Income Tax Appellate Tribunal - Delhi
Amar Singh vs Income-Tax Officer on 25 May, 1995
Equivalent citations: [1995]54ITD375(DELHI)
ORDER
T.V. Rajagopala Rao, President
1. These are assessee's appeals against the common order dated 31-12-1991 passed by the C1T(A), Agra relating to assessment years 1974-75 and 1975-76.
2. The facts leading to the present appeals are briefly stated as follows : M/s. Sunheri Lal Bhagwati Prasad (SLBP for short) was a firm of two partners - S/Shri Sunheri Lal and Bhagwati Prasad each having 50 per cent share. The firm did wholesale commission business in vegetables, potatoes at Sabzi Mandi, Agra. They are the sons of Shri Amar Singh by his first wife. It appears that Shri Amar Singh after the death of his first wife married second time.
3. Shri Amar Singh did separate but similar business at the same Sabzi Mandi Agra as a partner of a separate firm M/s. Vishwa Nath Amar Singh. The above two firms have two separate business premises though both of them were situated in the same Bazar.
4. On 3-10-1974, survey under Section 133A of the Income-tax Act was conducted by the Income-tax Inspectors both on the business premises of M/s. SLBP and M/s. Vishwa Nath Amar Singh. During the inspection some documents bearing some entries, calculations on them were found at the business premises of M/s. SLBP on which the Inspectors signed for identification. Later, during the assessment proceedings for assessment year 1974-75 summons under Section 131 were issued to produce those papers marked 71 to 74 and on their production, they were impounded by the ITO on the ground that they represent incriminating documents.
5. According to the revenue these papers disclose various amounts deposited by Shri Amar Singh in M/s. SLBP on various dates falling in the accounting year relevant to assessment years 1974-75 and 1975-76. For assessment year 1974-75, money aggregating to Rs. 1,96,000 came in small sums spreading from 15-12-1973 to 31 -3-1974. The items in total are eighteen (18) in number. It is also the revenue's case that such deposits relating to assessment year 1975-76 totalled to Rs. 2,53,000. It is also the revenue's case that the said papers (No. 71 to 74) are in the hand-writing of Shri Bhagwati Prasad who worked as Munim in M/s. SLBP at the time of survey. The documents did not clearly and unequivocally reveal that the amounts were deposited by Shri Amar Singh. According to the revenue the initials 'VA' found in those papers represent the name of M/s. Vishwa Nath Amar Singh.
6. On the basis of these documents the revenue at the first instance wanted to add Rs. 1,96,000 for the assessment year 1974-75 and Rs. 2,53,000 for the assessment year 1975-76 in the hands of M/s. SLBP. During the course of assessment proceedings against M/s. SLBP for assessment years 1974-75 and 1975-76 Shri Banarsi Dass Munim was examined twice, that is on 4-10-1977 and 5-12-1977. According to his depositions Shri Amar Singh, the assessee before us in these appeals deposited the various amounts on different dates appearing in the impugned papers and he directed Shri Banarasi Dass to record the transactions on the impugned papers. While framing the assessments against M/s. SLBP for assessment year 1974-75 a sum of Rs. 1,96,000 and for assessment year 1975-76 a sum of Rs. 2,53,000 were added as unexplained deposits. At pages 1 to 5 of the assessee's paper book-II, the assessment order dated 21-6-1978 and at page Nos. 6 to 10, the assessment order of even date for assessment year 1975-76 were provided.
7. M/s. SLBP filed appeals before the CIT(A), Kanpur inter alia challenging the impugned additions for assessment years 1974-75 and 1975-76. For narration of facts it is enough to note that the appeals were allowed by the CIT(A) by his separate but similar orders dated 31-12-1979. He mainly relied on the statement of Shri Banarsi Dass for coming to his conclusion that the moneys in the impugned papers belonged to Shri Amar Singh, the assessee before us but did not represent moneys belonging to M/s. SLBP. The appellate orders of the CIT(A), Kanpur for assessment year 1974-75 were provided at pages 11 to 19 and his appellate order for assessment year 1975-76 were provided at pages 20 to 21 of the paper book No. II filed by the assessee before us.
