TMI Blog1990 (10) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the return and the trading results as disclosed in the books of accounts found during a search at the assessee's premises which contained duly closed accounts and trading profit and loss account and balance-sheet prepared therefrom. This contention was dealt with by the Tribunal in Paragraph 19 of its order as below : "19. We have given careful consideration to the peculiar facts of the present case. We will straightway agree with the assessee's submission that the ITO had not given to the assessee proper opportunity of being heard. But the same is not true of the first appellate authority. By the time the matter reached him, the assessee had with him photostat copies of all the relevant material seized by the Department from the assessee's possession and, in addition, had the benefit of knowing the findings of the ITO. Nothing, therefore, prevented the assessee from stating its case before the CIT(A). The CIT(A) had not barred the assessee at any stage from leading its evidence and stating its case. If there was any material in the seized record, on which it wanted to rely, it could easily bring it to his attention as all the seized material was with the assessee. If i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with reference to the facts and circumstances of each case. We have already recorded our finding in this record, and, according to it, the assessee had all the opportunity to say what it wanted to say and place such evidence on record as it felt proper. Such opportunity was deliberately not availed by the assessee for best reasons known to it." 3. It is contended in the miscellaneous application as well as in the arguments raised before us that after recording a finding in the second sentence of the aforesaid paragraph that the ITO had not given the assessee a proper opportunity of being heard, the Tribunal erred in making the remaining observations in the aforesaid paragraph and in not remanding the matter to the assessing officer for a fresh decision after giving the assessee proper opportunity of hearing. It was contended that the right of being heard by the assessing officer having been violated the defect could not be cured by the appeal before the CIT (Appeals) or before this Tribunal. The learned counsel contended that the case was fixed for hearing onthe 30th of March, 1987when the assessee was required to explain the discrepancy in the profit and it was adjourned to 31st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal when a valid decision to expel him is subsequently made. Such a deprivation would be a powerful result to be achieved by what in law is a mere nullity ; and it is no mere triviality that might be justified on the ground that natural justice does not mean perfect justice. As a general rule, at all events, I hold that a failure of natural justice in the trial body cannot be cured, by a sufficiency of natural justice in an appellate body." 4. Reliance was also placed on another judgment of the Hon'ble Supreme Court in A.R. Antulay v. R.S. Nayak AIR 1988 SC 1531, in which it was held that the transfer of a case by the Supreme Court to be tried by a Judge of the High Court was invalid when the law provided that the trial should be held by a Special Judge. It was held that the transfer affected the following rights of the accused :-- "(i) The right to be tried by a Special Judge in accordance with the procedure established by law and enacted by Parliament. (ii) The right of revision to the High Court under section 9 of the Criminal Law Amendment Act. (iii) The right of first appeal to the High Court under the same section. (iv) The right to move the Supreme Court under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate authority has the power to make such further enquiry as it thinks fit or may direct the ITO to make further enquiry and report the result of the same. Under section 251 the first appellate authority has the power to confirm, reduce, enhance or annul the assessment or to set aside the assessment and refer the case back to the ITO for making a fresh assessment in accordance with such directions as may be given. Rule 46-A of the Income-tax Rules provides for admission of additional evidence before the first appellate authority. Sub-clause(b) of sub-rule(1) thereof covers a case where the appellant was prevented by sufficient cause from producing the evidence, which he was called upon to produce by the assessing officer. Sub-clause (c) permits admission of additional evidence where the appellant was prevented by sufficient cause from producing before the assessing officer any evidence which was relevant to any ground of appeal and sub-clause (d) permits admission of additional evidence where the assessing officer had made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relating to any ground of appeal. Similarly the Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee make no attempt to offer an explanation before the CIT(A), even before this Tribunal no attempt was made to avail the benefits of Rule 29 and produce the necessary material which the assessee pretends to have been prevented from producing before the assessing officer for the non-grant of adjournment. It has to be remembered that the explanation that the higher profit, shown in the account books, that were seized during the search, was because of purchases that the partners made and that they failed to communicate to the Munim resulting in their non-recording in the account books was offered for the first time at the hearing of the appeal and without any supporting material whatsoever. The Tribunal in paragraph 20 has noted this conduct of the assessee and has mentioned that no positive evidence in support of the above averment was available with the assessee. If there were any such purchases it was the duty of the assessee to file the relevant details through the affidavits of the partners concerned. But nothing of the son was done and, as observed by the Tribunal, it was merely a bare plea with no supporting material whatsover. Thus, it is evident that the assessee did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was not taxable under section 41(1) on account of the subsisting liability to repay the amount to the assessee's customers. As is evident from the proceedings the assessee never established any existing liability in favour of its customers. Excise duty was never shown to have been realised from the assessee's customers as a separate charge and that too under a specific or implied agreement that if it is not payable it will be refunded to the customers. Section 41(1) comes into operation as soon as the excise duty is refunded to the assessee. The taxability of such a refund is independent of an alleged liability, for which the assessee should show that such a liability exists and claim an independent deduction irrespective of the provisions of section 41(1). If under agreements with the assessee's customers the assessee ever refunds any amounts to them then such amounts can certainly be claimed as business expenditure of those years. There is, therefore, no mistake in the Tribunal's order on this point. 13. No other point has been raised in M.A. No. 89 (Del.)/90 which deserves dismissal. 14. The assessee's application dated5-1-1989, which has now been registered as M.A. N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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