Income Tax Appellate Tribunal - Patna
A.K. Mishra vs Income-Tax Officer on 25 April, 1997
Equivalent citations: [1998]64ITD37(PAT), [1999]235ITR53(PAT)
ORDER
Shri V.K. Sinha, A.M.
1. This is an appeal filed by the assessee and the sole grievance relates to an order of the CIT (Appeals) confirming an addition of Rs. 78,000 to the assessee's income.
2. The assessee is an individual and had income from salary as well as house property. In the course of assessment proceedings, it was found that the assessee had made an investment of Rs. 3,15,000 in the purchase and construction of a house property in the financial year relevant to the assessment year 1989-90. The source of investment was stated to be, inter alia, loan from the assessee's wife, Smt. Swapna Mishra. She filed an affidavit confirming the advance of loan and stated that it was given by cheque. According to the assessment order, the source of income was stated to be salary Rs. 1,500 per month from teaching in Nursery School since 1985 and accumulation of Rs. 20,000 out of past home savings and tuition fees. The school was closed in the year 1988 and by that time she had accumulated Rs. 80,000. A copy of the assessment order for assessment year 1988-89 alongwith a Computation of Income and statement of affairs was also filed. It showed Rs. 80,610 available in the Capital account. Copies of the assessment orders for assessment years 1986-87 and 1987-88 were also filed.
3. The Assessing Officer (A.O.) observed that the assessments for all these years had been completed in one month and that too under section 143(1). The entire exercise was done for capital formation. No documentary evidence was filed in support of her claim. No register of school or name of other teachers was furnished. The bank account was opened on 26-7-1988 and during a very short period a sum of Rs. 78,000 was deposited. For these reasons, he concluded that the amount was only assessee's money which was shown in the guise of a loan. An addition of Rs. 78,000 was accordingly made.
4. The CIT(Appeals) dismissed the appeal summarily stating that the findings given by the Assessing Officer were quite reasonable and creditworthiness of the assessee's wife was not made out. The assessee is now in appeal before us.
5. The ld. counsel for the assessee invited our attention to a notice dated 11-6-1991 issued by the Assessing Officer to the assessee, which contained the following paragraph regarding the loan of Rs. 78,000 :
"Your wife Smt. Swapna Mishra has advanced loan of Rs. 78,000 which is stated to have been invested in the purchase of house. Smt. Swapna Mishra is not assessed to tax in this Circle. It has been mentioned that she advanced the loan out of income from School which was being run from by her. It has also been stated that part of the loan also came from out of share money from receipt from paternal property. In this connection Smt. Swapna Mishra may also be produced before me for examining the genuineness of loan."
6. The ld. counsel stated that in compliance thereof an affidavit dated 9-3-1992 was filed, a copy of which was also placed before us. It was stated that she was a teacher in a Nursery School for about two years in 1981 and 1982, and not from 1985, as stated in the assessment order. Particulars of her earnings as well as her returns were mentioned therein. According to him, no further questions were asked or clarification was sought from the lady nor she was cross-examined, but an adverse inference was drawn. He submitted that according to the decision of the Supreme Court in the case of Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 (SC), an affidavit could not be rejected without cross-examination. He, therefore, submitted that the matter may be restored to the file of the Assessing Officer for doing the needful and thereafter proceeding as per law.
7. The ld. D.R., on the other hand, relied on the assessment order and added that an affidavit was not a complete evidence and payment by cheque was not conclusive, relying on decision of the Supreme Court in the case of Sumati Dayal v. CIT[1995] 214 ITR 801/80 Taxman 89.
8. We have considered the rival submissions carefully. The decision in the case of Mehta Parikh & Co. (supra) was explained by the Madhya Pradesh High Court in the case of Smt. Gunwantibai Ratilal v. CIT [1984] 146 ITR 140 (MP) in the following words :
"... [The decision in Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 (SC)] cannot be construed to lay down the proposition that unless the deponents are cross-examined, the affidavits cannot be rejected. That decision lays down that if there is no material whatsoever on record for doubting the veracity of the statements made in the affidavits and if the deponents have also not been subjected to cross-examination for bringing out the falsity of their statements, then the Tribunal would not be justified in doubting the correctness of the statements made by the deponents in the affidavits. The finding arrived at in such a case would, according to the Supreme Court, be a finding based on pure surmise, having no basis in evidence." (p. 144)
9. In the present case, apart from raising his doubts, the Assessing Officer has not placed any material on record for doubting the veracity of the statements made in the affidavit. We must also keep in mind that the affidavit in question was filed in March 1992 when the limitation for completing the assessment was due to come to an end. This is so even when the explanation was sought as early as on 11th June, 1991. In the facts and circumstances of the case, it will be in the interest of justice to restore the matter to the file of the Assessing Officer with the direction to cross-examine the deponent as proposed by the ld. counsel for the assessee. If there is no response, he may draw his own conclusions. At the same time, he should make an attempt to place positive material on record regarding the veracity of the contents of the affidavit. A reasonable opportunity of being heard should be allowed to the assessee. We setaside the order of the CIT(Appeals) and the assessment order accordingly.