8. Against those orders of the CIT(A), Kanpur the revenue filed appeals before the ITAT and M/s. SLBP filed cross objection. The Delhi Bench 'B' consolidated all these appeals filed by the assessee as well as by the Department and the cross objection filed by the assessee and disposed of them of by its consolidated order dated 1-2-1982. The learned Tribunal had dismissed the appeals filed by the Department as well as by the assessee and also the cross objection filed by the assessee. The consolidated orders of the Tribunal are provided at pages 22 to 36 of paper book No. II filed by the assessee before us. In para 11 of its order, the learned Tribunal had observed the following:
We have given consideration to the above arguments. There is no dispute that Shri Banarasi Dass was the Munim of the assessee at the time of the survey of the assessee firm on 3-10-1974 the assessee had in its reply dated 20-12-1977 at pages 23 and 24 of the paper books admitted that the aforesaid papers at pages 71 to 74 are in the handwriting of Shri Banarasi Dass. Shri Banarasi Dass has been examined on oath twice by the ITO and he has also been cross examined by the assessee. We have gone through the statement very carefully. No question in cross examination has been asked by the assessee from the said witnesses to show that that the statement of Shri Banarasi Dass is not correct or that any of the assertions not made before us by the assessee is correct.
There was evidence also available with the assessee in the shape of accounts, if any, maintained by it regarding the salaries paid to the said Munim. Those entries could have proved as to when Shri Banarasi Dass cease to draw the salary, that evidence was not produced by the assessee though available with it. It seems to have been intentionally kept by it. We will, therefore, be justified in accepting the aforesaid statement of Shri Banarasi Dass that he was in the service of the assessee-firm upto February/March, 1976. From the statement of the said Munim Shri Banarasi Dass and his cross examination, we do not find any material or statement, nor is there any evidence, otherwise on record to prove that the said Munim is, in any way inimical to the assessee-firm or the partners constituting it. Further on going through these statements and cross examination, very minutely, we also find that the assessee-firm has not been able to shake his credence. His statement, in the absence of any evidence to the contrary, has to be accepted. The statement of Shri Banarasi Dass, as rightly held by the CIT (Appeals) prove when Shri Amar Singh in his statement recorded by the ITO for the second year has not categorically denied the same prove the fact that the amount to the extent of Rs. 1,96,000 for the first year and the additional amount of Rs. 2,53,000 was introduced by Shri Amar Singh, father of the partner of the assessee-firm for the purposes of business of the assessee-firm.
9. The revenue tried to obtain reference from the Tribunal's order dated 1-2-1982 under Section 256(1) of the I.T. Act, 1961. Copy of Form No. 37 is provided at page 37 and the connected statement of facts at page 38 and proposed question of law at page 39 in the second paper book filed before us. The reference filed by the revenue was rejected and its rejection order dated 18-8-1992 is provided at pages 40 to 54 of the second paper book filed by the assessee before us.
10. Even by March, 1985 the individual assessments of Shri Amar Singh for assessment years 1974-75 and 1975-76 were not completed inasmuch as many a time his assessments were completed ex parte but they were reopened under Section 146 and again his assessments were completed under Section 144 for his purported default. The table at page 1 of the paper book No. 1 filed by the assessee disclose the whole information as to how many times ex parte assessments were made and how many times they were set aside for assessment year 1974-75 and 1975-76. For the sake of better appreciation, the table mentioned above is extracted below:
Asst. Year Income Asst. Year Income
1974-75. assessed 1975-76 assessed
1. Return of 1-3-1977 In response
income was to notice 25-7-1980
filed volun- under Section 148
tarily. dated 27-3-1980
2. First assess-
ment com-
pleted under
Section 24-2-1978
144 on No order 99,620
3. Re-opened
under Section
146
4. second asst.
completed
under Section
144 on 15-3-1980 97,120
5. Reopened under
Section 146
6. Third asst. 3-2-1983 3,12,720 3-2-198 33,08,394
completed on
under Section
144.
7. Reopened under
section 146.
