TMI Blog1995 (5) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... -10-1974, survey under section 133A of the Income-tax Act was conducted by the Income-tax Inspectors both on the business premises of M/s. SLBP and M/s. Vishwa Nath Amar Singh. During the inspection some documents bearing some entries, calculations on them were found at the business premises of M/s. SLBP on which the Inspectors signed for identification. Later, during the assessment proceedings for assessment year 1974-75 summons under section 131 were issued to produce those papers marked 71 to 74 and on their production, they were impounded by the ITO on the ground that they represent incriminating documents. 5. According to the revenue these papers disclose various amounts deposited by Shri Amar Singh in M/s. SLBP on various dates falling in the accounting year relevant to assessment years 1974-75 and 1975-76. For assessment year 1974-75, money aggregating to Rs. 1,96,000 came in small sums spreading from 15-12-1973 to 31-3-1974. The items in total are eighteen (18) in number. It is also the revenue's case that such deposits relating to assessment year 1975-76 totalled to Rs. 2,53,000. It is also the revenue's case that the said papers (No. 71 to 74) are in the hand-writing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 1-2-1982. The learned Tribunal had dismissed the appeals filed by the Department as well as by the assessee and also the cross objection filed by the assessee. The consolidated orders of the Tribunal are provided at pages 22 to 36 of paper book No. II filed by the assessee before us. In para 11 of its order, the learned Tribunal had observed the following : "We have given consideration to the above arguments. There is no dispute that Shri Banarasi Dass was the Munim of the assessee at the time of the survey of the assessee firm on 3-10-1974 the assessee had in its reply dated 20-12-1977 at pages 23 and 24 of the paper books admitted that the aforesaid papers at pages 71 to 74 are in the handwriting of Shri Banarasi Dass. Shri Banarasi Dass has been examined on oath twice by the ITO and he has also been cross examined by the assessee. We have gone through the statement very carefully. No question in cross examination has been asked by the assessee from the said witnesses to show that that the statement of Shri Banarasi Dass is not correct or that any of the assertions not made before us by the assessee is correct. There was evidence also available with the assessee in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes they were set aside for assessment year 1974-75 and 1975-76. For the sake of better appreciation, the table mentioned above is extracted below : -------------------------------------------------------------------------------------------------------------------------------------------------- Asst. Year Income Asst. Year Income 1974-75. assessed 1975-76. assessed ------------------------------------------------------------------------------------------------------------------------------------------------ 1 . Return of In response income was 1-3-1977 to notice 25-7-1980 filed voluntarily. under section 148 dated 27-3-1980 2. First assessment completed under section 24-2-1978 99,620 144 on No order 3. Re-opened under section 146 4. second asst. completed under section 15-3-1980 97,120 144 on 5. Reopened under section 146 6. Third asst. 3-2-1983 3,12,720 3-2-1983 3,08,394 completed on under section 144. 7. Reopened under section 146. 8. Now asst. 30-3-1985 2,87,080 2,76,290 completed under section 143(3) on (under appeal) ------------------------------------------------------------------------------------------------------------------------------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and any such reliance shall be completely unwarranted, illegal and bad in law. At no stage, the assessee was confronted by the Income-tax Appellate Tribunal about such a finding and the finding given without affording an opportunity to the person against whom the same is given is not finding either in fact or in law. The assessee relied upon the Andhra Pradesh decision in the case of Kalwa Devadatham v. Union of India [1958] 33 ITR 56 wherein it has been held that the onus rests on the income-tax authority to show that the income which they seeks to tax is liable to be taxed by the statute. The assessee brought to the notice of the ITO that inspite of the objections raised by him, if the document found in the premises of M/s. SLBP was sought to be utilised against the assessee, then it was requested to summon the following persons under section 131 of the I.T. Act, 1961 : 1 . Shri Sunheri Lal, ex-partner of M/s. Sunheri Lal Bhagwati Prasad, r/o Hajipura, Agra. 2. Shri Bhagwati Prasad, r/o Hajipura, Agra. 3. Shri Banarasi Dass, Munim, r/o 4306, Parsuram Gali, Kacheri Ghat, Agra. 4. Inspector of Income-tax who conducted