Punjab & Haryana H.C : violation of the ‘Principles of Natural Justice’ by refusing to afford any opportunity to the counsel for the appellant firm to produce documentary evidences as regards issues which were not in dispute before the Tribunal

High Court Of Punjab And Haryana

Vithal Overseas Vs. CIT

Assessment Year : 2004-05

Section : 37(1)

Adarsh Kumar Goel And Mrs. Daya Chaudhary, JJ.

IT Appeal No. 713 Of 2008 (O & M)

July  15, 2009


Adarsh Kumar Goel, J. – The assessee has preferred this appeal under section 260A of the Income-tax Act, 1961 (in short, ‘the Act’) against the order of the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar, dated 6-6-2008, passed in ITA No. 81(ASR)/2008 for the assessment year 2004-05, proposing to raise four substantial questions of law, out of which learned counsel for the appellant pressed only question Nos. 1 and 2, which are as under :—

“1. Whether the Tribunal had gravely erred in law and acted in gross violation of the ‘Principles of Natural Justice’ by refusing to afford any opportunity to the counsel for the appellant firm to produce documentary evidences as regards issues which were not in dispute before the Tribunal?

2. Whether the Tribunal had erred in law and exceeded its jurisdiction by not confining itself to the matter in issue in the appeal before it and deciding the appeal before it in favour of the revenue/department on grounds not in controversy?”

2. The assessee made a claim for deduction of Rs. 5,88,500 towards expenditure on foreign travel of Sunil Kumar Malhotra, son of one of the partners. The claim was disallowed for want of evidence. On appeal, the claim was allowed except for 10 per cent attributable to personal expenses. The CIT(A) observed that the expenditure had been incurred by cheque and there was nexus with the business purpose. On appeal of the revenue before the Tribunal, the view taken by the CIT(A) was set aside. It was held that the assessee had not led any evidence that visit of Sunil Kumar Malhotra was necessary to facilitate negotiations with foreign buyers. There was no evidence of any negotiations which may have taken place. There was also no evidence that Sunil Kumar Malhotra had special aptitude with regard to business of the assessee nor there was any evidence to show that he was representative of the assessee.

3. Learned counsel for the appellant submits that the Tribunal ought to have given further opportunity, as the Tribunal was dealing with a ground, which was beyond the grounds raised and under rule 12 of the Income-tax Rules, 1962, if a new ground was taken, which was beyond the originally pleaded ground, an opportunity to lead evidence was required. Reliance has been placed on judgments of this Court in CIT v. Dehati Co-operative Marketing-cum-Processing Society [1981] 130 ITR 504 and Oriental Building & Furnishing Co. v. CIT [1952] 21 ITR 105 (Punj.).

4. We are unable to hold that the questions raised are substantial questions of law. Whether evidence is to be allowed, is a matter of discretion depending upon a fact situation. In the present case, the issue dealt with was assessee’s claim for deduction of amount towards expenses incurred by Sunil Kumar Malhotra on foreign travel. The assessee had all the opportunity before the Assessing Officer to produce evidence that Sunil Kumar Malhotra was representing it and expenditure was genuinely incurred for business purpose. No doubt, the CIT(A) accepted the plea of the assessee, the Tribunal was entitled to go into the correctness of the said finding and take its own view by appreciation of evidence. There was no obligation on the part of the Tribunal to allow further evidence as no new point was raised. The question of issue being the genuineness of the expenses incurred for business purpose on visit of Sunil Kumar Malhotra, representing the assessee, the judgments relied upon are distinguishable.

5. The questions raised cannot be held to be substantial questions of law.

6. The appeal is dismissed.

[Citation : 334 ITR 229]

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