TMI Blog2001 (9) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... SHAH., D. A. MEHTA. JUDGMENT The judgment of the court was delivered by M. S. SHAH J. -In this reference at the instance of the assessee, the following questions have been referred for our opinion in respect of the assessment year 1981-82: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that in an assessment under section 144 the assessee need not be given an opportunity of being heard by the Income tax Officer? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the addition of cash credits of Rs. 1,81,451?" The facts leading to the filing of this reference briefly stated, are as under: The Income-tax Officer framed the assessment under section 144 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), on a total income of Rs. 2,50,127. The return of income was filed on June 29, 1981 declaring total income at nil. Another return also declaring total income at nil was filed on January 22, 1982, as the date of verification in the first return was not written correctly. A notice under section 143(2) was issued to the assessee in November, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter, the assessee moved an application under section 146 of the Act, which was rejected by the Income-tax officer and the said order was confirmed by the Commissioner (Appeals). The assessee also preferred an appeal against the order of the Income-tax Officer under section 144 of the Act. On the dates fixed for hearing of the appeal also, nobody attended and on that day, a letter was sent requesting for adjournment on the plea that the director of the assessee-company, Mr. Niranjan, was sick. Hence, another opportunity was also given. At the appellate stage, the assessee produced some papers purporting to be confirmation letters from the creditors of unsecured loans and the shareholders whose particulars were sought for by the Assessing Officer in the course of the assessment proceedings. The Commissioner of Income-tax. (Appeals), however, found that no explanation was offered for submitting the additional evidence at the appellate stage and further the documents were not admissible unless they were proved. The Commissioner (Appeals) thereupon sent letters dated January 2, 1985, and February 20, 1985, giving opportunities to the assessee to appear and present its case. Aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of treating the unexplained cash credit amounts as the income of the assessee. In support of the said contention. Mr. Shah has placed reliance on the decision of the apex court in CIT v. Smt. P. K. Noorjahan [1999] 237 ITR 570, which was concerned with section 69 of the Income-tax Act, 1961. Mr. Shah read out the order of the Tribunal dealing with this particular question and submitted that the Tribunal has not at all considered the assessee's contention that when the Income-tax Officer had given a finding of fact that the assessee did not seem to have commenced the production as yet, there was no justification for treating the credits in the assessee's books in the form of Rs. 90,000 worth for shares issued and Rs. 1,60,127 in the form of unsecured loans as income under section 68 of the Act. Similarly, the Commissioner of Income-tax Act (Appeals) erred in merely modifying the amount and in not deleting the entire additions. Mr. Shah for the assessee heavily relied on the decision of the apex court in CIT v. Bharat Engineering and Construction Co. [1972] 83 ITR 187 in support of his contention when the assessee had not yet commenced the production, the cash credit entries oug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that from June, 1947, till March 1948, the Hindu undivided family assessee or its karta had no other business or means of income from which the assets in question could be earned. The Assessing Officer, the Appellate Assistant Commissioner as well as the Income-tax Appellate Tribunal and also the High Court held that there was material on the basis of which it was possible to conclude that a substantial amount in question represented the undisclosed income of the assessee. On appeal, the Supreme Court reversed the finding and held that though it was a finding of fact, the finding given by the Tribunal was such that no person acting judicially or properly instructed as to the relevant law could come to such a finding. The business carried on by the assessee at Lahore was reasonably large business though its extent could not be verified by any reliable material produced by the assessee. Therefore the utter improbability amounting almost to impossibility of the assessee having earned such a large amount as profit within a few months in the disturbed conditions which were then prevailing in India was a circumstance which ought to have been taken into account by the Tribunal. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to section 68 of the Act, was not there. In fact, this aspect of the matter has been considered in the case of Anup Udyog, with which we are in respectful agreement. In this view of the matter and after considering the material, we do not find any merit in the appeal preferred by the assessee." The Tribunal thus proceeded only on the basis that K. S. Kannan Kunhi's case [1969] 72 ITR 757 (Ker), had no application as it was rendered under the pro visions of the Indian Income-tax Act, 1922, which did not contain a section corresponding to section 68 of the 1961 Act. The Tribunal obviously did not have the benefit of applying the law laid down by the apex court in Smt. P. K. Noorjahan's case [1999] 237 ITR 570. As per the said principle, the question was required to be considered in the facts of the case, but the above extracted paragraph of the Tribunal's judgment shows that the Tribunal did not deal with the facts of the case except stating that "after considering the material". The Tribunal does not appear to have considered the submission made on behalf of the assessee that even as per the finding of the Income-tax officer, the business of the assessee had not commenced. Sim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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