Allahabad H.C : The 3rd Member order has, in reference, merely confined to the legal issue in question; whereas, no such embargo was contained in the reference order by the Ld. President ITAT, as reproduced in the order of the 3rd Member. Further it is categorically mentioned that the matter was argued by the Authorised Representative of the assessee on the merits of addition before the 3rd Member

High Court Of Allahabad

Smt. Renu Aggarwal Vs. ITO -3(3), Mathura

Assessment Year : 2003-04

Section : 68, 254

Sunil Ambwani And Surya Prakash Kesarwani, JJ.

IT Appeal (Defective) No. 36 Of 2013

IT Appeal No. 67 Of 2013

September 2, 2013

ORDER

1. We have heard Shri Abhinav Mehrotra for the assessee- appellant. Shri Shambhu Chopra appears for the revenue.

2. The Income Tax Appeal (Defective) No.36 of 2013 arises out of an order dated 30.8.2011 passed by Income Tax Appellate Tribunal, Agra Bench, Agra in ITA No.55/Agr/2007 for assessment year 2003-04. The appeal has been preferred on following substantial questions of law:—

“1. Whether the Tribunal has committed error of law in omitting to adjudicate the merits of addition U/s 68 and that the 3rd Member order has, in reference, merely confined to the legal issue in question; whereas, no such embargo was contained in the reference order by the Ld. President ITAT, as reproduced in the order of the 3rd Member. Further it is categorically mentioned that the matter was argued by the Authorised Representative of the assessee on the merits of addition before the 3rd Member, as well.

2. Whether in sustaining the aforesaid additions, the Tribunal erred in law in not appreciating that there was no embargo for the third Member (as nominated by the Ld. President ITAT) to adjudicate the controversy on merits, as well and has erred in limiting the scope of reference by the Ld. President ITAT.

3. The connected Income Tax Appeal No.67 of 2013 arises out of an order dated 11.1.2013 passed by the Income Tax Appellate Tribunal, Agra Bench, Agra in M.A. No.03/Agra/2012 in ITA No.55/Agra/2007 for the assessment year 2003-04 by which a Miscellaneous Application filed by the assessee-appellant under section 254 (2) of the Act was dismissed. The appeal has been preferred on following substantial questions of law:—

“(1) Whether the Tribunal has committed error of law in dismissing the Application of the Assessee U/s 254 (2), holding that there was no occasion for it to deal with the merits of addition, in a case of reference of a ground of appeal to the third Member, who did not deal with the merits of such addition in his order.

(2)Whether the Tribunal has committed error of law in holding that non-adjudication of a ground of appeal on merits does not fall within the province of a “mistake apparent on record” and ousts the jurisdiction of the Tribunal, U/s 254 (2) of the Income Tax Act.

(3) Whether the Tribunal has committed a further error of law in dismissing the Application of the Assessee, U/s 254 (2), by holding that the assessee has raised a highly debatable issue, whereas, it is a pure question of fact, as to whether the ground of appeal stood decided on merits or not and hence the ITAT, committed perversity in recording such findings as the same are contrary to the material and evidence available on record.”

4. Brief facts giving rise to these two appeals are that an assessment was made by the Income Tax Officer, Range-3, Mathura under Section 143 (3) of the Act, by making additions to the returned income under Section 68, disallowing the gift received by the assessee of Rs. 2 lacs from Shri Jay Singh Yadav, and another gift of Rs. 2 lacs from Shri Gajanand Goyal. The gift received from Shri Jay Singh Yadav was disallowed on the ground that Shri Jay Singh Yadav had never given any donation to her. The assessee had herself deposited the amount in the account of Shri Jay Singh Yadav and had thereafter withdrawn to deposit it in her account showing it as donation. She has no relations with Shri Jay Singh Yadav, who has a small salary and huge liability of his family. In the year 2000 he had got his daughter married. His financial position was not so good that he could have saved Rs. 2 lacs. He had never given any donations to any of his relatives in his whole life. The Income Tax Officer held the said amount to be from undeclared source of the assessee under Section 68 of the Act and liable to be taxed in her hands. For the other gift of Rs. 2 lacs from Shri Gajanand Goyal, the assessee was given eight opportunities to produce the person. She could not produce him. On her request summons under Section 131 were issued on 22.8.2005. The letter returned back with the remarks “on enquiry no one resides at the given number”. The address was provided by the assessee on 18.5.2005. The assessee submitted that she had provided two addresses of Shri Gajanand Goyal, given to her by Shri Amar Singh Pal. Shri Amar Singh Pal was contacted on his mobile number on which he had informed that he is a Chartered Accountant and has prepared the statement of accounts of Shri Gajanand Goyal. He does not know his address, and that in any case he is not residing at 2250 Naya Bazar, Delhi. The assessee submitted that as per statement of Shri Amar Singh Pal, the donor is resident of Delhi and he has given the gift. The assessee was thereafter directed to be present in person for evidence regarding both the gifts. She did not appear and instead submitted her written statement. On these facts the Assessing Officer found that she had failed to prove the donations and added the amount to her income.

