TMI Blog1976 (12) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Income-tax Officer had information that the creditor was a man of little means and this amount represented the assessee's own income. He found that the other assessees who had shown credits in the name of Paliram Pannalal had owned up that the credits were not genuine. The assessee was asked to explain and prove the genuineness of this loan. In reply, the assessee stated that no money was received and the credit was given under advice from M/s. Industrial Supply and Agency Company. There was also a debit of Rs. 50,000 on the same date in the name of Matilal Nemchand on which interest payment of Rs. 1,500 was claimed. The Income-tax Officer held that the assessee had not proved the loan. He also held that it was not correct to say that no money was received because of the clear narration in the cash book. He treated the amount as income from other sources and added it in the assessment. Against the said assessment order the assessee preferred an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held that while disallowing interest paid to Matilal Nemchand the Income-tax Officer held that he was not a genuine party but while considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent to the appeal before the Appellate Assistant Commissioner who must have got notice of the hearing of the appeal and that being the position since no objection was raised on behalf of the Income-tax Officer or the department before the Appellate Assistant Commissioner, it was completely within the jurisdiction of the Appellate Assistant Commissioner to accept the contents of the affidavit and by accepting the same the Appellate Assistant Commissioner committed no error in law or on facts. It is further submitted on behalf of the assessee that the Tribunal found fault with the Appellate Assistant Commissioner in accepting the affidavit in the following terms in its order : " The Appellate Assistant Commissioner should have verified the affidavits or at least should have allowed the Income-tax Officer an opportunity to verify the same since this piece of evidence was coming up for the first time and it was not available for the Income-tax Officer. " The Tribunal, therefore, factually excluded the affidavit from consideration in arriving at its conclusion on the point. Having thus excluded the affidavit, the Tribunal considered some other points, which were considered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, make such further enquiry as he thinks fit, or may direct the Income-tax Officer to make further inquiry and report the result of the same to the Appellate Assistant Commissioner ......... " The language of sub-section (4) of section 250 of the Income-tax Act, 1961, is substantially the same as the language of sub-section (2) of section 31 of the Indian Income-tax Act, 1922. While considering the provision of section 31(2) of the Indian Income-tax Act, 1922, the Supreme Court in the case of Keshav Mills Co. Ltd. v. Commissioner of Income-tax [1965] 56 ITR 365, at pages 380-81, has observed as follows : " The scheme of the Act appears to be that before the Income-tax Officer all the relevant and material evidence is adduced. When the matter goes before the Appellate Assistant Commissioner, he is authorised under section 31(2) to make such further enquiry as he thinks fit, or cause further enquiry to be made by the Income-tax, Officer before he disposes of the appeal filed before him. Section 31(2) means that at the appellate stage additional evidence may be taken and further enquiry, may be made in the discretion of the Appellate Assistant Commissioner. When the matter g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings before the Income-tax Officer, except in the following circumstances, namely :-- (a) where the Income-tax Officer has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Income-tax Officer ; or (c) where the appellant was prevented by sufficient cause from producing before the Income-tax Officer any evidence which is relevant to any ground of appeal ; or (d) where the Income-tax Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the Appellate Assistant Commissioner records in writing the reasons for its admission. (3) The Appellate Assistant Commissioner shall not take into account any evidence produced under sub-rule (1) unless the Income-tax Officer has been allowed a reasonable opportunity-- (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence, document or any witness in rebuttal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the Appellate Assistant Commissioner was required to verify the affidavit at the relevant time. The Income-tax Officer had the opportunity of raising objection to the affidavit but that was not done. That being the position, the Tribunal could not reject the affidavit from consideration on those two grounds. The affidavit in question is a valid piece of evidence and it has to be considered on merits by the Appellate Assistant Commissioner as well as by the Tribunal. Since at the relevant time rule 46A of the Income-tax Rules, 1962, was not available but rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, was available, the Tribunal could not have excluded the evidence received by the Appellate Assistant Commissioner but if any doubt arose in its mind it could have tested its validity in accordance with the known principles of law and in the light of rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. In any view of the matter, the Tribunal had no jurisdiction to exclude the affidavit, which is the most material evidence so far as the assessee is concerned, in order to substantiate his plea of the loan of Rs. 50,000. Since this most material evidence was excluded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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