Shri Abdul Razack, Judicial Member
1. My ld. Brother (AM) has accepted the arguments of the assessee's counsel, Shri K.N. Jain, supported by the judgment of the Supreme Court rendered in the case of Mehta Parikh & Co. (supra) that since the Assessing Officer did not cross-examine the assessee's wife after she filed the affidavit dated 9th March, 1992, the matter should be restored to the file of the Assessing Officer with a direction to cross-examine her and upon failure to draw his own conclusions and at the same time further directing him (i) to make attempt to place positive material on record regarding the veracity of the contents of the affidavit of the assessee's wife; (ii) to allow reasonable opportunity of being heard to the assessee. With respect to my ld. Brother I am unable to persuade myself to consent for remand of the case to the Assessing Officer, nor can I agree to the above directions given by him to the Assessing Officer. In my view the addition of Rs. 78,000 deserves to be confirmed upholding the impugned order of the Appellate Commissioner (A/C).
2. But before I spell out my reasons I think full facts as culled by me from the assessment order as also the assessee's conduct in relation to the finalisation of the assessment proceedings require little more elaboration. The assessee who is an employee in Bokaro Steel Plant earning a gross annual salary of Rs. 69,785 spent during the financial year 1988-89 relevant to the assessment year 1989-90 (year under appeal) a sum of Rs. 3,15,000 for the purchase and construction of a house property at 213, Cooperative Colony, Bokaro Steel City. Originally a return a was filed by the assessee on 30th June, 1989 declaring taxable income of Rs. 43,780, the income returned was accepted under section 143(1) of the IT Act, 1961, as per order dated 29-9-1989. During the course of enquiry undertaken by the Assessing Officer for the assessment year 1990-91 the assessee replied giving the sources as under :-
Rs. 52,000 out of savings from salary income Rs. 1,17,000 out of loan from father, Dr. S. P. Mishra Rs. 68,000 out of loan from Anup Kr. Mishra Rs. 78,000 out of loan from Smt. Swapna Mishra The loan creditors, viz., Dr. Shyam Prasad Mishra (assessee's father) and Shri Anup Kumar Mishra were examined by the Assessing Officer during the course of finalisation of assessment proceedings for assessment year 1990-91. The assessee's wife Smt. Swapna Mishra who is stated to have loaned a sum of Rs. 78,000 to the assessee was not produced for examination. This is pertinent point to be noted. The Assessing Officer, therefore, formed a reasonable belief that the assessee's true income chargeable to tax had escaped assessment and he, therefore, issued a notice under section 148 and served it on the assessee. In compliance thereto, no return was filed by the assessee. But a letter was filed requesting the Assessing Officer to treat the original return filed on 30th June, 1989 as return filed in compliance to his said notice issued under section 148 of the Act. It is stated by the Assessing Officer in his assessment order that in respect of notices issued by him under section 143(2) of the Act from time to time, the assessee's advocate and authorised representative Shri A. K. Sarkar appeared and the case was discussed with him and who stated that the reply of the assessee regarding sources of investment given in the course of hearing for the assessment proceedings for the assessment year 1990-91 be inserted in the assessment records for the assessment year 1990-91. It is also recorded in the assessment order that the oath statements of Dr. Shyam Prasad Mishra and Shri Anup Kumar Mishra recorded in the course of assessment proceedings for the assessment year 1990-91 may also be inserted in the assessment record for the assessment year 1989-90. This attitude and conduct of the assessee is also worth noting for the view which I am taking in this case. In spite of such a negative and non-cooperative attitude of the assessee, the Assessing Officer did not finalise the assessment making the addition, though in law under such circumstances he was competent to do so. But he demonstrated his fairness by addressing a letter to the assessee on 11-6-1991, a xerox copy of which has been filed by the assessee's counsel, Shri K. N. Jain before us during the course of hearing of this appeal and which forms part of the appeal record. I am reproducing below portion of the said letter of Assessing Officer which concerns the impugned addition of Rs. 78,000. It reads as under :
"Your wife, Smt. Swapna Mishra has advanced loan of Rs. 78,000 which is stated to have been invested in the purchase of house. Smt. Swapna Mishra is not assessed to tax in this Circle. It has been mentioned that she advanced the loan out of income from School which was being run by her. It has also been stated that part of the loan also came out of share money from receipt from paternal property. In this connection Smt. Swapna Mishra may also be produced before me for examining the genuineness of loan.
Compliance is requested within a week of receipt of this letter."
The Assessing Officer also requested in this letter for compliance within a week from the date of receipt of the said letter. On a query from the Bench the assessee's counsel Shri K. N. Jain fairly and candidly conceded that compliance was not made and that the assessee's wife did not present herself before the Assessing Officer for the purpose of examination in relation to the stated loan of Rs. 78,000 to the assessee. Representatives of both sides were unable to inform and tell us as to what truly happened and transpired between 11-6-1991 and 9-3-1992 which is the date on which the affidavit of assessee's wife Smt. Swapna Mishra was filed and between 9-3-1992 and the date of framing of the assessment stated to be made on 31-3-1992 as informed by the assessee's counsel as the date of the assessment order is not mentioned in the copy of the said order filed in the appeal record. In order to find out and uncover these true facts which were not brought to our notice during the course of hearing and which did not surface, I wanted to examine the assessment records by summoning it from the Assessing Officer and earnest efforts were also made in this direction by me. My Sr. Personal Assistant Shri Ramjee Prasad was directed by me on 22-9-1995 to address a letter to the Junior Departmental Representative, Shri P. C. Mishra and summon assessment record from the Assessing Officer. Till the date of passing of this order by me all my efforts to get the assessment records from the Assessing Officer have been abortive. My orders and directions have been flouted. I shall be adverting more elaborately to the misconduct of the Income-tax Officer in this regard in later part of this order after giving my reasons and view.
