TMI Blog1994 (11) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... at pages 3 and 4 of the assessment order. The loans are recorded in the account books of the assessee which have been maintained by it on mercantile basis as is recorded by the Assessing Officer (AO) in the assessment order. A return was filed on 29th June, 1982 declaring loss of Rs. 2,99,486. The Assessing Officer issued letter dated 13-11-1984 to the assessee demanding proof of capital and cash credits (loan) appearing in the account books of the assessee. The case was fixed on 30th November, 1984 for this purpose. This letter was served on the assessee on 15-11-1984. As no proof was advanced on 30-11-1984 the case was adjourned and reported to 3-12-1984 and then again to 5-12-1984. Further time was given by the Assessing Officer till 10-12-1984 for production of evidence but there was no response from the assessee on that date. The Assessing Officer addressed another letter on 15-1-1985 which was served on the assessee on 16-1-1985 demanding proof within five days i.e. by 21-1-1985. The Assessing Officer says that there was no appearance nor any petition for adjournment on that date. However, a letter was filed on 24-1-1985 giving some information by the assessee's advocate but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced before us after the hearing by the Departmental Representative as per our direction given on the date of hearing, viz. on 6-10-1994. The A/c. has reproduced the explanation submitted by the assessee's advocate in para 13 at pages 4 and 5 of the impugned order and which we deem it useful to reproduce as under : " Cash Credits : 1.1. The learned ITO has laid great stress on the time extended. However, there were substantial cash credits and the assessee was called upon to explain each and every account. As such the assessee tried to get verification from all the depositors. It may kindly be noted that substantial credits are by cheques. Even though the assessee tried to get confirmation from each creditors. 1.2. Shri Madhukant Girdharlal was attending to this matter. During this time he was President of Chamber of Commerce. Then came the election of office bearers. Much of the time of Shri Madhukant Girdharlal was spent after chamber's work. In the mean time he was attending before ITO and whatever confirmation were available from time to time was giving. 1.3. During the election Shri Madhukantbhai unfortunately expired due to severe heart attack at an age of 52 years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on 3-12-1984 to produce required details on 5-12-1984 but again nothing was produced. After that the assessee was again requested vide this office letter dated 15-1-1985 by which the assessee was requested to produce proof by 21-1-1985. Practically no proof was furnished. Then as the matter was getting time-barred, assessee's ITP was personally requested and in response to that a written submission dated 28-3-1985 was filed. In this submission it was contended by the assessee that 'the firm has written to the parties concerned for confirmation or for sending copies of a/cs. Some parties are at Ahmedabad and some have gone out of Rajkot and hence we were unable to obtain confirmation from these parties. However, if your honour will kindly go through these remaining account mostly the amount is received by cheque. All the parties are genuine. We undertake to file the copies of a/c. or the confirmation at the earliest. In the meantime assessment be made and if in case your honour feel that some items are unexplained or not genuine we will not take any objection if you reopen the assessment. However, the amount is received by cheque mostly or all remaining a/c. and hence they may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer also in his letter of 23-4-1988 repeated what transpired during the course of assessment proceedings. He further stated that the confirmation letters and evidence submitted before him (A/c.) were not filed before him (AO) and therefore, he made the addition on account of unexplained cash credits. Before us in this appeal, the assessee's AR has filed a voluminous paper book containing confirmation letters, account copies, affidavits in Gujarati with their English translation and other connected materials which also included copies of letters filed by the assessee's advocate Shri Sanghavi in first appeal enclosing therewith copies of some confirmation letters and account copies. In respect of affidavits and other related evidence/material as placed in the paper book filed before us, the assessee's AR prayed for admitting the same as additional evidence in terms of Rule 29 of the ITAT Rules, 1963 which according to him, was essential and vital for deciding the dispute regarding the addition of loans and also in larger interest of rendering and dispensing substantial justice to the assessee. The assessee's AR in this regard heavily relied on the decision of the Gujarat High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ". File