5. The CIT (A) confirmed the findings of the Assessing Officer that the assessee has not proved the validity and bonafides of the gift of Rs. 2 lacs each from Shri Jay Singh Yadav and Shri Gajanand Goyal. The CIT (A) discussed the entire evidence all over again in confirming the findings of the Assessing Authority.

6. In the second appeal the Judicial Member and the Accountant Member of the Income Tax Appellate Tribunal, Agra Bench, Agra recorded difference of opinion on a question of law to establish the genuineness of gifts. The Judicial Member held that before dealing with the issue as to whether the gifts are genuine or not, it was necessary to deal with the legal question as to whether the amount can be added under Section 68 of the Act or not. It was argued that the assessee does not maintain any books of accounts in her individual capacity, but for her proprietorship concern. The amount in question (the gifts) were received in her individual bank account, and do not relate to the books of account of her proprietorship concern. The Judicial Member held that Section 68 is attracted only when any credit entry is found in the books of account of the assessee. The bank passbook, in which these amounts were credited, is not a book of account. Relying upon CIT v. Bhaichand N. Gandhi [1983] 141 ITR 67/[1982] 11 Taxman 59 (Bom.); Sundar Lal Jain v. CIT [1979] 117 ITR 316 (All.); Ms. Mayawati v. Dy. CIT[2008] 19 SOT 460 (Delhi); Anand Ram Raitani v. CIT [1997] 223 ITR 544 (Gau.); Smt. Shanta Devi v. CIT [1988] 171 ITR 532/37 Taxman 104 (Punj. & Har.); and Jawahar Lal Oswal v. Asstt. CIT [1999] 71 ITD 324 (Chd.) he held that since the assessee had succeeded on the legal aspect, there was no need to decide the appeal on the merits of these gifts. Consequently, the appeal was partly allowed.

7. The Accountant Member in his dissenting opinion held that in the present case the bank account under reference being a regular and disclosed one, the same in any case forms part of the assessee’s accounts so that it becomes immaterial in so far as application of Section 68 is concerned. The credit amount does not continue to be deposited in the bank account but stands immediately withdrawn, so that the amount flows to the assessee’s business or its regular accounts, i.e., if the books of account are to be construed as only business accounts, even as there is no warrant for the same either in law or in fact. He further held in para 3.3 and 4 of his judgment as follows:—

“3.3 Further, notwithstanding and without prejudice to the foregoing, even if for argument sake it is considered that the assessee is not maintaining any books of accounts, or that the two credits, claimed to be gifts, which stand deposited in its bank account, does not form part of its regular accounts or “books of account”, the maintenance of which is beyond doubt, or did not flow, during the relevant previous year, in its regular accounts, the finding on which would also be necessary to decide the issue on the legal ground as assumed, the fact of the amount (s) having been deposited in the assessee’s bank account (assuming it to be, for whatever reason, not a part of its books of accounts), so that the same does not stand included in its accounts, the provisions of Section 69 of the Act would become applicable, so that this legal plea is by itself of no moment. Support for the purpose stands drawn from the decision in the case of CIT v. Jauharimal Goel , [2005] 147 Taxman 448 (All.), wherein it stands clarified that the deposit in the assessee’s bank account would stand to be covered u/s. 69 or s. 69A of the Act. The observations of the Hon’ble Court would apply with more force where the bank account is not disclosed or does not form part of the assessee’s books of account, or the same stand not maintained, so that the provision of s.68 would not be applicable thereto. The Act, it is trite, must be read as a whole to discern its scheme. For our purpose, rather, what is required is a whole some study of the relevant provisions, i.e., of the said Chapter (VI) of the Act, which requires a satisfactory explanation from the assessee, for it to be not deemed as its income for the relevant previous year, qua any credit in its books, or any other asset or money or valuable, of which it is found to be owner, and which stands not disclosed (per its books of account). As such, where the said ownership is not disputed, as in the instant case with the assessee itself claiming the said sums to be gifts to it, and thus its property, the onus to explain the same is on the assessee. Further, this onus, the relevant provisions of Chapter VI of the Act (viz. s.68, 69, 69A, 69B, and 69C) being para materia, employing the same language, is the same for all the said provisions. This aspect of the matter, i.e., of the extent and the nature of the burden of proof cast per the different deeming provisions of the said Chapter, where applicable, being the same, stands, apart from being born out by the express language of the Act, endorsed by the Tribunal (Agra Bench) per its decision in the case of Sachin Aggarwal v. ITO (in ITA No.17/Agr/2008 dated 02/1/2009. As such, it would be of no consequence in law, in the facts and circumstances of the case if the AO applied the provisions of s. 68 instead of s. 69 of the Act it being trite that the omission to refer to a section, or even applying a wrong section, would be of no moment as long as the authority concerned has the necessary power to perform the action under reference (refer: L. Hazarimal Kuthalia v. ITO [1960] 41 ITR 12 (SC): Laxmi Industries & Cold Storage (P.) Ltd. v. ITO [1971] 79 ITR 248 (All.). Also, it is a settled principle of law that in a given case the transaction under reference may fall to be covered under more than one provision of the Act, and which by itself would be of no moment. I state so by way of abundant clarification, and for the sake of completeness of the discussion in the matter, even as the two provisions under reference, i.e. s.68 and 2.69 are alternative, one (s.68) becoming applicable under the condition of existence of the books of account, and the other (s.69) where no so.