3. I now to the affidavit of the assessee's wife dated 9-3-1992 which has been affirmed before a Notary Public, at Chas, Shri K. K. Sinha, I deem it fit and important to reproduce the contents therefrom which are in the below given manner :-
"1. That I was a teacher in a nursery school run by Mrs. Banerjee in sector IC for about 2 years (1981-82) where I got trained myself to run a nursery school.
2. That thereafter when Mrs. Banerjee left Bokaro in 1984, I started a nursery school in my quarter (IC-155). I got almost all the students of erstwhile Mrs. Banerjee's school.
3. That since 1985 my earnings from the nursery school was about Rs. 15,000 per month.
4. That besides the monthly income from the school I had also accumulated about Rs. 20,000 out of my past home savings and from tuition fees I used to receive from Mrs. Banerjee's school.
5. That I continued the school upto middle of 1988 and accumulated about Rs. 80,000.
6. That my husband proposed to purchase one house and thus asked me for financial accommodation.
I found it the best way to help my husband by lending the said accumulated fund to him in the process of purchase of the house.
7. That on 3rd August, 1988 I had given a loan of Rs. 78,000 to my husband Ashok Kumar Mishra through cheques.
8. That my husband purchased the house in September, 1985 and thereafter we shifted to that house.
9. That as I shifted to our new house I could not manage to continue the nursery school and due to my varicose vein disease also I was physically unfit to continue the same.
10. That I filed my return of income since I had taxable income for the assessment year 1986-87 to 1988-89. I have shown the accumulation of the fund in my return. The assessment for those years were completed on accepting the income shown. My P.A.N. No. is 17-044-PN-2334.
11. That I have given the confirmation of loan to Shri A. K. Mishra which was required by him in his income-tax assessment proceedings.
12. That I swear this affidavit on his request to be required for his income-tax assessment proceedings.
Verification I solemnly affirm that the above statements are true to the best of my knowledge and belief and have signed this verification here at Chas on 9 March, 1992."
The assessee's counsel also fairly and candidly admitted at the time of hearing that no corroborative or supporting evidence or material was adduced, enclosed or filed alongwith the said affidavit. The Assessing Officer took that affidavit on record and on that basis came to conclusion that the assessee failed to discharge the onus which lay upon it in law (section 69 of the Act) and hence concluded that the sum of Rs. 78,000 stated to have been loaned to him by his wife was, in fact, assessee's money (income) from some undisclosed sources and, therefore, added it to the returned income.
4. Several Courts have uniformly laid down in countless decisions that the power of remand by an appellate authority should be used very sparingly and in most deserving and appropriate cases when upon closer examination of the case it is noticed that the order of the inferior Court or Tribunal is palpably and patently erroneous and illegal or that great prejudice or justice has been caused to a party seeking remand owing to gross or flagrant violation of statutory provisions or of Rules of natural justice. It is also elementary that parties interested in obtaining relief from Courts or Tribunal's must and should place before Courts and Tribunals all the materials and evidence on which relief is sought. Failure to do so at the earliest opportunity may result in negation and denial of further opportunity to place evidence at a later stage in the case. The Hon'ble Patna High Court in the case reported in Bishwanath Prasad Bhagwat Prasad v. CIT [1956] 29 ITR 748 have laid down that the power of remand cannot be exercised unless the appellate authority comes to the conclusion that the assessment order or the order under appeal is either wrong, illegal and unsustainable for some reason appearing in the order itself claiming remand is also not a vested right of any litigant. As is fundamentally well known in the administration of justice system that remand of a case cannot be ordered so as to enable the desiring and praying party to fill up the lacunae, blanks or vacuum in the evidence or the case, to the prejudice of the other contesting party. Thus, the discretion which the Appellate Authority like this Tribunal has been given for exercising set aside of assessments or for remand is a judicial discretion and the same must be governed by Rule and not by humour or any other extraneous consideration. I have, therefore, to examine the prayer of assessee's counsel for remand of the case to the Assessing Officer in the light of the above mentioned salutary principles which have emerged from the Court's decisions.
