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T. Devasahaya Nadar Versus Commissioner of Income-Tax Madras

[1964] 51 ITR 20 - Tax Case No. 220 of 1961 - Dated:- 25-9-1963 - Jagadisan And Srinivasan, JJ. For the Assessee : S. Swaminathan for K. Narayanaswami and K. Mahadevan For the Commissioner : S. Ranganathan JUDGMENT Jagadisan, J. The following questions stand referred under the Indian Income-tax Act: "1. Whether the Tribunal was entitled to use the statement of Solomon Nadar as material for basing any finding adverse to the assessee when Solomon Nadar was not made available for examination b .....

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ncome-tax Officer commenced proceedings under section 34 of the Act on the basis of certain information that the assessee had acquired properties in Ceylon during the accounting year but failed to disclose it in the books of account. The properties of the value of ₹ 24,000 were said to have been purchased at Baligoda, Ceylon. In response to the notice, the assessee submitted that the original assessment was not liable to be reopened and that he had not made any money besides the income whi .....

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The addition was sustained on the strength of information got from one Solomon Nadar, who stated that he was a partner of the assessee in "black market" operations, that the total profit of ₹ 48,000 was divided and taken in two equal shares. At that stage, the assessee came to know that the department acted upon Solomon Nadar's statement that the assessee had earned an income of ₹ 24,000 from the activities of a firm of which both Solomon Nadar and the assessee were pa .....

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refore, remanded the proceedings to the Income-tax Officer for further examination of Solomon Nadar after due notice to the assessee. Unfortunately, Solomon Nadar, who was a resident of Ceylon, did not choose to go to India. Every time a date was fixed for the enquiry, he was resourceful to offer some excuse for his not being able to be present. Ultimately, he sent the following letter on February 11, 1958, to the department: "Besides the information hitherto furnished, I think I will have .....

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mbo, for ₹ 6,000 many years ago and that he had been receiving a rental income of ₹ 25 per mensem from that property and that this item of purchase was not reflected in the account books of the assessee. On these materials, the Tribunal considered the question afresh and reached the conclusion that there were materials on record to justify the addition made by the department. The Tribunal accepted the statement of Solomon Nadar. It was of the view that it must be true as it was made .....

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as the assessee was not afforded an opportunity to cross-examine him. Learned counsel also contends that it is because the Tribunal was unable to accept the evidence of Solomon Nadar recorded behind the back of the assessee that the proceedings were remanded to give the assessee an opportunity for cross-examination. We are of opinion that it cannot be said as a general proposition of law that any evidence upon which the department might rely should have been subjected to cross-examination. The .....

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tice. One such rule is that he shall not use any material against the assessee without giving him an opportunity to meet it-Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax [1954] 26 I.T.R. 775, 783; [1955] 1 S.C.R. 941. The source of information for the material against the assessee need not be divulged. In fairness to the assessee he should be told what is against him, so that he may, if he can, displace it. It is no denial of natural justice if the Income-tax Officer refuses to prod .....

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