TMI Blog2017 (3) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure and therefore, it was rightly observed by the Tribunal that it was dangerous to accept the statement of the Managing Director of the Company that was initially made on 4.8.1995. The Tribunal held that it could not be said after considering the Note Book, D14 that there was a contradiction in the statement made by the Managing Director as the subsequent statement of the Managing Director was an explanatory statement that was substantiated by the Managing Director, on the basis of the Note Book, D14. The Tribunal has, in the order dated 21.03.1997 recorded reasons for reducing the peak deficit and quantifying the undisclosed income by referring to the material available before the Tribunal. In the order under Section 256 (1) while refusing to refer question no.4, the items from the peak deficit of ₹ 55,52,042/are recorded and it is observed that the Tribunal had given sufficient reasons for reducing the peak deficit. While refusing to refer the questions that were sought to be referred, after recording convincing reasons it is observed by the Tribunal that no question of law would arise for being referred to the High Court. We find on a reading of the orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instead of on a daytoday basis ? (6) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in quantifying the undisclosed income on grounds/arguments not fully supported by valid evidence ? The following facts give rise to the application : The respondent assessee is a company engaged in the manufacture of spirit, alcohol etc. On 2.8.1995 there was a search by the Income Tax authorities under Section 132 of the Income Tax Act at the office premises of the assessee at Nagpur, the factory premises at Gwalior and also the residential premises of the Directors of the company at Nagpur. The search took place simultaneously and during the course of the search at Gwalior a Note Book that was marked as D14 was seized. The Managing Director of the company was examined at the time of the search and he stated that the exercise book, D14 represented the miscellaneous receipts of the assessee company some of which had been accounted and some of which were not accounted. It was stated that the company was willing to pay the income tax on the other miscellaneous receipts. A notice under Section 158 BC of the Act was served on the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the undisclosed income at ₹ 61,20,114/. While holding so, the Tribunal considered the entire material on record and went through each and every entry to satisfy itself about the position of transactions explained by the assessee. After the Tribunal decided the appeal on 21.3.1997, the Department filed an application under Section 256 (1) of the Act for referring the aforestated six questions to the High Court for a decision. The Tribunal decided the application under Section 256 (1) of the Act against the Department by the order dated 10.9.1997. In view of the dismissal of the application under Section 256 (1) of the Act, the Department has filed the application under Sub Section 2 of Section 256 of the Act seeking the exercise of the jurisdiction under the said provision. The learned Counsel for the Department submitted that the Tribunal was not justified in admitting the additional evidence in the appeal filed by the assessee without affording an opportunity to the Department to examine the same. It is submitted that the Tribunal was not justified in giving undue weightage to the statement of the Managing Director recorded on 21.8.1996 while giving inadequate weightag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings of the Tribunal in the appeal filed by the assessee are based fully on facts, specially on a perusal of the Note Book, D14 and each and every entry made therein. The learned Counsel sought for the dismissal of this application. On a reading of the orders of the Tribunal, dated 21.3.1997 and 10.9.1997, it appears that it is not necessary to invoke the jurisdiction under Section 256 (2) of the Act. The Assessing Officer had passed the order mainly by relying on the statement made by the Managing Director of the assessee company dated 4.8.1995 that the Note Book, D14 comprised of the entries in respect of miscellaneous receipts. The Tribunal, however, on an appreciation of the material on record, specially the Note Book, D14 on the basis of which the assessment order was passed, held that it was dangerous to accept the statement made by the Managing Director of the assessee-company on 4.8.1995 in its totality as the very perusal of Note Book, D14 reflected that the entries in the said Note Book were not only the miscellaneous receipts but there were entries pertaining to expenditure in the said Note Book. While holding so, the Tribunal perused each and every entry in the Note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal then considered the peak deficit, cash balance in the books of account of the company besides the sale proceeds as also the offer of ₹ 17,00,000/by the assessee as undisclosed income and came to the conclusion that the undisclosed income of the assessee would be ₹ 61,20,114/. After minutely perusing the order of the Tribunal dated 21.3.1997, the Tribunal while rejecting the application under Section 256 (1) of the Act, dated 10.9.1997 refused to refer the questions that were sought to be referred by the Department to the High Court. The Tribunal referred to each of the questions separately and gave convincing reasons for refusing to refer the same. The Tribunal held that though it was the case of the Department in the appeal before the Tribunal that the assessee had tendered additional evidence and no opportunity was granted to the Department to refute the same, the Tribunal found as a matter of fact that no additional evidence was admitted before the Tribunal in the appeal filed by the assessee. The Tribunal recorded that the Counsel for the Department was not able to demonstrate before the Tribunal while hearing the application under Section 256 (1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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