Delhi H.C : Whether, on the facts and circumstances of the case, the IAC during the proceedings under s. 144B(4) was right in refusing to entertain fresh evidence in the form of affidavit of legal heir of the deceased creditor ?

Sections 144B

Asst. Year 1975-76

Prakash Kumar, for the Assessee : R.C. Pandey with Mrs. Premlata Bansal, for the Revenue

JUDGMENT

ARIJIT PASAYAT, C.J. :

These two reference applications have been registered on the motion of the assessee under s. 256 (1) of the IT Act, 1961 (for short “the Act”), by the Income-tax Appellate Tribunal, Delhi Bench “C” (for 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 IAC during the proceedings under 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 asst. yr. 1975-76 and centres round the addition of Rs. 20,000. The said sum was reflected in the books of account of the assessee as cash credit in the name of one Balwant Singh. Income-tax Officer (in short “the ITO”) held that the assessee’s explanation was unsatisfactory as regards the nature and source of the said sum. Said finding was challenged by the assessee by way of appeal before the Commissioner of Income-tax (Appeal) [in short “the CIT (A)”]. The CIT omitted to deal with the question. An application was filed under s. 154(1)(b) of the Act seeking rectification of the appellate order, dt. 17th March, 1979. The CIT recorded a finding against the assessee. An appeal was preferred before the Tribunal questioning the correctness of the addition maintained by the CIT(A). It is to be noted that since the variation between the income returned and the income assessed was more than Rs. 1 lakh, ITO had referred the matter to the Inspecting Assistant Commissioner (in short “the IAC”). The said authority issued notice to the assessee to explain as to why the addition proposed should not be approved. The assessee took the stand that adequate opportunity was not granted for explaining the cash credit. The IAC examined the record and found that adequate opportunity was granted to the assessee to have his say but the same was not complied with. Additionally, it was observed by the IAC that in a proceeding under s. 144B(4), fresh evidence could not be entertained. The Tribunal upheld the CIT (A)’ conclusion that adequate opportunity had been granted to the assessee to explain the cash credit which it could not satisfactorily explain.

The Tribunal did not address itself to the question whether in a proceeding under s. 144B(4) there was any fetter on the IAC 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 IAC was justified in refusing to entertain the fresh evidence is concerned, it has to be noted that the IAC referred to the background material and on perusal of the record came to hold that the assessee 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 under 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.

[Decision in favour of Reference returned unanswered]

[Citation : 250 ITR 356]