4. Finally, as my brother’s order does not adjudicate the issue on merits. I also refrain from doing so as it would be of no consequence; and order by the Division Bench of the Tribunal can only be where the same stands endorsed by both the members constituting the Bench, or in case of a difference of opinion, which would only be, where one is expressed, by majority view, through the procedure as laid down u/s 255 (4) of the Act. As such, even as this issue stood raised by me during the discussion with my ld. Brother, I am constrained not to proceed any further in the matter.”

8. On the difference of opinion recorded between the Judicial and Accountant Members of the ITAT, Agra, they by order dated 16.2.2009 referred the matter to the President, ITAT to nominate a 3rd Member as per provisions of Section 255 (4) of the Act on the question as follows:—

“3. That the Commissioner of Income Tax (Appeals) was wrong in confirming in disallowing the gifts received by the assessee Rs.4,00,000/-

a. Shri Jay Singh Yadav                                                              Rs.2,00,000/-

b. Shri Gajanand Goyal                                                              Rs.2,00,000/-

as cash credit and to assess as income u/s. 68 of the Income Tax Act by the Ld. Income Tax Officer.”

9. The President, ITAT nominated Shri G.E. Veerabhadrappa, Vice President as the 3rd Member, who heard the matter and recorded his opinion, which was an agreement with the discussions of learned Accountant Member. He found that learned Accountant Member appreciated the fact that the assessee is a wholesale cloth merchant doing the business under the name ‘Shri Ganesh Traders’, maintaining accounts, which stand duly audited under Section 44AB of the Act, as also her personal account, compiling final accounts in the form of a combined profit & loss account, capital account, the personal balance sheet, which, thus reflects the capital investment in Shri Ganesh Traders. In the assessment order there is reference to the production of books of account, vouchers etc. in the course of assessment proceedings. The audit under Section 44AB of the Act is to be of the assessee’s accounts for the relevant year and not only those relating to the business/profession, the turnover in which exceeds the threshold limit, or only of its business or profession. The Assessing Officer held that it was clear from the record that the bank account under reference forms part of the assessee’s business accounts as is evident from the absence of any ground in its respect, both before the Tribunal as well as before CIT (A). According to him all these shows that the assessee is maintaining books of account.

10. The Vice President, ITAT acting as 3rd Member observed that the Accountant Member went on to discern the assessee’s books and found that the credit amount does not continue to be deposited in the bank account, but stood immediately withdrawn so that the amount flows into the assessee’s business where regular accounts are maintained. He opined that there was no factual basis whatsoever for allowance of its appeal on this basis and justified the addition even under Section 69 of the Act. He relied upon CIT v. Jauharimal Goel [2005] 147 Taxman 448 (All) wherein it was clarified that the deposits in the assessee’s bank account stood covered under Section 69 or Section 69A of the Act. The provision of Section 68 would not be applicable thereto. He also relied upon L. Hazari Mal Kuthiala v. ITO [1961] 41 ITR 12 (SC) and Laxmi Industries & Cold Storage Co. (P.) Ltd. v. ITO [1971] 79 ITR 248 (All) and reiterated the settled principle of law that in a given case, the transaction may fall to be covered under more than one provisions of the Act.