search. It was reiterated that the document on which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der consideration could decide the evidentiary value of the impounded papers during the present assessment proceedings on the basis of statements of Shri Banarsi Dass and also of the assessee recorded the assessment proceedings of M/s. SLBP which evidence and statements have been the subject matter of consideration before the CIT (Appeals) as well as before the Tribunal in the case of M/s. SLBP for assessment years 1974-75 and 1975-76. He further identified the main question which cropped up before him as whether the ITO could base his findings in the asst. order under appeal, on the basis of what had already been held by the CIT (Appeals)/Appellate Tribunal in the case of M/s. SLBP for assessment year 1974-75 and 1975-76. He took the view that there was no legal infirmity attached to the assessment order under appeal before him merely because he could not record the de novo statement of Shri Banarsi Dass in the presence of the assessee because the ITO mainly relied on the findings of the CIT (Appeals)/Appellate Tribunal in the case of M/s. SLBP. He found that in such circumstances no Court had ever held that the findings in the assessment orders were vitiated. Therefore, he confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een acceded to. The assessee had made similar request in his several letters written to the ITO. It is true that when the assessee was examined, it was stated by him that it was his lawyer who wanted to see these statements and examine these persons. The right of a person to be properly and legally advised cannot be taken away and as he has made his request in writing, the ITO would have tried to see that these requirements are fulfilled in so far as they were possible. The learned Tribunal also found that the CIT (Appeals) confirmed the finding of the ITO on the basis of the finding given by the Tribunal in its earlier order and had not directed the ITO to examine persons other than Shri Banarsi Dass as requested before the ITO. However, they held that the view of the CIT (Appeals) was not correct. Even though the learned Tribunal found that though the statement in the earlier proceedings can be used, it was necessary for the ITO to give a specific opportunity to the assessee to either produce any witness or specified witnesses whom he wanted to examine for establishing this case. Ultimately, the Tribunal held that they were of the view that this is a fit case where the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . SLBP. (d) Shri Kanshi Ram, partner of the firm M/s. Kanshi Ram Co. (e) Shri Chamman Lal. The assessee stated that after receiving the copies of the aforesaid statements, he would inform the learned CIT (Appeals) for issue of summons under section 131 of the Act to various persons whose statements will give weight in further corroborating the stand taken by the assessee. (3) No clear picture regarding any money transactions emerges from these loose papers". The Assessing Officer had not at all tried properly to appreciate the entries and was not able to give any meaning to the accounts about the items which were returned, which were not returned and which related to house and with other expenses noted. In another written submissions made by the assessee to the CIT (Appeals), it was contended that the various transactions shown in the loose papers could not be connected either with the assessee or with the books of the firm relating to the assessee. So also, the source of the inflow of the money shown in those loose papers could not be established. It is surprising that no money was shown to have been paid back during the period mentioned in those loose papers. By no st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Shri Amar Singh. The entries were made by Shri Banarsi Dass and those two papers were not true. (6) Affidavit of Shri Ashwini Kumar, S/o Shri Teja Shah who was one of the partners in M/s. Teja Shah Co. He used to do commission agency business at Sabzi Mandi, Agra. He was shown papers by Shri Amar Singh in which his father was found to have taken Rs. 15,000 from Shri Amar Singh. In fact he solemnly denied of having borrowed either Rs. 15,000 or any other amount by his father from Shri Amar Singh. 14. After having heard both the sides, the evidence produced by the assessee from time to time, the following issues arise for our consideration in this appeal. (1) Whether any finding given by the Tribunal in the case of M/s. SLBP is binding against the assessee in this case namely Shri Amar Singh. (2) Whether the statement given by Shri Banarsi Dass, the Munim in whose hand-writing the impugned papers were found on search of the business premises of M/s. SLBP can be taken to be proof against Shri Amar Singh. Whether these statements may be taken to be relevant at all in the assessment proceedings relating to Shri Amar Singh. (3) Whether the finding of the Tribunal in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpleted on 28-3-1978 as can be seen from pages 136 to 138 of the second paper book filed on behalf of the assessee. So also, the assessment against M/s. Vishwa Nath Amar Singh for assessment year 1976-77 is completed on 21-11-1981, as can be seen from pages 139 to 140 of the second paper book filed on behalf of the assessee. 