TMI Blog1998 (11) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... u by paying him adequate compensation for giving an entry which on the face of it appears to be a genuine gift. He submitted that certain dealings were going on between the assessee and Major Bhangu. He, therefore, urged that the documents/evidence may have bearings on the issue of gifts in the case of the assessee and the same ought to be admitted. Learned Departmental Representative made detailed submissions, which are summarised as under: (a) The evidence has a bearing on the finding given by AO and that there have been dealings between the assessee and Major Bhangu and others: (b) The said evidence does not go to build up a new case by the Department or to improve the case of AO; and (c) The said evidence is to strengthen the conclusion already arrived at by AO. Learned Departmental Representative submitted that powers of the Tribunal are very wide for admission of additional evidence under r. 29. He submitted that the crucial question is relevancy of documents to the issue to be decided by the Tribunal. In support, learned Departmental Representative relied on the following decisions: (i) Omar Salay Mohamed Salt vs. CIT (1959) 37 ITR 151 (SC). In this case, ITO found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1948 could not derive any support from the statement contained in the affidavit. He also referred to the result of subsequent enquiries made by ITO and observed that the Departmental enquiries made at the other end substantially supported the assessee's claim that Yamunabai was possessed of valuable jewels and such jewels were sold in 1948 by her duly authorised attorney-the assessee-and the same proceeds transferred to Madurai for crediting to her account in the assessee's books. The AAC held that in the face of overwhelming evidence there was no justification at all for disputing the assessee's claim that the credits did really represent Yamunabai's monies and on no account could they be treated as profits camouflaged and both the items aggregating to Rs. 1,59,240 were therefore, liable to be deleted. When the matter travelled to the Tribunal, it pointed out various loopholes, as mentioned at p. 161 of the report and held that the aforesaid amounts represented unaccounted money in the hands of the assessee which he managed to remit to Madurai and, therefore, treated the said amounts as unexplained. The order of the AAC was accordingly vacated to the extent of Rs. 1,59,240. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Ram vs. CIT (1958) 34 ITR 646 (SC), wherein it was observed that the Tribunal had full jurisdiction and it is in its discretion to refuse permission to an appellant to raise for the first time before it new questions of fact which cannot be decided without taking further evidence. It was also observed that even if the Tribunal had already given permission to the appellant to produce affidavits and other evidence pertaining to the new questions of fact, it is open to it not to accept them, if it decides not to allow the appellant to raise the new questions of fact. Learned Departmental Representative submitted that on the face of it, it would appear that reliance on this decision contradicted the prayer being made by the Department. However, with reference to the facts of the case which were referred to by learned Departmental Representative, he submitted that the assessee took a new plea shifting his stand that the draft for Rs. 5 lakhs was made in Srinagar to make payment to the party from whom the goods were purchased as against the earlier plea that remittance of Rs. 5 lakhs from Srinagar to Amritsar represented profits of business carried on in Srinagar. He submitted that und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was negligible. He also found that the sales were in round figures of 500 tolas. On first appeal before the AAC, the assessee explained that the difference in weight shown in the partition agreement and that appearing in the purchaser's books was due to pearls and stones which had been removed from the jewels. On further appeal, the proceedings book m which were recorded the particulars of the agreement of partition, was produced before the Tribunal in support of the claim, but the Tribunal refused to admit the books as evidence on the ground that it could not have been produced before the ITO. The Tribunal held that the amounts did not represent the sale proceeds of the family jewels but secret profits of the business. On a reference, the High Court affirmed the decision of the Tribunal. On appeal to the apex Court, it was held that the finding of the Tribunal that the sum of Rs. 2,30,346 represented concealed business profits was a finding of fact which could not be interfered with in a reference unless it was shown that there was no evidence to support it or that it was perverse. It was also held that the proceedings book was not relied upon as evidence with reference to the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1163/96. He submitted that the underlying object is speedy adjustment/assessment and that order is approved by learned CIT. He submitted that learned CIT did not authorise AO to collect evidence after assessment. He further submitted that there was no provision in the IT Act to collect such