11. The Vice Chairman, ITAT as the 3rd Member examined the papers filed by the assessee. She had filed Form 3CD signed by the Chartered Accountant, who certified the financial statements of the assessee. Column No. 9 of this form clearly states that the assessee has maintained cash book, ledger and journal. It is stated that proper books of account have been kept by the assessee so as to enable the drawing of the profit & loss account and the balance sheet. The financial statements for individual transactions as well as the transactions of Shri Ganesh Traders were subject to audit report of even date, which does not qualify the shortcoming or non-maintenance of any books of account. There were sufficient indication in the directions of maintenance of books of account by the assessee. Learned Judicial Member did not even deal with these and went by the legal arguments taken in this regard, which were not even mentioned in the order of CIT (A). He thereafter held in paras 11, 12 and 13 of his order as follows:—

“11. Even if the assessee is technically taken to be not maintaining any books of account in relation to the passbook entries, it must be appreciated that the passbook credits have ultimately gone into the books of the assessee by way of credit in capital account as found by the learned AM. In any case, I refrain from getting into that aspect of the matter. The addition could very well be justified even under Section 69 of the Act. It is for the assessee to prove the sources of the credits in the bank account as the bank itself has acknowledged that the assessee has an asset in the form of credits in the passbook. It is only for this reason that the assessee ventured into furnishing the evidence in support of the claims of gifts stated to have been received by her. The assessee being found to be the owner of a particular asset is definitely under an obligation to disclose all the sources thereof to the satisfaction of the tax authorities. So, the quarrel whether it is Section 68 or Section 69 should not make a difference having regard to the subsisting obligation of the assessee to explain all the credits and sources of the investments found by the Revenue. In my view the learned Judicial Member was unnecessarily in haste to get into the case laws without properly appreciating the facts of the case. It always happens whenever a judgment is appreciated without appreciating the facts that led to that particular decision. I am observing this because it was not the case of the assessee either before the AO or before the CIT (A) and the record that is produced by the assessee before the authorities and before the Tribunal is sufficient to indicate the fact relating to the maintenance of the books of account by the assessee, as discussed by the learned Accountant Member. Therefore, in my view, deleting the addition only on the legal grounds, without appreciating the facts on record does not bring proper result. To this extent I do not approve the view of the learned Judicial Member. I entirely agree with the discussions of the learned Accountant Member in this regard.

12. In the light of the discussions which are primarily based on the facts of the case as presented before the tax authorities, I am of the view that the additions are required to be upheld. I may make it very clear that in the light of the discussions in the two orders, I have refrained myself from getting into the merits of the additions, although the learned counsel who appeared before me presented certain case laws which are relevant only for deciding the issue on merits.

13. The matter shall now be placed before the regular Bench for passing appropriate order.

Decision pronounced in the open Court on 30th August, 2011.

Sd/-

(G.E. VEERABHADRAPPA)

VICE PRESIDENT”

12. The matter came back to the Bench of the Tribunal with the opinion of the Vice President, ITAT as the 3rd Member, on which the Income Tax Appellate Tribunal, Agra Bench, Agra, consisting of a different Judicial Member and Accountant Member, found that since the 3rd Member had agreed with the view taken by the Accountant Member, the appeal of the assessee is treated as dismissed, giving rise to Income Tax Appeal (Defective) No.36 of 2013.

13. The assessee filed an application under Section 254 (2) before the Income Tax Appellate Tribunal, Agra, which was dismissed on 11.1.2013, giving rise to the Income Tax Appeal No.67 of 2013. While dismissing the application under Section 254 (2) of the Act, the ITAT observed that the alleged mistake to be rectified under Section 254 (2), must be so obvious that it can be easily corrected, such as any arithmetic mistake, a wrong quotation of section, etc. A debatable issue cannot be considered as mistake to be corrected by the Tribunal, which has no powers to review its orders. Relying upon Hindustan Lever Ltd. v. Jt. CIT [2006] 284 ITR 42 (Cal.) and CIT v. Earnest Exports Ltd. [2010] 323 ITR 577/8 taxmann.com 302 (Bom.) it was held that since the matter was referred to the 3rd Member, therefore, its is a decision like a decision passed by Special Bench of three Members and therefore, the subsequent Division Bench is not competent to comment upon the order passed by the 3rd Member.