marked " A " contains evidence filed before the A/c. and file marked " B " contains additional evidence for admission in the second appeal as per Rule 29 of the ITAT Rules. In the said application of 19-10-1994 the assessee has stated in the last para that a copy of the said petition was also tendered to the DR. 12. We have given our anxious consideration to the submissions made by both the representatives. For diverse reasons which we give hereinafter we are of the view that no prejudice is likely to be caused to the Revenue if the additional evidence now produced before us by the assessee is admitted as per the provisions of Rule 29 of the ITAT Rules. This Tribunal, under the scheme of the Income-tax Act, 1961 is a final fact-finding authority and in order to enable it to decide disputes brought before it by way of second appeal in a lawful, fair and judicious manner it has necessarily to look into and consider such evidence and other material having a nexus and bearing on the subject-matter of the appeal viz. the dispute involved. Even according to the provisions of Rule 29, the Tribunal is empowered to receive and admit additional evidence for any other substantial c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and yet the Tribunal admitted the same as an additional evidence and directed that fresh assessment be made in the light of the new agreement. On a reference to the High Court, it was held that the Tribunal rightly exercised its discretion under Rule 29 in allowing production of additional evidence. The Madras High Court in the case of R.S.S. Shanmugam Pillai Sons v. CIT [1974] 95 ITR 109 examining the scope of the powers of the Tribunal under Rule 20 of the ITAT Rules held that the Tribunal has got a wide discretion to admit or reject documents at the stage of appeal but such discretion cannot be exercised in an arbitrary manner and that if the Tribunal found that the documents filed are quite relevant for the purpose of deciding the issue before it would be well within its powers to admit the evidence, consider the same or remit it to the lower authorities for fresh consideration. This view of the Madras High Court was reiterated in another case which arose in the year 1990 in the case of Anaikar Trades Estates (P.) Ltd. (No. 2) v. CIT [1990] 186 ITR 313. Even the jurisdictional Gujarat High Court as far back as 1977 in the case of Pari Mangaldas Girdhardas have laid down th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eon and the A/c. approved such action of the Assessing Officer in spite of the explanation submitted before him by the assessee's AR that some connected evidence in the shape of account copies and confirmation letters as has been recorded by us above in this order. In fact, a careful reading of para 15 of the impugned order of the A/c. reveals that he was not happy with the addition made by the Assessing Officer from the observation " the Income-tax Officer also did not make any effort to find out the genuineness of these credits ". The A/c. was convinced that most of the credits were by cheques but the assessee for various reasons was not in a position to obtain confirmation letters from the creditors concerned. Well, in such a situation the A/c. ought to have remitted the matter to the file of the Assessing Officer giving one more chance to the assessee to procure the corroborative evidence in respect of the loans but he opted the course of obtaining a remand report from the Assessing Officer which was nothing except reiteration of the same observations as were made in the assessment order. The Assessing Officer in his remand report dated 23-4-1988 has stated that the addition ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence as compiled in the paper books filed before us has to be admitted in terms of Rule 29 of the ITAT Rules and we therefore, admit the same. 19. After pondering over the matter, we deem it fit and proper to remit the case to the file of the Assessing Officer with a direction to receive the said additional evidence which have now been filed before us by the appellant in the shape of confirmation letters, affidavits and account copies of lenders. We further direct the Assessing Officer to process the same by conducting a valid, proper and thorough enquiry into the whole loan transactions aggregating to Rs. 4,34,400 and then to arrive at a correct decision but not without affording a fair and reasonable opportunity of hearing to the appellant-assessee to convince the Assessing Officer that the loans are genuine,. We therefore, vacate the finding and conclusion of the A/c. in respect of this dispute and order and direct accordingly. 20. We now come to the different additions upheld and sustained by the A/c. which have been listed from ground Nos. 19 to 24. We have heard the elaborate arguments made before us by representatives of both the sides in respect of each ground and w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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