5. The pleadings on the grounds taken by the assessee before the A/C was for deleting the addition because the assessee discharged the legal burden which lay on it and proved the genuineness of the loan obtained from his wife. No case was made out nor it was pleaded in first appeal for remand of the case to the Assessing Officer for cross examination of the assessee's wife consequent to the filing of the affidavit by her dated 9-3-1992. Even in the present second appeal the only grievance in the various grounds taken is that the addition of Rs. 78,000 was unwarranted and should have been deleted by the A/C. It is only during the course of arguments that the assessee's counsel Shri K. N. Jain repeatedly and emphatically pleaded for vacating the impugned order of the A/C and restoring the matter to the file of the Assessing Officer for cross-examination of the assessee's wife in respect of averments made by her in the affidavit and for enabling the assessee and his wife to adduce evidence and material in their possession regarding the genuineness of the advancement of loan of Rs. 78,000 to the assessee. No arguments were made or advanced by the assessee's counsel on merits for demolishing the case made out by the Assessing Officer in relation to the impugned addition.
6. There are no two opinions that this Tribunal is final fact finding Authority on appeal and all the facts have to be placed candidly for its examination so as to enable it to arrive at and render a fair and just decision and pass order in appeal as it thinks fit as provided in section 254 of the IT Act, 1961. Neither the assessee's counsel nor the Junior Departmental Representative, Shri P. C. Mishra in the absence of assessment records from the Assessing Officer could place full, relevant and important facts commencing from the filing of the original return till the completion of the reassessment proceedings pursuant to notice under section 148 of the Act. The assessment records were, therefore, directed to be produced for examination and verification of true facts. But as recorded by me earlier elsewhere above, in spite of my order and directions relevant assessment records of the assessee were not at all produced.
7. There is no dispute that the assessee purchased and constructed a house property and very substantial and major portion of investment came from loans from his wife, his father and other relative. The contribution of the assessee was a meagre sum of Rs. 52,000 which has been accepted by the Assessing Officer as having come from his salary savings. It was, thus, clearly known to the assessee that he will have to explain to the satisfaction of the Assessing Officer the nature and source of investment in the said property as per law that is to say as laid down in section 69 of the Act. Since it was not done at the original stage of assessment proceedings the Assessing Officer was impelled to record reasons and issue notice under section 148 due to which the reassessment proceedings were set in motion. Thus, the real purpose of initiation and commencement of reassessment proceedings was known to the assessee.
8. In proceedings before the Assessing Officer the other lenders appeared before him and explained on oath their sources for giving loans to the assessee for investment in the said property. No addition in respect of those loans was made by the Assessing Officer. The assessee's wife admittedly did not appear before the Assessing Officer and failed to explain satisfactorily her sources for advancing such huge sum of Rs. 78,000 in spite of a request letter issued by the Assessing Officer on 11-6-1991. As stated earlier what happened between 11-6-1991 and 8-3-1992, a day before the affidavit was filed by the assessee's wife is not known either to the assessee's counsel or to the Junior Departmental Representative, as the assessment records were not sent by the Assessing Officer. Suddenly on 9-3-1992 after a lapse of 9 (Nine) months the assessee's wife prepares an affidavit confirming the advancement of loan to her husband (assessee) and stating the source how she earned, saved and accumulated a huge sum of Rs. 78,000 and then advanced it to her husband. It is a important to note that this affidavit of 9-3-1992 was filed before the Assessing Officer at the request of her husband as is averred in para 12 of the affidavit. It is, thus, clear that the affidavit was not prepared and filed upon the order or direction of the Assessing Officer. Though she averred in the affidavit about her activities and sources not a grain worth or weight of credible, legal evidence or material was filed in support of or alongwith the affidavit. No evidence was filed between 10-3-1992 and 31-3-1992 when the assessment was made. Very strange indeed. And yet the assessee wanted that the Assessing Officer should have accepted as true and correct the entire story narrated in the affidavit and should not have made the addition of Rs. 78,000 under section 69 of the Act. Though the assessee's wife voluntarily at the request of her husband (assessee) and in order to assist him in his IT case executed an affidavit but she neither bothered to go over to the office of the Assessing Officer appear before him and offer herself for examination on oath though the request as far back as 11-6-1991 was made by the Assessing Officer. Nor did he file or adduce any evidence worth its name if the same was with her. Why the evidence was withheld by her or the assessee from the Assessing Officer is not told or explained even at this belated stage of this second appeal. And curiously in this second appeal, for the first time, a grievance is made out that the Assessing Officer having failed to cross examine her, after filing of the affidavit, the addition was arbitrary and illegal and hence the matter now (at this belated stage) should go back to the Assessing Officer for the purpose of cross-examination of the assessee's wife to find out whether what she stated in her affidavit was correct or not, and for further enabling the assessee and his wife to adduce evidence in support of the averments made in the affidavit. I think neither the assessee nor his wife had any evidence with them, then to support the averments made in the affidavit. And perhaps in the meantime relevant evidence has been mustered and it is for this reason that remand is repeatedly insisted by the assessee's counsel. According to me, therefore, such a pleading or prayer at this belated stage of second appeal cannot and should not be entertained and require to be rejected outright and I hereby reject the same.