8. Now asst. 30-3-1985 2,87,080 2,76,290
completed
under Section
143(3) on
(under appeal)
11. Ultimately, the assessment was completed under Section 143(3) against Shri Amar Singh on 30-3-1985 for assessment year 1974-75 as well as for assessment year 1975-76 by two separate assessment orders. These two separate orders form the basis of the appeals now stood for our consideration. The ITO Circle-2, Agra had issued notice dated 13-3-1985 under Section 143(2) for assessment year 1974-75 and dated 19-3-1985 under Section 143(2) for assessment year 1975-76 to the assessee. Quoting the Tribunal's findings in the case of M/s. SLBP which is already extracted above, the ITO called upon the assessee to show cause why in view of the said finding of the Tribunal the deposits of Rs. 1,96,000 for assessment year 1974-75 and Rs. 2,53,000 for assessment year 1975-76 should not be added as the income of the assessee for assessment year 1974-75 and 1975-76. Notice given to the assessee for assessment year 1974-75 was provided at page 8 and similar notice given for assessment year 1975-76 was provided at page 9 of the 1st paper book filed by the assessee before us. The assessee gave his replies dated 6-2-1985 and 14-2-1985 relating to the notices issued to him for assessment year 1974-75. Firstly, it is contended in the replies filed by the assessee that the documents were found in the premises of the firm M/s. SLBP during the course of survey and the assessee had no concern with the same. Secondly, it is contended that during the course of assessment proceedings of M/s. SLBP the statement of Shri Amar Singh, the assessee herein, was recorded in which he had completely denied the knowledge of any such document. Further it is contended that the Tribunal's findings or observations while disposing of the appeal of M/s. SLBP were not binding against the assessee nor can it be treated to be relevant with the assessee's case. It is contended that on the basis of the said finding, the income cannot be treated as the income of the assessee, that the burden of proving that the alleged papers belonged to the assessee or any income in respect thereof belonged to the assessee is on the revenue and the assessee cannot be supposed to prove negative. Ultimately, it is contended that the finding of the Tribunal in the case of M/s. SLBP has no connection with the assessee's case and no reliance can be made on that finding of the Tribunal in the assessment of the assessee and any such reliance shall be completely unwarranted, illegal and bad in law. At no stage, the assessee was confronted by the Income-tax Appellate Tribunal about such a finding and the finding given without affording an opportunity to the person against whom the same is given is not finding either in fact or in law. The assessee relied upon the Andhra Pradesh decision in the case of Kalwa Devadatham v. Union of India [1958] 33 ITR 56 wherein it has been held that the onus rests on the income-tax authority to show that the income which they seeks to tax is liable to be taxed by the statute. The assessee brought to the notice of the ITO that inspite of the objections raised by him, if the document found in the premises of M/s. SLBP was sought to be utilised against the assessee, then it was requested to summon the following persons under Section 131 of the I.T. Act, 1961 :
1. Shri Sunheri Lal, ex-partner of M/s. Sunheri Lal Bhagwati Prasad, r/o Hajipura, Agra.
2. Shri Bhagwati Prasad, r/o Hajipura, Agra.
3. Shri Banarasi Dass, Munim, r/o 4306, Parsuram Gali, Kacheri Ghat, Agra.
4. Inspector of Income-tax who conducted search. It was reiterated that the document on which the figure of Rs. 4,49,000 was found written did not belong to the assessee nor was found in his premises, although, the survey was also conducted on the premises of M/s. Vishwanath Amar Singh in which the assessee was one of the partnera on that very day. The ITO however, rejected the submissions of the assessee. After extensively extracting the Tribunal's findings made in the case of M/s. SLBP, the ITO passed the assessment orders. The reasons for the addition is found to be as follows :
Since the Hon'ble Tribunal and all other subordinate authorities have duly considered the ownership of the papers and gave interpretation and have affirmed that the finding is one of fact investments to the extent of Rs. 1,96,000 is included in the hands of the assessee as unexplained investments Thus as against the declared income of Rs. 20,770 the assessment was completed for assessment year 1974-75 on a total income of Rs. 2,87,080 as per the assessment order passed by the ITO dated 30-3-1985. Almost for similar reasons, the ITO made an addition of Rs. 2,53,000 as unexplained investment in the hands of the assessee for assessment year 1975-76 by his assessment order dated 30-3-1985 under Section 143(3) Aggrieved against the additions made towards unexplained investment for the assessment years 1974-75 and 1975-76 the assessee went in appeal before the CIT (Appeals), Agra. During the appeal proceedings before considering the merits of the assessee's contention, the learned CIT (Appeals) asked the ITO to report whether Shri Banarasi Dass could be contacted and whether his statement could be recorded in the presence of the assessee. If such person is available for recording the statement, the ITO was asked to record the statement in the presence of the assessee and allow the assessee to cross examine him. However, the ITO reported to the CIT (Appeals) that Shri Banarasi Dass expired on 4-7-1985. The CIT (Appeals) found that the question before him was whether to embark on de novo recording of the testimony of Sri Banarsi Dass, Munim or whether the ITO could consider the two statements recorded by his counter part on 14-10-1977 and 5-12-1977 of Shri Banarsi Dass during the course of assessment proceedings in the case of M/s SLBP. He also identified that another linked up question which arises for consideration before him was whether the ITO in the assessee's case under consideration could decide the evidentiary value of the impounded papers during the present assessment proceedings on the basis of statements of Shri Banarsi Dass and also of the assessee recorded the assessment proceedings of M/s SLBP which evidence and statements have been the subject matter of consideration before