. He submitted that on3-12-1996the counsel for the assessee had requested for adjournment and was granted an opportunity to rebut the reply of the Revenue's counsel on6-12-1996. Shri Syali pointed out that the only observation of the Bench was that while arguing on merits, the counsel has necessarily to restrict himself to the material on record and ignore the additional evidence, the admissibility of which is in dispute. He stressed that counsel in the course of hearing was specifically asked by the Bench that if non-admission of additional evidence is held to be in order what would be the stand on merits of the case. According to Shri Syali, the reason was that if the Bench were to come to conclusion that additional evidence has been wrongly rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to decide the application under rule 29 of the ITAT Rules. He submitted that it is clear that the case of the assessee in the Misc. Application is, and rightly so, that, though the counsel for the applicant did not invite attention of the Bench to any earlier order or the petition under rule 29 nor did he argue in respect thereof, since the said application is on record of the Tribunal, its non-consideration gives rise to a mistake apparent from record. According to Shri Syali, the crucial question is, therefore, as to whether the Bench was duty bound to pass an order on pleading not taken before it, merely because the pleading in its written form is on record and was highlighted in the course of earlier hearing, before a different combination. He submitted that the law on this issue is settled that the case pleaded has to be the basis for the decision and that the decision is always based on a pleadings of the parties. Shri Syali submitted that law is well settled as far back in 1950 where in the case of Karim Bakhsh v. Qadir Plantiff Bakhsh AIR 1950 Lahore 126, it was observed by the Hon'ble Lahore High Court that " where a Judge mentions specifically certain points which were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of the hearing of the appeal. He submitted that after the petition was highlighted before an earlier combination of the Bench and an order passed thereon wisdom may have dawned to the strength of the case which compelled the learned counsel neither to highlight nor to argue the same before the present combination. 9.9 Shri Syali further referred to paragraph 8 of the order of the Tribunal and submitted that the Tribunal has formulated three issues and the last issue was as to whether on the basis of material on record orders of the Assessing Officer/CIT (Appeals) are acceptable. He, therefore, submitted that rule 29 application has not been argued and there is no issue framed by the Tribunal in relation to such application. He also argued that cause of substantial justice has been dealt with by the Tribunal while dealing with admission of additional evidence under rule 46A and it found the assessee to be negligent in not furnishing the required evidence before the Assessing Officer. He, therefore, urged that the order of the Tribunal cannot be reviewed again in order to advance the cause of substantial justice as now being pleaded before the Tribunal. He submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any decision on rule 29 application, the Tribunal was justified in making order under section 254 on the main appeals. He further submitted that there is no indication on record about abandonment of rule 29 application or withdrawal thereof. He further submitted that even the order of the Tribunal is silent about the matter not having been argued before it. 10.1 With reference to the contentions of the learned counsel for the Department that the issue relating to applicability of section 68 has been argued on merits, the learned counsel submitted that there is a fallacy in saying so. He submitted that if the additional evidence is not admitted, the assessee cannot argue on merits with reference to the genuineness of the gifts and inapplicability of the provisions of section 68. He further submitted that the assessee has not been asked to substantiate arguments with reference to the requisite evidence. 10.2 The learned counsel further submitted that the limited argument is that rule 29 application ought to have been disposed of, as the same has not been abandoned/withdrawn by the assessee. He, therefore, submitted that there is a grey area in the order which requires to be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reference exists in the order of the Tribunal to the name Jayant Nanda, the Bench " has taken note of the evidence attached to this application, which has remained pending as undisposed." 12.1 A copy of the written proposition dated21-5-1997was also given to the learned counsel for the Department, who in reply, has stated that the department does not wish to add anything further to the arguments already advanced, the written proposition dated21-5-1997being a repetition only. 13. We have very carefully considered the arguments addressed by both the learned counsel for the parties. A very careful and detailed perusal of our log books, which have been compared inter se, indicates that at the time of hearing of the appeals, the counsel for the assessee had not addressed any arguments on the application under rule 29. All his arguments were related to admission of additional evidence under rule 46A before the CIT (Appeals). There was not a whisper about application under rule 29. This is now an admitted position. All the same, we did make an offer to the learned counsel for the assessee for perusing our Log Books and satisfy himself of this position. This was declined. On the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts from abroad ; and finally. (iii) If the answer to issue No. (it) is in the affirmative, then whether on the basis of material on record the order of the assessment, as also of the learned CIT (Appeals) are acceptable. 