9. It is not the assessee's case that the relevant evidence in support of the sources of Rs. 78,000 was not available or not in existence when the loan was taken by the assessee or at least when the assessment was made originally. The evidence we were told by the assessee's counsel, Shri K. N. Jain upon query, was very much there and always in existence. Then what was the reason to keep away or hide such evidence from the Assessing Officer ? Why such a barren affidavit was made out and filed before the Assessing Officer ? The assessee's only case in this second appeal is that the Assessing Officer should have cross-examined the assessee's wife after she filed the affidavit dated 9-3-1992 as per the decision of the Supreme Court in the case of Mehta Parikh & Co. (supra) and further the Assessing Officer should have requested the production of supporting and corroborative evidence in respect of the sources of Rs. 78,000 which was ready with the assessee's wife. The negative conduct of the Assessing Officer according to the ld. counsel, Shri Jain gives a right to the assessee for remand of the case to the Assessing Officer as has been accepted and ordered by my ld. Brother. In view of these true facts I find no justification or warrant for ordering a remand to the Assessing Officer.
10. Now the question is what is the weight or value of this affidavit of assessee's wife. Affidavit, as per section 3(3) of the General Clauses Act, 1897 includes affirmation and declaration in the case of persons by law to affirm or declare instead of swearing. Besides, affidavits are not included in the definition section 3 of the Indian Evidence Act, 1872 and are expressly excluded by section 1 of the Evidence Act. Affidavit can be filed and used as evidence if for sufficient reasons Court passes an order under Order 19 Rule. 1 of the Civil Procedure Code (CPC).
11. By virtue of section 131 of the Act, 1961 the IT authorities have been vested with the same powers as are vested in a Court in the Code of Civil Procedure when trying a suit in respect of the following matters, viz., -
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath;
(c) compelling the production of books of account and other documents; and
(d) issuing commissions.
12. To put it in simple words, the IT authorities by virtue of the said provisions have been equated with court as if trying a suit. An affidavit, therefore, cannot be filed before the Assessing Officer except in the manner provided and laid down in Order 19 rule 1 C.P.C. The Assessing Officer as is evident from his letter dated 11-6-1991 wanted the assessee's wife to be produced for examination in relation to the sources for advancing loan to the assessee to the extent of Rs. 78,000. But such simple requisition of the Assessing Officer was not complied with. In law, therefore, the affidavit cannot be filed and if filed, loses its evidentiary value. The assessee's counsel, therefore, cannot insist as a course of right that the case be restored to the Assessing Officer for examination of the assessee's wife, on the basis of Supreme Court's decision in Mehta Parikh & Co.'s case (supra).
13. The assessee's counsel has strongly relied on the decision of the Hon'ble Supreme Court in the case of Mehta Parikh & Co. (supra) for remand for the purpose of cross-examination of the assessee's wife. In my view that judgment of the Apex Court has not laid down that whenever an affidavit is filed before IT authorities then the affirmant/declarant must and should be cross-examined by them and violation would mean and result that the averments of the affidavit are true and should be accepted in entirety. A careful reading of the Judgment of the Apex Court in Mehta Parikh & Co.'s case (supra) will clearly reveal that the observations made by their Lordships in relation to the cross-examination of the declarant in that case was in relation to peculiar facts of that case and that judgment does not lay down a legal principal or proposition for universal application for all the time to come, that if the declarant is not cross examined then the averments in the affidavit become acceptable as true and correct. The real effect and impact of the observations of their Lordships of the Supreme Court in the case of Smt. Gunwantibai Ratilal (supra) the relevant observation from which decision has been extracted by my ld. Brother at para 8 page 3 of his order. I am at this stage reminded of the salient observations of their Lordships of the Bombay High Court in the case of CIT v. Sudhir Jayantilal Mulji [1995] 214 ITR 154 at page 160. I quote those observations as under :-
"It is well settled that the ratio of a decision alone is binding, because a case is only an authority for what it actually decides and not what may come to follow from some observations which find place therein. The ratio of the decision has to be distinguished from propositions assumed by the court to be correct for the purpose of disposing of the particular case, because it is the ratio and not the propositions which are relevant and binding. It is, therefore, not proper to regard every word, clause or sentence occurring in a judgment of the court as containing a full exposition of the law. Judgments of the Courts should not be construed as statutes. They must be read as a whole and observations made therein should be considered in the light of the facts and circumstances of that case and the questions before the court. A decision of the court takes its colour from the questions involved in the case in which it is rendered."
14. The settled legal position in this regard has been very succinctly summed up by their Lordships of the Apex Court in the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297/64 Taxman 442 in the following words at page 320 :-
"It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by the court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the court. A decision of this court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this court, to support their reasonings."
Reference in this regard may also be made to the Full Bench decision of the Hon'ble Patna High Court reported in CIT v. Smt. Kamla Devi Rathi [1995] 213 ITR 177/82 Taxman 348. In my view, therefore, the Judgment of the Hon'ble Supreme Court in the case of Mehta Parikh & Co. (supra) cannot help the assessee for obtaining the remand to the Assessing Officer for the purpose of examining or cross examining the assessee's wife pursuant to her affidavit dated 9-3-1992.