the CIT (Appeals) as well as before the Tribunal in the case of M/s SLBP for assessment years 1974-75 and 1975-76. He further identified the main question which cropped up before him as whether the ITO could base his findings in the asst. order under appeal, on the basis of what had already been held by the CIT (Appeals)/ Appellate Tribunal in the case of M/s SLBP for assessment year 1974-75 and 1975-76. He took the view that there was no legal infirmity attached to the assessment order under appeal before him merely because he could not record the de novo statement of Shri Banarsi Dass in the presence of the assessee because the ITO mainly relied on the findings of the CIT (Appeals)/Appellate Tribunal in the case of M/s SLBP. He found that in such circumstances no Court had ever held that the findings in the assessment orders were vitiated. Therefore, he confirmed the finding of the ITO and the amount of Rs. 1,96,000 should be treated as unexplained investment in the hands of the assessee under Section 69 of the IT Act, 1961. For similar reasons which he adopted while confirming the addition for assessment year 1974-75, he also confirmed the addition of Rs. 2,53,000 for assessment year 1975-76. The learned CIT (Appeals)'s order dated 28-11-1985 is provided at pages 55 to 64 of the second paper book filed by the assessee. Against the said order of the CIT (Appeals) dated 28-11-1985, the assessee as well as the Department went in appeal and also preferred cross objection in ITA No. 761 & 762/Del/ 1986 and ITA No. 920/Del/86 and Co. No. 113/Del/86 and all of them were consolidated and disposed of by Delhi Bench 'C of the Tribunal by its order dated 30-10-1987. In the said appeals, the Tribunal rejected the argument of the assessee that the impounded documents were implanted documents by Shri Banarsi Dass, in order to bring trouble to the assessee. The Tribunal also found that it was the duty of the ITO to examine as many people as possible regarding the sheets of paper found and the entries made therein and to let the assessee question the persons coming forward for making statements. The other Munim including Shri Bhagat Singh were not examined. It is true that these loose sheets included certain money transaction and the assessee was directly connected with it and some of the entries mentioned either in person or the names of his firm M/s Vishwanath Amar Singh (V.A.). The examination of the persons required to be examined by the assessee might have thrown some light on the nature their entries and their actual meaning. As far as Shri Banarsi Dass is concerned, his statement already recorded could be the basis for giving a finding but it will have to be ascertained whether his statement could be corroborated by the statement of others. The Tribunal also held that the completion of the assessment without examining these persons was perhaps due to the limitation involved in completing the assessment. Moreover, the ITO was perhaps of the view that the finding of the Tribunal in the case of the firm M/s Sunheri Lal Bhagwati Prasad was enough. It also does not appear that the request of the assessee about furnishing to him statement of all the persons who had been examined in the proceedings of the firm M/s SLBP had been acceded to. The assessee had made similar request in his several letters written to the ITO. It is true that when the assessee was examined, it was stated by him that it was his lawyer who wanted to see these statements and examine these persons. The right of a person to be properly and legally advised cannot be taken away and as he has made his request in writing, the ITO would have tried to see that these requirements are fulfilled in so far as they were possible. The learned Tribunal also found that the CIT (Appeals) confirmed the finding of the ITO on the basis of the finding given by the Tribunal in its earlier order and had not directed the ITO to examine persons other than Shri Banarsi Dass as requested before the ITO. However, they held that the view of the CIT (Appeals) was not correct. Even though the learned Tribunal found that though the statement in the earlier proceedings can be used, it was necessary for the ITO to give a specific opportunity to the assessee to either produce any witness or specified witnesses whom he wanted to examine for establishing this case. Ultimately, the Tribunal held that they were of the view that this is a fit case where the order of the CIT (Appeals) is set aside and the matter is restored to him with the direction that he should examine the witnesses which the assessee wanted to examine before the ITO. The Tribunal, however, rejected the plea of the assessee that these papers were planted for creating evidence and also rejected the further plea that they have been got up by Shri Banarsi Dass. They specifically held that there was no evidence at all for these allegations made on behalf of the assessee. They further held that these paper have relevance for making the assessment on the assessee and if the assessee continues to give vague answers to the question put an inference can be drawn against him. A true meaning has to be given to these documents by ascertaining whether any part of the money indicated to have been brought in was at any time returned. Some part of the money was meant to be returned and others were not. It is for the assessee to bring in evidence for this purpose. Ultimately, they had set aside the matter to the CIT (Appeals) and he was directed to associate with the ITO in the proceedings so as to save some time in the fresh disposal of the matters. They gave the direction concerning both the assessment years under consideration. Thus the Tribunal had disposed of the matter by remanding the case to the CIT (Appeals) by virtue of their orders dated 30-10-1987 passed in ITA Nos. 761 &762/Del/86.
12. Thereafter, the assessee filed his written submissions before the CIT (Appeals) in the remand proceedings on 29-8-1991. The points highlighted in those written submissions were the following:
(1) There were survey operations on 3-10-1974 both on the premises of M/s SLBP as well as M/s Vishwa Nath Amar Singh in which the assessee was one of the partners. However, no incriminating documents were found during the course of survey operations conducted on the premises of M/s Vishwa Nath Amar Singh.