evidence after conclusion of assessment proceedings in block assessment. He also submitted that the attempt of the Department in getting the aforesaid evidence admitted was only to improve the case of AO. (d) If such evidence is incidentally collected after completion of assessment, then it is in the nature of circumstantial evidence. Learned counsel submitted that why circumstantial evidence should prevail over direct evidence which has been considered by AO in deciding the issue of gifts made to the assessee. (e) The prayer of the Department is an abuse of the judicial process and is by way of mischief and the same is not permitted by r. 29 of Income-tax (Appellate Tribunal) Rules. He submitted that it is desperate attempt by the Department to interfere with the judicial process. He pointed out that in the first instance the Department invoked the concept of the group as a whole in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1992) 198 ITR 297 (SC), wherein it has been observed that '........It is neither desirable nor permissible to pick out a word or a sentence from the judgment of the Supreme Court divorced from the context of the question under consideration and treat it to be the complete law declared by the Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Court. A decision of the Supreme Court takes its colour from the questions involved in the case m which it is rendered and, while applying the decision to a later case, Courts must carefully try to ascertain the true principle laid down by the decision'. (ii) (1998) 148 CTR (Queries/Opinion/News) 47, where Tribunal rulings have been mentioned. It is mentioned that the Mumbai Bench in its order dt. 12th Aug., 1998, has held that '........ no value can be attached to the entries in the diary in the absence of any corroborative evidence and that no addition can be made in the hands of the assessee on the basis of entries in the said evidence'. It is further mentioned at p. 48 that '......... The diaries do not go beyond the point of suspi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessments because he found that the assessee was not a partner in the firm and the ITO had relied on certain material, which had not been put to the assessee, for coming to the conclusion that he was a partner. On further appeal, the Tribunal found that the amounts assessed in the hands of the assessee as his share of income from the firm was based on material placed on record in violation of the principles of natural justice and in fact there was no evidence to come to the conclusion that the assessee was a partner in the firm, and dismissed the appeals. On a reference, the High Court held that the only correct course open to the Tribunal was to annul the assessment orders passed by the ITO. (vi) Maharaja Gajendrapal Singh of Jhabua vs. CIT (1982) 137 ITR 151 (MP). In the said case, the adoptive father of the assessee, who was a jagirdar, died in 1945. The jagir was resumed by the State of Madhya Bharat under the Madhya Bharat Abolition of Jagirs Act, 1951, and compensation amounting to Rs. 1,84,723 was payable to the assessee, and the Jagir Commissioner fixed the amount of maintenance payable to the widows of the father of the assessee (adoptive mothers of the assessee). F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to make out a case for admission of additional evidence since it was not on file of the assessee. He also submitted that the substantial cause, as mentioned in r. 29, should be in the interest of general public and it should not be served at the cost of the assessee. He submitted that admission of additional evidence collected after assessment of block assessment will give the Department a long rope to go on collecting such evidence and bring new facts/new arguments to be taken into account. He submitted that the decision in (1958) 34 ITR 646 (SC), as relied upon by learned Departmental Representative, actually goes in favour of the assessee as new facts cannot be taken on record. He submitted that the new question put to third parties amount to bringing new facts on record to support the conclusion of AO and that attempt is to polish/improve upon the finding of AO. He further submitted that even decision in (1959) 35 ITR 416 (SC) relates to evidence sought to be adduced by the assessee. He also referred to the application filed by the Department for admission of additional evidence and submitted that the statements of third parties are circumstantial evidence to prove a fact as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction between strengthening of the case of AO and improving his cases. He pointed out that AO in the case of donors and in the case of the assessee is the same, though the proceedings are different. The Bench referred to the provisions of s. 158BC, whereunder no notice under s. 148 is required to be issued for the purpose of proceedings under Chapter XIV-B and the assessee being debarred from filing a revised return and asked learned Departmental Representative to offer his comments in view of the said provisions, learned Departmental Representative submitted that he had no comments. Learned Departmental Representative submitted that the cases relied upon by learned counsel relate to reopening of assessments and that the same are not relevant. He referred to