15. I am further of the opinion that the facts and circumstances of the present case, elaborately brought out and discussed by me do not warrant, justify or authorise remand to the Assessing Officer with directions as given by my ld. Brother. Any indulgence by the Tribunal now (at this belated stage) will give greater scope and chance to the assessee to tinker, manoeuvre and muster with the evidence (which perhaps was not available at the earlier stages of the proceedings) thereby causing grave prejudice to the Revenue's case. I do not wish to forget that the assessee has, fairly and justly, been given ample time and opportunity to prove and meet his case and explain to the Assessing Officer about the genuineness and source of the sum of Rs. 78,000 with his wife which amount is stated to have been loaned by her to him. The assessee has been given a very long rope, but he has been negligent and callous and did not care to respond to the requisition or demand of the Assessing Officer or the requirement of law. The assessee in my view thus missed the bus. It will be travesty of justice to give such latitude to the assessee by this Tribunal now.
16. Before concluding my order and parting with this appeal I must say few words regarding non-production of assessment records of the assessee by the concerned IT department officials in spite of the orders and directions issued on 22-9-1995 by me by virtue of the powers vested in this Tribunal under section 255(6) of the IT Act, 1961. The Junior Departmental Representative Shri P. C. Mishra was directed as per orders contained in letter dated 22-9-1995 of my Sr. Personal Assistant, Shri Ramjee Prasad to produce the assessment records of the assessee for assessment year 1989-90 which is the year under appeal. The matter was followed up by me personally with the Sr. Departmental Representative and Dy. Commissioner of Income-tax, Range-I, Shri Gopal Kamal who on 2-11-1995 gave me an assurance that on or before 6-11-1995 the assessment records of the assessee will be produced as ordered and directed. But alas! till the date of passing of this order the assessment records were not at all produced. No reasons or causes have been tendered for disobeying the orders of this Tribunal for production of the assessment records. I am, therefore, compelled to presume that there has been intentional and deliberate disobedience on the part of the departmental officials particularly the Assessing Officer in disobeying and flouting the orders and directions issued by this Tribunal rendering the concerned departmental officials liable for imposition of penalty as laid down in section 272A(1)(c) of the Act. In addition to imposition of penalty under Section 272A(1)(c) omission to produce documents before public servant by person legally bound to give is an offence punishable under section 175 of the Indian Penal Code (IPC). Any act of disobeying the order duly promulgated by a public servant is also an offence punishable under section 188 of the IPC. The concerned IT officials intentionally failed and omitted to assist me in discharge of my judicial functions as a Judicial Officer of the State as such the same is an offence punishable under section 187 of the IPC. Non-production of assessment records of this appellant/assessee by the concerned IT departmental officials amounts to obstructing a public servant in discharge of public functions and is an offence punishable under section 186 of the IPC. The concerned IT officials by their such acts, deeds and conduct have, thus, rendered themselves liable for various offences listed by me above and for being proceeded with as provided in IT Act, 1961 and the IPC after obtaining the required permission from the competent authority in this regard. In addition to the above offences, the concerned IT departmental officials have also rendered themselves liable for departmental action for lock of devotion to duty as provided in rule 3 of the Central Civil Services Conduct Rules, 1964.
17. The Assistant Registrar of Patna Bench is, therefore, hereby ordered and directed to send an extract of paras 15 to 16 of this order to "The Commissioner of Income-tax, Ranchi" who is directed to initiate appropriate departmental enquiry into the whole matter and fix responsibility of concerned officer(s) under his charge. He is further directed to take suitable action as provided in law against the delinquent departmental officer(s) and to mention this misconduct in the Annual Confidential Character Report/Service records of the delinquent departmental officials. The Assistant Registrar, Patna Bench is further ordered and directed to send a copy of the letter addressed to Commissioner of Income-tax, Ranchi alongwith extracts of paras 15 & 16 of this ordered to "The Chief Commissioner of Income-tax, Bihar State" so that he also becomes aware of as to what is happening under his charge and how the IT departmental officials are conducting themselves in relation to appeals before this Tribunal involving huge Government revenue as in this case.
18. For the foregoing facts and reasons discussed, there remains no doubt in my mind that remand of the case to the Assessing Officer is not warranted not justified and, therefore, the order of the Appellate Commissioner confirming the addition of Rs. 78,000 is required to be upheld and the same as such is upheld.
19. In the result, the appeal of the assessee is, therefore, dismissed.
I.T. Appeal No. 1488 (Pat.) of 1992, (Asst. Year : 1989-90) Supplementary Order by Shri V. K. Sinha, A.M.
1. I am constrained to pass a supplementary order since my learned brother has considered certain developments and incidents after the hearing of the appeal was closed on 19-9-1995 and about which I was not aware. My learned brother has very strongly condemned the Sr. D.R., the Jr. D.R. and the Assessing Officer on account of these developments and incidents. It is in these very unusual circumstances that this supplementary order is being passed. I find that a supplementary order was passed in the case of Vasantbhai B. Patel (HUF) v. Dy. CIT [1995] 55 ITD 118 (Ahd.)(TM) also.