13.3 Since the disposal of application under rule 29 in the reply to this M.A. has been linked to the arguments and decision on merits, a plain reading of the order, our notes, submissions of the counsel clearly indicates that the then learned counsel has argued the case on merits. He not only argued but even replied to the counter of Shri Syali, the learned Advocate for the revenue on merits by trying to distinguish the case of D.C Rastogi as cited. To contend that no arguments were addressed is factually incorrect in view of the various recording of facts, arguments, replies and conclusion, as highlighted by Shri Syali and amounts to an unsuccessful effort on the part of the petitioner to find some issues to salvage their case. But for the bland statements signed by the assessees themselves, who were not present in the Court at the time of hearing of the appeals, there is no basis for the submission that arguments were not adduced on merits. In view of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g disposal of application under rule 29 first [Emphasis supplied], therefore, no arguments were addressed. All this and yet not a word in support from the counsel who represented the regular appeal. 13.6 Be that as it may, rule 29 petition was neither highlighted nor argued. Having opted not to highlight or argue the said petition it cannot be now said that its non-disposal suo motu gives rise to a mistake apparent from record. Disposal of a petition under rule 29 before the present combination of the Bench, even if no order existed was a precedent to disposal of appeal provided it was pressed and a request made. It was not so. To understand as to why the earlier combination of the Bench made the order and what was the necessity to do so, a question was raised by the Bench. Shri Syali explained that even on the earlier occasional endeavour was made to leave rule 29 application as a last resort. Since the then combination of the Bench objected to the modus operandi sought to be adopted, an order was passed. It was, thus, plausible that on subsequent occasion before present combination of the Bench, rule 29 application was not thought worthy of argument as the prime argument was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was whether the Appellate Court was bound to frame a point regarding that ground even though it was not actually urged by the Advocate for the appellant during the course of arguments. At page 227, para 23 after analysing the law on the issue, it was held that there is presumption that every Court does its duty by properly following the correct procedure. This presumption is available to presume that the Appellate Court in its judgment dealt with all the points which were urged before it by mentioning them as points for decision and also by giving a decision on each point. There is no presumption that the Advocate for the appellant would have pressed each and every ground of the memorandum of appeal. The Advocate is presumed to know the strength and weakness regarding each ground and the desirability of pressing such ground or abandoning it. 14.3 In the circumstances the non-disposal cannot be said to be a mistake apparent from record within the meaning of section 254(2) of the Income-tax Act. We do not agree with the submissions of Shri G.C. Sharma that the cases cited and relied above have no relevance to the disposal of this M.A. by the Tribunal. Shri Sharma himself, to drive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in particular to the following portion as appearing in the order of the CIT (Appeals) at page 6 : " As pointed out above, all the evidences now sought to be admitted have been obtained only recently, except the declaration of Mr. Jayant Nanda, which is undated but attested on5-2-1995. Even this declaration along with his certificate of gift and a certificate of the British Bank of the Middle East, which is undated, was filed only on 31-3-1995 with the Assessing Officer when the proceedings had concluded on 27-3-1995 and the assessment order passed by Assessing Officer on 28-3-1995. This shows that the additional evidence, now sought to be filed, was not in existence at the assessment stage or was filed after the assessment order was passed on28-3-1995. This, despite the show-cause notices issued by the Assessing Officer on27-1-1995and21-2-1995." 14.6 Thus, it is a misconstruction to allege utilisation of evidence filed along with the application under rule 29 when the same had been filed before the CIT (Appeals) and taken note of. It need be added that in the course of hearing of the present application, this was not even a ground. 14.7 In the circumstances, the appellants h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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