(2) Against the Tribunal's order given in the case of M/s SLBP reference application was filed before the Tribunal as well as before the Hon'ble Allahabad High Court. However, both the references were rejected. In view of the directions of the Tribunal, it was requested to direct the Assessing Officer to supply copies of statements of the following:
(a) Shri Banarsi Dass.
(b) Shri Teja Shah, partner of the firm M/s Teja Shah & Co.
(c) Partners of the firm M/s SLBP.
(d) Shri Kanshi Ram, partner of the firm M/s Kanshi Ram & Co.
(e) Shri Chamman Lal.
The assessee stated that after receiving the copies of the aforesaid statements, he would inform the learned CIT (Appeals) for issue of summons under Section 131 of the Act to various persons whose statements will give weight in further corroborating the stand taken by the assessee.
(3) No clear picture regarding any money transactions emerges from these loose papers.
The Assessing Officer had not at all tried properly to appreciate the entries and was not able to give any meaning to the accounts about the items which were returned, which were not returned and which related to house and with other expenses noted. In another written submissions made by the assessee to the CIT (Appeals), it was contended that the various transactions shown in the loose papers could not be connected either with the assessee or with the books of the firm relating to the assessee. So also, the source of the inflow of the money shown in those loose papers could not be established. It is surprising that no money was shown to have been paid back during the period mentioned in those loose papers. By no stretch of imagination these loose papers can be said to be belonging to the assessee. No reliance can be placed either on those papers or in the statement of Shri Banarsi Dass and the addition made in the case of the assessee by the Assessing Officer is not at all justified. It is also contended that though the assessment against the assessee for assessment year 1976-77 stands completed by the Assessing Officer by assessment order dated 12-2-1981 no income from any source except his share income from M/s Vishwa Nath Amar Singh has been assessed in his hands. From the perusal of the Income-tax files for subsequent assessment years, it is clearly established that no such investment has ever been made by the assessee out of any money which was noticed in those papers. Therefore, it would be very much unfair to reach a conclusion that the assessee had income noted in those alleged papers.
13. By his letter dated 29-8-1991, the learned CIT (Appeals) directed the Assessing Officer to do the needful after having sent the written submissions received so far along with his letter to the Assessing Officer. The assessee had filed series of submissions before the CIT (Appeals). He also annexed the affidavits of various persons to his written submissions :
(1) His own affidavit.
(2) Affidavit of Shri Chandra Prakash, S/o Shri Kanshi Ram.
(3) Shri Gaya Prasad, Advocate. The advocate in his affidavit states that from the loose papers which were shown to him by the assessee with regard the transaction to a sum of Rs. 7,000 and Rs. 1,000 were stated to be related to him. However, he categorically denied any such transactions with Shri Amar Singh. No settlement of account took place.
(4) The affidavit of Dr. Dilip Sarkar, s/o late Dr. S.C. Sarkar in which it is stated that he had closely scrutinized the loose papers which were said to have been written by Shri Banarsi Dass. There is a mention of Rs. 8,000 to be related to him. He denied having borrowed any amount from Shri Amar Singh.
(5) Affidavit of Shri Navjot Singh, S/o Shri Babu Lal. In his affidavit he states that he used to assist his father, who used to do as commission agent in Sabzi Mandi, Agra. Shri Amar Singh has shown two papers and in those papers there were entries of Rs. 8,500 and Rs. 3,000 and they were stated to be belonging to his father. However, his father never entered into any transaction with Shri Amar Singh. The entries were made by Shri Banarsi Dass and those two papers were not true.
(6) Affidavit of Shri Ashwini Kumar, S/o Shri Teja Shah who was one of the partners in M/s Teja Shah & Co. He used to do commission agency business at Sabzi Mandi, Agra. He was shown papers by Shri Amar Singh in which his father was found to have taken Rs. 15,000 from Shri Amar Singh. In fact he solemnly denied of having borrowed either Rs. 15,000 or any other amount by his father from Shri Amar Singh.
14. After having heard both the sides, the evidence produced by the assessee from time to time, the following issues arise for our consideration in this appeal.
(1) Whether any finding given by the Tribunal in the case of M/s SLBP is binding against the assessee in this case namely Shri Amar Singh.
(2) Whether the statement given by Shri Banarsi Dass, the Munim in whose hand-writing the impugned papers were found on search of the business premises of M/s SLBP can be taken to be proof against Shri Amar Singh. Whether these statements may be taken to be relevant at all in the assessment proceedings relating to Shri Amar Singh.
(3) Whether the finding of the Tribunal in the case of M/s SLBP relating to impugned papers at pages 71 to 74 constitute an issue estoppel when the same papers were to be considered in the assessment proceedings against Shri Amar Singh.
(4) Whether there is any inherent evidence in the impugned papers which conclusively prove that the entries in those papers belonged to Shri Amar Singh.