2. The appeal was heard finally on 19-9-1995 and kept for orders : A proposed order passed by me was sent to my learned brother on 22-9-1995. At this stage, a need was felt by him to examine the assessment records for verification. These assessment records were not available during the hearing of the appeal and were not asked for during the hearing. A direction was given by my learned brother to his Sr. P.A. to contact the Jr. D.R. and request him to obtain the assessment record. A letter was accordingly issued by the Sr. P.A. to the Jr. D.R. Thereafter, on 13-10-1995, the Sr. P.A. contacted the Jr. D.R. (as per Order Sheet entry) and recorded that the Jr. D.R. stated that he had not received assessment record from the concerned ITO. Thereafter, on 2-11-1995 a xerox copy of the letter dated 12-10-1995 from the Jr. D.R. to the Assessing Officer, asking for assessment record, was placed on record for perusal of my learned brother. Subsequently, on the same day the Sr. D.R. came to meet my learned brother and he was directed urgently to obtain the assessment records for verification of true facts of the case.
According to the order sheet, the Sr. D.R. assured my learned brother that by 6-11-1995 the assessment records will be sent to him. A letter from Jr. D.R. to my learned brother dated 2-11-1995 was also placed by his Sr. P.A. for his perusal and order. In this letter, the Jr. D.R. stated that he had contacted the Assessing Officer on phone to send the records. A letter was written on 12-10-1995 with a copy to the Dy. CIT, Dhanbad. Thereafter, on 1-11-1995 a telephonic request was again made to the Assessing Officer. His response was awaited. A photo copy of the letter dated 12-10-1995 mentioning above was also enclosed. Later on 7-11-1995 my learned brother directed his Sr. P.A. to enquire from the Sr. D.R. or the Jr. D.R. again and on the next day the Sr. P.A. contacted the Jr. D.R. and was informed that the assessment record of this case had not been sent by the concerned officer. My learned brother passed a dissenting order thereafter on 21-11-1995.
3. I reiterate that the above development and incidents took place after the hearing of the appeal was concluded on 19-9-1995 and the case was kept for orders. I was not aware of them, nor was I consulted. My learned brother acted singly in the matter throughout. There are three reasons why this should not have been done. It may be mentioned that according to section 255(1) of the Income-tax Act, 1961, the powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted by the President of the Tribunal from amongst the Members thereof. Thereafter, according to sub-section (2), subject to the provisions contained in sub-section (3), "a Bench shall consist of one Judicial Member and one Accountant Member. "Sub-section (3) makes a provisions for a single Member Bench. The President, or an authorised Member of the Tribunal, may, sitting singly, dispose off any case which has been allotted to the Bench of which he is a Member and which pertains to an assessee whose total income, as computed by the Assessing Officer in the case, does not exceed Rs. 1 lac. The first reason, therefore, is that the total income 'computed' by the Assessing Officer exceeds Rs. 1 lac. Consequently this is not a case which can be heard by a single Member Bench. The second reason is that my learned brother is not authorised to hear cases sitting singly. This is being mentioned by me only as a narration of facts. For that matter, I am also not authorised to hear cases sitting singly. The information, therefore, could not have been sought by one Member acting singly. The third reason is that even if the first two reasons did not exist, this was a case where hearing had already been done by a Division Bench and, therefore, one Member could not act singly. For these three reasons, the requisitioning of record by one Member acting singly was not valid.
4. When the case records could not have been requisitioned, as held by me above, there is no question of any default by the Sr. D.R., Jr. D.R. or the Assessing Officer. In particular, the condemnation of their conduct and observations regarding imposition of penalty under section 272A(1)(c); offences under sub-sections 175, 188, 187 and 186 of the IPC, lack of devotion to duty as per Rule 3 of Central Civil Services Conduct Rules, 1964 and making entries in their Annual Confidential Character Report/Service Records are uncalled for and deserve to be deleted for this reason alone.
5. However, this is not the only reason why the adverse remarks deserve to be deleted. There are further reasons which are being discussed below.
6. I am unable to agree, with respect, with the observations of my learned brother in para 16 of his order that the directions issued by him on 22-9-1995 were issued by virtue of powers vested in this Tribunal under section 255(6) of the Income-tax Act, 1961. The powers under section 255(6) of the Act to exercise powers vested in the Income-tax authorities, referred to in section 131, cannot be exercised without issue of summons under section 131. No such summons were issued.
7. It is stated in para 15 of the order of my learned brother that he was compelled to presume that there was intentional and deliberate disobedience on the part of the Officials, particularly the Assessing Officer, in disobeying and flouting the orders and directions issued by this Tribunal rendering the concerned Departmental Officials liable for imposition of penalty as laid down in section 272A(1)(c) of the Act. Firstly, in my opinion, there is no material on record to show that the delay was intentional or deliberate. On the other hand, the Jr. D.R. repeatedly informed that he had contacted the Assessing Officer for obtaining the assessment records and even sent a copy of his letter to the Dy. CIT, Dhanbad. It is not a case where the assessment records were in possession of the Jr. D.R. or Sr. D.R. As far as Assessing Officer is concerned, there is nothing on record to show that any enquiry was made as to the reason why he could not send the assessment records. Secondly, although under section 255(6) of the Act the Tribunal has powers vested in Income-tax authorities referred to in section 131, the Tribunal has not been given any power to impose a penalty under section 272A(1)(c) of the Act. According to sub-section (3) of section 272A of the Act, penalties can be imposed under sub-section (1) by various Income-tax authorities and the Tribunal has not been vested with such power.
