Ganesh Trading Co. vs Commissioner of Income Tax

Arijit Pasayat, C.J.—These two reference applications have been registered on the motion of the assessed u/s 256(1) of the Income Tax Act, 1961 (for short "the Act"), by the Income Tax Appellate Tribunal, Delhi Bench "C" (in short "the Tribunal"), and the following common question has been referred for the opinion of this court :

"Whether, on the facts and circumstances of the case, the Inspecting Assistant Commissioner during the proceedings u/s 144B(4) was right in refusing to entertain fresh evidence in the form of affidavit of legal heir of the deceased creditor ?"

The dispute relates to the assessment year 1975-76 and centres round the addition of Rs. 20,000. The said sum was reflected in the books of account of the assessed as cash credit in the name of one Balwant Singh. The Income Tax Officer (in short "the ITO") held that the assessed''s Explanation was unsatisfactory as regards the nature and source of the said sum. The said finding was challenged by the assessed by way of appeal before the Commissioner of Income Tax (Appeals) (in short "the CIT(A)"). The Commissioner omitted to deal with the question. An application was filed u/s 154(1)(b) of the Act seeking rectification of the appellate order dated March 17, 1979. The Commissioner recorded a finding against the assessed. An appeal was preferred before the Tribunal questioning the correctness of the addition maintained by the Commissioner of Income Tax (Appeals), It is to be noted that since the variation between the income returned and the income assessed was more, than Rs. 1 lakh, the Income Tax Officer had referred the matter to the Inspecting Assistant Commissioner (in short "the IAC"). The said authority issued notice to the assessed to explain as to why the addition proposed should not be approved. The assessed took the stand that adequate opportunity was not granted for explaining the cash credit. The Inspecting Assistant Commissioner examined the record and found that adequate opportunity was granted to the assessed to have his say but the same was not complied with. Additionally, it was observed by the Inspecting Assistant Commissioner that in a proceeding u/s 144B(4), fresh evidence could not be entertained. The Tribunal upheld the Commissioner of Income Tax (Appeals)'' conclusion that adequate opportunity had been granted to the assessed to explain the cash credit which it could not satisfactorily explain. The Tribunal did not address itself to the question Whether in a proceeding u/s 144B(4) there was any fetter on the Inspecting Assistant Commissioner to admit fresh evidence. On being moved for reference, the question as set out above, has been referred for opinion.

We have heard learned counsel for the parties. So far as the question whether the Inspecting Assistant Commissioner was justified in refusing to entertain the fresh evidence is concerned, it has to be noted that the Inspecting Assistant Commissioner referred to the background material and on perusal of the record came to hold that the assessed had been granted adequate opportunity for explaining his stand. That conclusion is essentially factual. So far as the question of jurisdiction to entertain fresh evidence in a proceeding u/s 144B(4) is concerned, the Tribunal has not dealt with the question and, Therefore, the issue does not arise out of the order of the Tribunal. Looked at from any angle, the aforesaid question does not arise out of the order of the Tribunal to warrant any answer. We decline to answer the question.

The references are returned unanswered.