(5) How for the assessment of Rs. 1,96,000 for assessment year 1974-75 and Rs. 2,53,000 for the assessment year 1975-76 as unexplained investment justifiable in the hands of Shri Amar Singh.
15. After having heard both the sides on the above matters and having gone through the contents of the paper book and the whole file in general, we are of the view that there is no justification for making an addition of the impugned amounts in the hands of the assessee either for assessment year 1974-75 or for assessment year 1975-76. Our reasons are as follows:
(1) On 3-10-1974, survey was conducted under Section 133A not only at the business premises of M/s SLBP but also on the business premises of M/s Vishwa Nath Amar Singh in which Shri Amar Singh was one of the partners. The business premises of these two firms are far away from each other, though they are located in the same Sabzi Mandi, Agra. It is significant that no incriminating documents were found in the premises of M/s Vishwa Nath Amar Singh. The impugned papers marked pages 71 to 74 were found at the business premises of M/s SLBP.
(2) The revenue had no reservation in its mind that the impugned amounts namely Rs. 1,96,000 for assessment year 1974-75 and Rs. 2,53,000 for assessment year 1975-76 should be taken to be the unexplained investment of M/s SLBP and they must be assessed only in the hands of that firm. In M/s SLBP Shri Sunheri Lal and Bhagwati Prasad are the two partners each having 50% share. No doubt, they were the sons of Shri Amar Singh. However, they were the sons of Shri Amar Singh by his first wife and on the date of inspection Shri Amar Singh married second time. They were living separately. One has nothing to do with the others business. Thus Shri Amar Singh has not at all concerned with M/s SLBP. He was having 50% share in M/s Vishwa Nath Amar Singh and the assessments framed against M/s Vishwa Nath Amar Singh which were filed in the paper book would clearly establish that fact. For assessment year 1975-76, the assessment was completed on 28-3-1978 as can be seen from pages 136 to 138 of the second paper book filed on behalf of the assessee. So also, the assessment against M/s Vishwa Nath Amar Singh for assessment year 1976-77 is completed on 21-11-1981, as can be seen from pages 139 to 140 of the second paper book filed on behalf of the assessee.
16. According to the assessment orders Shri Amar Singh and Smt. Amrit Kaur each having 50% share in the firm of M/s Vishwa Nath Amar Singh. No amount was included in the hands of the said firm towards unexplained investment under Section 69B of the Act for both the assessment years 1975-76 and 1976-77. The impugned papers marked pages 71 to 74 were furnished at pages 131 to 135. Page 73 contain eighteen entries spreading from 15-12-1973 to 13 -12-1974, the total of which comes to Rs. 1,96,000. However at page marked 71 there were no dates whatsoever. Virtually the statement of Shri Banarsi Dass was the only basis on which Rs. 2,53,000 was added in the hands of M/s SLBP for assessment year 1975-76. The amount of Rs. 2,53,000 were shown as brought forward figure at the beginning of paper marked 71. Now Shri Banarsi Dass was no more. We had already seen that he died on 4-7-1985. The question is whether when he is not available for examination, whether his statements recorded twice earlier on 14-10-1977 and 5-12-1977 can be made use of against Shri Amar Singh. We have no hesitation in our mind to hold that the statements can no longer be used against Shri Amar Singh in as much as those statements were given during the assessment proceedings framed against M/s SLBP and not during the assessment proceeding of Shri Amar Singh. It is common knowledge that the assessment proceedings of M/s SLBP and Shri Amar Singh are separate and distinct from each other. There is no res judicata in income-tax proceedings. The issue estoppel which is part of the res judiciata is not at all available in the income-tax proceedings. The finding given by the Tribunal while disposing of the appeal of M/s SLBP cannot be of any avail during the assessment proceedings started against Shri Amar Singh. In the impugned papers some of the entries were noted as belonging to 'V.A.' According to the statement of Shri Banarsi Dass 'VA' stands for M/s Vishwa Nath Amar Singh. Even going by that theory, the deposit could be taken to have been made in the firm of M/s SLBP by M/s Vishwa Nath Amar Singh a different firm. M/s Vishwa Nath Amar Singh is a firm in which Shri Amar singh is only a partner. When the name of M/s Vishwa Nath Amar Singh was disclosed as a depositor, there is no reason why the assessment or the impugned additions were not made in the hands of M/s Vishwa Nath Amar Singh and there is no particular reason why the assessment was framed against Shri Amar Singh only, adding the impugned amounts of Rs. 1,96,000 for assessment year 1974-75 and Rs. 2,53,000 for assessment year 1975-76 in his hands as unexplained investment. Section 33 of the Evidence Act is as follows:
Section 33:
Relevancy of certain evidence for proving, in subsequent proceedings, the truth of facts therein stated. Evidence given by a witness in a judicial proceeding or before any person authorised by law to take it, is relevant for the purpose of proving, in a subsequent judicial proceeding, or in a later stage of the same judicial proceeding, the truth of the facts which it states, when the witness is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or if his presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable.
