TMI Blog1965 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... period between November 6, 1953, and November 26, 1954. In its accounts of November 25, 1953, and November 27, 1953, there were two cash credit entries of the aggregate amount of Rs. 20,000 ; it did not include this amount in its return part for assessment year 1955-56. When questioned by the Income-tax Officer it stated that the amount of Rs.20,000 was advanced to one of the partners by his mother. The Income-tax Officer did not believe the statement and included the amount in the assessment as income from "undisclosed sources." The assessee preferred an appeal which was dismissed by the Appellate Assistant Commissioner. " Previous year " is the period of twelve months ending on the 31st day of March next preceding the assessment year, or if the accounts of the assessee have been made up to a date within the said twelve months in respect of an assessment year ending on any date other than the said 31st day of March, then, at the option of the assessee, the year ending on the date to which its accounts have been made up ; but, where in respect of a particular source of income an assessee has once been assessed, it cannot in respect of that source exercise the option so as to vary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority, that there was no sufficient explanation for its not being taken earlier, that it was not purely a legal plea because the question whether a cash entry represents income is one of fact, and that the ground was not taken bona fide at that late stage and needed going into the facts once again. The Tribunal dismissed the assessee's application under section 66(1) and this court called for a statement under section 66(2). The normal rule is that an appellant before the Tribunal must confine his arguments to the grounds taken in the memorandum of appeal ; if he wants to travel outside the memorandum of appeal, he must obtain the Tribunal's leave. He has no absolute right to the leave ; otherwise the provision regarding his obtaining the Tribunal's leave would become meaningless. If the leave had to be granted merely for the asking, no useful purpose is to be served by requiring the leave. As it is not an appellant's absolute right to have the leave, he has to make out a case for obtaining it, and if he fails to do so, the failure itself is ground for refusing the leave. If he makes out a case for the leave, it can still be refused if there are facts on account of which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a ground of fact and an appellant is not entitled absolutely to the leave if the ground is of law. Therefore, the mere fact that the ground is of law did not entitle the assessee as a matter of right to the leave ; it had still to show some additional facts and it did not show any ; when it did not show any additional facts and, when the Tribunal found that the new ground was not absolutely a ground of law, it meant that no case was made out by the assessee for the grant of leave and this was full justification for the Tribunal's refusing the leave. Since the Tribunal did not find that the assessee had made out a case for the grant of leave, it may not be necessary to consider the grounds urged on behalf of the department for refusing the leave. Still we have considered them and I find that they cannot be ruled out as irrelevant. There is reason behind the ground (for refusing the leave) that thereby the disposal of the appeal would be delayed. If the entertainment of the ground calls for investigation of facts, it means delay in the completion of the assessment proceeding. As I said earlier, allowing the assessee to raise the ground would necessitate investigation of the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irrelevant. So long as there is some logical connection between those grounds and the refusal to grant leave, it cannot be said that the Tribunal acted arbitrarily. The matter of granting or refusing leave is at the discretion of the Tribunal ; this is not disputed. It has to exercise the discretion judicially, i.e., not arbitrarily. So long as it exercises it for reasons which have some logical connection with the way in which it is exercised, it cannot be said to have acted arbitrarily. It must act on the assumption of the correctness of the reasons found by it ; if the reasons are subsequently found by another authority to be incorrect, it cannot be said that the Tribunal acted arbitrarily, merely because the reasons on which it based its discretion were incorrect, provided it acted bona fide. It is required to act judicially and not correctly. Sri Gulati referred to us a number of authorities. In Commissioner of Income-tax v. P. Darolia Sons the Patna High Court held that there is no presumption that an undisclosed income is from the disclosed business, that the question is one of fact to be decided upon the materials and that in the absence of any system of accounting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances exist. In Commissioner of Income-tax v. M. P. Kolhe the Bombay High Court was concerned with a plea of pure law ; the facts in that case were quite different. My answer to the question is in the affirmative. A copy of this judgment should be sent under the seal of the court and the signature of the Registrar to the Income-tax Appellate Tribunal as required by section 66(5) of the Act. The assessee should pay to the Commissioner of Income-tax his costs which may be assessed at Rs. 200. Counsel's fee may be assessed at Rs. 200. PATHAK J.-I agree that the question must be answered in the affirmative. But I would prefer to rest my opinion on the short ground that the jurisdiction exercised by the Tribunal when refusing to entertain the additional ground of appeal is discretionary in nature and I am not satisfied that the Tribunal acted arbitrarily in the exercise of that discretion. It was entitled to consider whether the application for raising the additional ground was made bona fide. It held that it was not, having been made, in its opinion, " to thwart the course of proceedings and gain time. " It pointed to the absence of such a plea before the income-tax authorities. ..... 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