16. According to the assessment orders Shri Amar Singh and Smt. Amrit Kaur each having 50% share in the firm of M/s. Vishwa Nath Amar Singh. No amount was included in the hands of the said firm towards unexplained investment under section 69B of the Act for both the assessment years 1975-76 and 1976-77. The impugned papers marked pages 71 to 74 were furnished at pages 131 to 135. Page 73 contain eighteen entries spreading from 15-12-1973 to 13-12-1974, the total of which comes to Rs. 1,96,000. However at page marked 71 there were no dates whatsoever. Virtually the statement of Shri Banarsi Dass was the only basis on which Rs. 2,53,000 was added in the hands of M/s. SLBP for assessment year 1975-76. The amount of Rs. 2,53,000 were shown as brought forward figure at the beginning of paper marked 71. Now Shri Banarsi Dass was no more. We had already seen that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable." As can be seen from the above section that before any evidence given by a witness in a judicial proceeding is relevant for the purpose of proving a relevant fact in a subsequent judicial proceeding when the witness is dead, the following conditions should be fulfilled : (1) the proceeding should be between the same parties or their representatives in interest ; (2) that the adverse party in the first proceeding had the right and opportunity to cross examine and (3) the question at issue were substantially the same in the first and in the second proceedings. No doubt, Shri Banarsi Dass was examined twice in the assessment proceedings relating to M/s. SLBP. However, those proceedings cannot become the proceedings between the same parties or their representatives in interest, vis-a-vis the proceedings against Shri Amar Singh. Therefore, whatever may be the evidence given by Shri Banarsi Dass in the case of M/s. SLBP, cannot be taken to be relevant in the assessment proceeding in which a different party is the assessee, namely Shri Amar Singh. Shri Amar Singh by no st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment or recomputation could not have been made at the time the order which was the subject matter of the appeal, reference or revision as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken. Section 153(3)(iii) The provisions of sub-sections (1) and (2) shall not apply to the following classes of assessments, reassessments, recomputation which may subject to the provisions of sub-section 2A be completed at any time ; (iii) where in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147." As can be seen that under section 153(iii) an assessment, re-assessment or recomputation can be made against a partner in consequence of or to give effect to a finding or a direction made in the case of a firm or an assessment, reassessment etc. is to be made against any other person in consequence of or to give effect to a finding or a direction contained in an order under section 254, 260, 262, 263 or 264 or an order of any Court in the proceedings otherwise than by way of appeal or reference under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh cannot be considered valid under law or they cannot be considered to be proceedings started in consequence of or to give effect to a finding or a direction contained in the order passed in the case of M/s. SLBP. Therefore, the finding given in the case of M/s. SLBP cannot be an effective finding as regards assessment proceedings against Shri Amar Singh are concerned. Consequently, the ITO cannot rely upon the findings given by the Tribunal in the case of M/s. SLBP while making the addition of these amounts in the hands of Shri Amar Singh for the assessment years 1974-75 and 1975-76. It is contended that the Tribunal had no justification to give a finding regarding the assessee's case while deciding the case of M/s. SLBP since the assessee was not a party to those proceedings and no specific opportunity was afforded to him before holding that the impunged amounts deleted to him. We find that this contention of the assessee fully tenable. The next contention on behalf of the assessee is that the impugned amounts were sought to be assessed in the hands of M/s. SLBP and the proceedings in the case of M/s. SLBP were taken to their logical and namely till the filing of references b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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