As can be seen from the above section that before any evidence given by a witness in a judicial proceeding is relevant for the purpose of proving a relevant fact in a subsequent judicial proceeding when the witness is dead, the following conditions should be fulfilled:
(1) the proceeding should be between the same parties or their representatives in interest;
(2) that the adverse party in the first proceeding had the right and opportunity to cross examine and (3) the question at issue were substantially the same in the first and in the second proceedings.
No doubt, Shri Banarsi Dass was examined twice in the assessment proceedings relating to M/s. SLBP. However, those proceedings cannot become the proceedings between the same parties or their representatives in interest, vis-a-vis the proceedings against Shri Amar Singh. Therefore, whatever may be the evidence given by Shri Banarsi Dass in the case of M/s SLBP, cannot be taken to be relevant in the assessment proceeding in which a different party is the assessee, namely Shri Amar Singh. Shri Amar Singh by no stretch of imagination can be considered to be representative in interest of M/s SLBP. When the condition for application of Section 33 were not fulfilled, it cannot be applied and, therefore, we hold that the statements recorded from Shri Banarsi Dass cannot be made use of against Shri Amar Singh. If that evidence is excluded and if there is no clinching evidence that the enteries in the impugned papers relate to only Shri Amar Singh and none else and when enteries can also be capable of being explained away to be relating to other assessee like M/s Vishwa Nath Amar Singh, it is highly improper to assess the impugned amounts in the individual hands of Shri Amar Singh.
17. Now let us see whether the following finding given by the earlier Tribunal while disposing of the case of M/s SLBP can be made use of in the assessment proceeding of the assessee, Shri Amar Singh :
The statement of Shri Banarsi Dass, as rightly held by the CIT (Appeals) prove when Shri Amar Singh in his statement recorded by the ITO for the second year has not categorically denied, the same prove the fact that the amounts to the extent of Rs. 1,96,000 for the first year and the additional amount of Rs. 2,53,000 was introduced by Shri Amar Singh, father of the assessee for the purposes of the business of the assessee firm.
Admittedly Shri Amar Singh was not either summoned or were given liberty to cross examine Shri Banarsi Dass on either of the two occasions on which he was examined in the case of M/s SLBP. In this connection, the learned counsel for the assessee had brought to our notice the provisions of Section 150 and also the provision of Section 153(3)(iii). Section 150 and Section 153(3)(ii) read as under :
Section 150 (1) Notwithstanding anything contained in Section 149 the notice under Section 148 may be issued at any stage for the purpose of making an assessment or re-assessment or recompilation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision (or by a Court in any proceeding under any other Law).
(2) The provisions of Sub-section (1) shall not apply in any case where any such assessment, re-assessment or recompilation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recompilation could not have been made at the time the order which was the subject matter of the appeal, reference or revision as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recompilation may be taken.
Section 153(3)(iii) The provisions of Sub-sections (1) and (2) shall not apply to the following classes of assessments, reassessments, recompilation which may subject to the provisions of Sub-section 2A be completed at any time;
(iii) where in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under Section 147.
As can be seen that under Section 153(iii) an assessment, re-assessment or recompilation can be made against a partner in consequence of or to give effect to a finding or a direction made in the case of a firm or an assessment, reassessment etc. is to be made against any other person in consequence of or to give effect to a finding or a direction contained in an order under Section 254,260,262,263 or 264 or an order of any Court in the proceedings otherwise than by way of appeal or reference under the Income-tax Act without question of any time limit. However, the provision is subject to the condition laid down in Explanation (3) which is important and it is as follows :
Where by an order (referred to in Clause (ii) of Sub-section (3) any income is excluded from the total income of one person and held to be the income of another person then, an assessment of such income on such other person shall, for the purposes of Section 150 and this section be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, provided such other person was given an opportunity of being heard before the said order was passed.