14. Shri Abhinav Mehrotra submits that the Judicial Member had not adverted to the facts of the case and had not decided the question of genuineness of the gifts, on merits. He had only recorded an opinion that Section 68 of the Act is attracted only when any credit entry is found in the books of accounts of the assessee and that the bank pass book is not a book of accounts. In the opinion of the 3rd Member, who had considered the escalating facts, the difference of opinion was recorded only on the question as to whether the bank account under reference being a regular and disclosed one, the same formed part of the assessee’s account so that this became immediately in so far as application under Section 68 is concerned. In para 4 of the order the Accountant Member clearly opined that since the order passed by the Judicial Member did not adjudicate the issue on merits, he is also refraining from doing so as it could be of no consequence.

15. Shri Abhinav Mehrotra submits that in the aforesaid circumstances the opinion of 3rd Member, to which the matter was referred for resolution under Section 255 (4) on the question of law, could not be the basis to dismiss the appeal. The Bench of Income Tax Appellate Tribunal, after having received the order of the 3rd Member, who had resolved the issue with regard to question of law referred to it, should have adverted back to the merits of the matter and considered as to whether the gifts were genuine. Having resolved the legal question and the quarrel whether under Sections 68 and 69 would be applicable and which would not make any difference as the financial statement of the assessee based on the accounts maintained by her reflected the financial statements for individual transaction, as well as transaction of Shri Ganesh Traders, which were subjected to audit report, the question of the genuineness of the transaction was lost in the debate.

16. Shri Abhinav Mehrotra submits that the confirmation of the opinion of the Accountant Member, who had deferred with the Judicial Member by the 3rd Member decided the question as to whether the Commissioner of Income Tax (Appeals) was wrong in confirming/disallowing the gifts received by the assessee as cash credit and to assess the income under Section 68 of the Act by the Income Tax Officer. The decision of this question could not have resulted into the decision of the appeal by the ITAT unless it had, after receiving the opinion of the 3rd Member, adverted the merits of the matter namely the genuineness of the gifts received by the assessee. To this affect the application under Section 254 (2) of the Act was maintainable. The ITAT should have rectified the mistake of having failed to decide the question of genuineness of the gifts on merits. The assessee has on the mistake committed by the ITAT lost an opportunity of second appeal on the question of genuineness of the gifts, which is a mixed question of law and facts. He would also submit that ITAT further erred in law in holding that the earlier order passed by it was an order passed by the Three Member Bench and thus the two Member Bench did not have jurisdiction to entertain the application under Section 254 (2) of the Act. He submits that the order after receiving the opinion of the 3rd Member cannot be treated as the order of three Member Bench. The order would in any case be of decision of Income Tax Appellate Tribunal, which could be rectified by the two Members, who had subsequently formed the Bench.

17. Shri Shambhu Chopra, on the other hand, submits that the ITAT had not only considered the question of law raised before it regarding the disallowance of the gifts received by the assessee so as to assess it as income under Section 68 of the Act, the Accountant Member had also considered the merits of the genuineness of the gifts as well. The 3rd Member had discussed the matter relating to applicability of Sections 68 and 69 as well as the genuineness of the transaction on its merits and that in the ultimate result gifts were not found to be genuine. It was recorded that Shri Jay Singh Yadav did not have any means and that the amount was deposited by the assessee in his account and was withdrawn showing it to be gift. Shri Jay Singh Yadav appeared but could not establish that he had any relation or capacity to give the gift of an amount of Rs. 2 lacs. On the other gift of Rs. 2 lacs the findings that the donor did not appear despite several opportunities and that a wrong address was given for service on him under Section 131 of the Act by the assessee was also considered and formed. Shri Shambhu Chopra submits that the gifts were arranged through Chartered Accountant, who could not establish the identity of Shri Gajanand Goyal and his relationship and capacity to give gift to the assessee. These two transactions recorded in the bank pass book, which were ultimately reflected in the accounts of Shri Ganesh Traders, which had maintained the accounts as wholesale cloth merchant was considered. The personal accounts of the assessee were compiled in the final accounts of the business in the firm and were reflected in the combined profit and loss account, capital account wherein the profit from proprietary business stood transferred. The balance sheet reflected the capital investment of the assessee in M/s Shree Ganesh Traders. The assessee had produced the books of accounts, vouchers before the Assessing Officer in the course of assessment proceedings. The accounts were also audited.