the case of CIT vs. Saligram Prem Nath (1989) 179 ITR 239 (P H), wherein it is observed that the Tribunal is vested with the requisite authority and jurisdiction to admit additional evidence and material in order to do substantial justice to the parties. In the said case, the ITO made additions to the income of the assessee on account of excessive shortage relying on the data available with regard to other persons doing similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced." It will be observed from the above that as a rule the parties to the appeal are not entitled to produce additional evidence unless the Tribunal requires any document to be produced, etc. to enable it to pass order or for any other substantial cause. The further stipulation is that the IT authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence on points specified by the authorities or on points not specified by them. Obviously, the rule is loaded in favour of the assessee. Having regard to the provisions of r. 29, we have examined the case law as relied upon by learned Departmental Representative. It is observed that in the case in (1959) 37 ITR 151 (SC), the Department had collected certain evidence on the basis of which the AAC allowed relief to the assessee, who held that in the face of such overwhelming evidence there was no justification at all for disputing the appellant's claim that the credits did really represent Yamunabai's monies and on no account could they be treated as profits camouflaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to give its opinion thereon when admission/consideration of this evidence was not objected to by the Revenue and the Revenue also sought to rely upon the very same evidence. There is, therefore, no ground to hold that the order of the Tribunal was vitiated by the consideration of this evidence." It is obvious that the said case is distinguishable on facts. The next case relied upon by learned Departmental Representative is (1958) 34 ITR 646 (SC) which relates to raising for the first time before the Tribunal new questions of fact which cannot be decided without taking further evidence. The Tribunal had come to the conclusion that sufficient opportunity, had not been given to the appellant to establish that the profits sought to be taxed were mixed up in the working funds in Srinagar. The Tribunal, therefore, remanded the case to the ITO for a proper enquiry. When the matter again came back to the ITO for inquiry, the assessee admitted that the profits in Srinagar were mixed up with the working funds and it was not possible for him to work out from his accounts to what extent the moneys sent to British India were the profits of the preceding year and to what extent they were th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings book as evidence as the same was not relied upon as an evidence before the ITO. It is obvious that this case does not help the plea of the Department for admission of additional evidence. In the case (1963) 47 ITR 864 (MP), it was observed that the admissibility of additional evidence under r. 29 depends upon whether or not the Tribunal requires the evidence to enable it to pass order or for any other substantial cause or if the ITO has decided the case without giving a sufficient opportunity to the assessee to adduce evidence on points specified by him or not specified by him. It is further observed that the rule does not enable the assessee or the Department to tender fresh evidence to support a new point or to make a new case. We feel that even this decision is of no help to the Department. In the case in (1974) 95 ITR 109 (Mad), the Tribunal rejected the admission of additional evidence but went into merits of the evidence. In that context, the High Court held that the Tribunal cannot refuse to entertain the evidence and at the same time go into its merit and come to a conclusion one way or the other. The said case is also distinguishable on facts. In the case in (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from filing a revised return. Further, under the provisions of s. 158BF, penalties for concealment under the provisions of s. 271(1)(c) cannot be imposed in respect of undisclosed income determined in block assessment. Having regard to the said provisions, in case of admission of proposed evidence, the Tribunal will have to restore the matter to AO, for the reasons mentioned by learned Departmental Representative i.e., to enable the assessee to meet the new facts as now found by AO. Such a course of action will thus enable the Department to consider the material collected in the case of third parties assessments, after completion of block assessment in the case of the assessee, which could normally have been done by the Department by reopening assessment under the normal provisions of the IT Act, after issue of proper legal notice under s. 148. As already mentioned, recourse to the provisions of s. 148 is not contemplated under Chapter XIV-B relating to block assessments. Thus, it will be an attempt to bypass the existing provisions of Chapter XIV-B and achieve something indirectly which cannot be done directly under the existing provisions relating to block assessments. Such an a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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