It is contended by Shri Sampath, the learned counsel for the assessee that though we are not concerned with the question of limitation and, therefore, Section 153 of the Income-tax Act doesn't directly come in to play in this appeal. However, the principle underlying Section 153 Explanation 3 only highlights the principle of natural justice, or involves the principle that no man should be condemned unless he is heard. Therefore, the principle underlying Explanation 3 to Section 153 may be appreciated and applied in this case. Mr. Sampath the learned counsel for the assessee has cited before us the Gujarat High Court decision in the case of A. B. Parikh v. ITO[1993]203 ITR 186. In that decision the Gujarat High Court had considered the ingredients of Explanation 3 of Section 153. They held that the Explanation 3 to Section 153 spells out two ingredients. The first ingredient is that there must be a finding that the income excluded from the total income of one person is the income of another person. The second ingredient is that the order must be one which has come to be passed after the other person was given an opportunity of being heard. It is true that while disposing of the appeal of M/s SLBP, the Tribunal found that the amounts of Rs. 1,96,000 for the assessment year 1974-75 and Rs. 2,53,000 for the assessment year 1975-76 are the amounts introduced by Shri Amar Singh, the assessee before us for purposes of business of M/s SLBP and those amounts did not belong to M/s SLBP. However, Shri Amar Singh was not heard by the Tribunal before making the observation or giving the said finding in the appeal of M/s SLBP. Therefore, the present assessment proceedings started against Shri Amar Singh cannot be considered valid under law or they cannot be considered to be proceedings started in consequence of or to give effect to a finding or a direction contained in the order passed in the case of M/s SLBP. Therefore, the finding given in the case of M/s SLBP cannot be an effective finding as regards assessment proceedings against Shri Amar Singh are concerned. Consequently, the ITO cannot rely upon the findings given by the Tribunal in the case of M/s SLBP while making the addition of these amounts in the hands of Shri Amar Singh for the assessment years 1974-75 and 1975-76. It is contended that the Tribunal had no justification to give a finding regarding the assessee's case while deciding the case of M/s SLBP since the assessee was not a party to those proceedings and no specific opportunity was afforded to him before holding that the impunged amounts deleted to him. We find that this contention of the assessee fully tenable. The next . contention on behalf of the assessee is that the impugned amounts were sought to be assessed in the hands of M/s. SLBP and the proceedings in the case of M/s SLBP were taken to their logical and namely till the filing of references both before the Tribunal as well as before the High Court under Section 256(2). Having been unsuccessful in all its attempts to assess the impugned amounts in the hands of M/s SLBP, the revenue cannot be permitted to make U-turn and permitted now to argue that the two impugned amounts are to be considered as unexplained investment of Shri Amar Singh which is quite opposite to its original stand. It is no doubt true that when the revenue is doubtful whether a particular amount to be assessed either in the hands of 'A' or 'B' then it can make regular assessment in the hands of one and protective assessment in the hands of other with regard to the same amount but in this case, the revenue was not in doubt at all. It had taken a definite stand that the impugned amounts should be assessed only in the hands of M/s SLBP. Having taken the definite stand, it cannot now be permitted to altogether allowed to change its front and argue the same impugned amounts should now be assessed in the hands of a different assessee Shri Amar Singh. The revenue cannot be allowed to approbate and reprobate at the same time. Shri Bhagat Singh who was the other Munim who handled the money of M/s SLBP was never examined by the ITO even though the ITO was requested to examine him by the assessee. It is quite un-likely that so much of money would only come in but would never be returned to Shri Amar Singh. Many times requests were made to the Assessing Officer directing him to supply the statements of various persons including Shri Banarsi Dass. However, the statement of Shri Banarsi Dass was supplied only on 17-3-1991 when he had died on 4-7-1985. He has no incriminating papers found in the simultaneous survey conducted at the premises of M/s Vishwa Nath Amar Singh. The papers said to be found at the premises of M/s SLBP cannot be relied upon against the assessee. The Assessing Officer had not at all tried to properly appreciate or interpret the entries contained in the impugned papers and has not given any meaning to the items noted in the impugned papers with headings which were returned, which were not to be returned and which 'related to the house' and 'other expenses'. The detail of assessments framed against the assessee for assessment years 1976-77, 1980-81 and 1982-83 as well as the assessments completed against M/s Vishwa Nath Amar Singh for assessment years 1974-75 and 1976-77 were all noted in para 11 of the impugned CIT (Appeals)'s order and in none of them any addition was made in the hands of Shri Amar Singh towards the unexplained investment. Shri Gaya Prasad Dixit in his affidavit stated that in the impugned papers there was a mention of the transaction relating to him of Rs. 7,000 and Rs. 1,000. However, he categorically denied of having any such transaction with Shri Amar Singh. He also stated that no settlement of any account in this connection took place. So also Dr. Dilip Sarkar states in his affidavit there is mention of transaction of Rs. 8,000 relating or him. He denied having made any such transaction with Shri Amar Singh or any other person. Having regard to all the above, we reverse the finding of the CIT (Appeals) in his impugned order dated 31-12-1991 and hold that neither of the two amounts of Rs. 1,96,000 for assessment year 1974-75 and Rs. 2,53,000 for assessment year 1975-76 can be added as unexplained investment in the hands of the assessee.
18. In the result, the appeals of the assessee stand allowed for these two assessment years.