18. Shri Shambhu Chopra submits that after the opinion expressed by the 3rd Member, the opinion of the Accountant Member stood confirmed and that the decision would be that of the Division Bench of the Tribunal and would not be taken the reference to be decided by the three Member Bench. He further submits that since the question of law as well as the question of genuineness of the transactions as the question of fact was also decided on merits, the passing observation, that the Accountant Member and the 3rd Member had not considered the question on merits, would be of no consequence.

19. We have examined the order in the light of the questions raised before us and find that the Tribunal, after receiving the opinion of the 3rd Member, who had concurred with the Accountant Member, only decided the question of law. The question, as to whether disallowance was made under Section 68 and under Section 69 depended on the question as to whether the credit was shown in the books of accounts of the assessee. It was found that though the bank pass book is not a book maintained by the assessee for the purpose of Section 68, it made no difference whether Section 68 and Section 69 of the Act would be applicable. The assessee is a wholesale cloth merchant doing the business under the name of Shri Ganesh Traders, which was maintaining the accounts. The accounts stood audited under Section 44AB of the Act in respect of the business as well as personal accounts, which were compiled as final accounts in the form of combined profit and loss account, capital account and personal balance sheet and reflected the capital investments in Shri Ganesh Traders. The assessee had produced these accounts before the Assessing Officer and thus the Tribunal opined in its majority opinion of the Accountant Member and the 3rd Member that Section 68 would be attracted and that even if Section 69 is referred to, the addition was justified under any of these two Sections as the sum was found credited in the books of assessee maintained for the previous years.

20. We have examined the question of law, which was raised and argued before the Tribunal and was referred for opinion of the 3rd Member, which was considered by the Judicial and Accountant Member of the Tribunal as well as 3rd Member, as to whether the Commissioner of Income Tax (Appeals) was wrong in confirming/disallowing the gifts received by the assessee of Rs. 4 lacs from following; (a) Shri Jay Singh Yadav of Rs. 2 lacs, (b) Shri Gajanand Goyal Rs. 2 lacs as cash credit and to assessee as income under Section 68 of the Act by learned Income Tax Officer. Both the Accountant Member and the 3rd Member, to whom the matter was referred, considered the question of law and returned the question in favour of the revenue. The counsel appearing for the assessee has not questioned the correctness of their decision, which is the majority decision of the Tribunal on the issue.

21. We however find substance in the argument of Shri Avinash Mehrotra that after deciding the question referred to as above, both the Accountant Member and the 3rd Member have expressly recorded in their orders that they have not gone into the merits of the additions. The 3rd Member also observed that he has refrained himself from getting into the merits of the additions although learned counsels, who appeared, presented certain case laws, which were relevant for deciding the issue on merits.

22. The opinions expressed by the Accountant Member and 3rd Member clearly demonstrate that they did not consciously decide the question of genuineness of the gifts on its merits.

23. We agree with Shri Shambhu Chopra that the decision of the ITAT, where there is difference of opinion and that the opinion of one of the Members finds support of the 3rd Member, would still be a decision of the Tribunal and is not to be treated as opinion of the three Member Bench, for denying an opportunity of rectification under Section 254 (2) of the Act.

24. In the present case the prayer in the application under Section 254 (2) of the Act filed by the assessee was to consider the question of genuineness of the gifts on merits. Such a prayer could not be considered under Section 254 (2) of the Act as a conscious omission to consider an issue on merits would not fall within the meaning of rectification of any error, which has crypt in the judgment. The Accountant Member and the 3rd Member, after having decided the question of law, should have considered the question of genuineness of gifts, which was pressed by the counsel appearing for the assessee. The assessee has lost the right of second appeal on the question of genuineness of gifts, on its merits. In our opinion the Tribunal erred in law in dismissing the appeal only on the ground that since the 3rd Member had agreed with the Accountant Member, the appeal deserves to be dismissed. The question of genuineness of gifts in view of the opinion of the 3rd Member was not considered on merits and was thus still open and on which the Tribunal did not give any decision. We thus find that the Tribunal erred in law in exercise of its powers in failing to decide the question of genuineness of the gifts on merits.

25. On the aforesaid discussions, the substantial questions of law framed in Income Tax Appeal Defective No.36 of 2013 are decided in favour of the assessee and against the revenue. The Income Tax Appeal is allowed and the matter is remanded to the Tribunal to decide the question of the genuineness of the gifts on its merits in accordance with the law.

26. The substantial questions of law framed in Income Tax Appeal No.67 of 2013 are decided in favour of revenue and against the assessee. The Income Tax Appeal No.67 of 2013 is consequently dismissed.

[Citation : 358 ITR 483]

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