8. Regarding the provisions of sections 175, 188, 187 and 186 of IPC, referred to in para 16 of the order of my learned brother, this Tribunal is not competent to pronounce on their applicability.
9. This Tribunal is also not competent to pronounce on liability for Departmental action for lack of devotion to duty as provided in Rule 3 of the Central Civil Services Conduct Rules, 1964 for the Sr. D.R., Jr. D.R. and the Assessing Officer. Whether there is any case for Departmental action has to be seen only by the Compentent Authority under the Conduct Rules.
10. On the basis of the material on record, it is also my considered opinion that there is no justification for any adverse remark against the Sr. D.R., Jr. D.R. or the Assessing Officer in their confidential Reports or Service Records.
11. I, therefore, differ from the order of my learned brother and hold that the adverse remarks against the Sr. D.R., Jr. D.R. and Assessing Officer in the order of my learned brother are not called for and should be deleted.
REFERENCE FOR 3RD MEMBER CASE UNDER SECTION 255(4) OF THE IT ACT, 1961, IN THE ABOVE MATTER As we differ in our views in the above case, we request the Hon'ble President to kindly refer the matter to the 3rd Member on the following points :
Points of difference :
1. Whether in the facts and circumstances of the case and in law an addition of Rs. 78,000 made to the assessee's income by the Assessing Officer should be set aside and restored to the file of the Assessing Officer with directions given in the order of the Accountant Member or it should be confirmed for the reasons given in the order of the Judicial Member,
2. Whether in the facts and circumstances of the case and in law the adverse remarks made against the Sr. Departmental Representative, Jr. Departmental Representative and the Assessing Officer in the order of the Judicial Member should be retained or deleted, either wholly or partly ?
REFERENCE BY JUDICIAL MEMBER FOR THIRD MEMBER OPINION IN THE ABOVE INCOME-TAX APPEAL AS PER SECTION 255(4) OF THE IT ACT
1. According to me only one question given on the next page is required to be referred to 3rd Member for his opinion as provided in section 255(4) of the Act and not two questions framed by my ld. Brother (Accountant Member). Instead of departmental officials, my ld. Brother is aggrieved for the observations and directions given by me in paragraphs 16 & 17 of my order dated 21-11-1995 in this IT appeals. I do not wish to counter or rebut the observations made by my ld. Brother in his so called supplementary order dated 26-12-1995 in this IT appeals, because an endless and frivolous debate and argument will ensue between us which I wish to avoid for maintaining sanctity of judicial discipline and decorum.
2. In discharge of my judicial function I am committed and charged with the responsibility to decide the appeal and give my views duly supported by reasons and not in a vacuum. And in that direction like any other Judge or Tribunal Member, I have an unimpeachable right to know the true hidden facts by summoning every document or case record in the custody of any person or authority and it is for this purpose that the Legislature has enacted and empowered the Tribunal as per the provisions of sub-section (6) of section 255 of the IT Act, 1961. This is precisely what I have done. In law it is not incumbent upon any Judge or Tribunal Member while discharging judicial function to take guidance, advice or consent either of his colleague who shared the Bench or of the parties or their respective representatives/counsel in the proceedings for examining and relying on any document, authors, commentary or judicial proceedings for writing or passing a Judgment or Order. To do so would amount to mockery of judicial system and demeaning the delivery of justice.
3. I am not questioning the conduct of my ld. Brother in passing an order and rendering his decision without verifying the true hidden facts from the case records of the assessee/appellant. Then why should my ld. Brother question and obtain an answer under section 255(4) from another Tribunal Member (colleague) who may perhaps be junior in status also on my conduct in discharge of my solemn judicial function. I, therefore, cannot join with my ld. Brother in obtaining an answer from 3rd Member of the Tribunal on question No. 2 framed by his which does not arise from the respective orders passed by both of us. I do not agree for reference of question No. 1 with my ld. Brother as it is argumentative. According to me, therefore, the below given question arises from out of respective orders and for which an opinion is required to be sought from a 3rd Member of the Tribunal as laid down in section 255(4) of the IT Act, 1961 :-
"Whether, on the facts and in the circumstances of the case, the assessee/appellant has satisfactorily explained as laid down in section 69 of the Act in respect of sum of Rs. 78,000 being amounts spent/invested in purchase/construction of house property at Bokaro Steel City ?"
THIRD MEMBER ORDER Shri Krishan Swarup, Accountant Member
1. There was a difference of opinion between the learned Members who heard this appeal. There was no unanimity among the learned members even for identifying the point(s) of difference. According to the learned Accountant Member, the following are the points of difference :
"1. Whether in the facts and circumstances of the case and in law an addition of Rs. 78,000 made to the assessee's income by the Assessing Officer should be set aside and restored to the file of the Assessing Officer with directions given in the order of the Accountant Member or it should be confirmed for the reasons given in the order of the Judicial Member ?
2. Whether in the facts and circumstances of the case and in law the adverse remarks made against the Sr. Departmental Representative, Jr. Departmental Representative and the Assessing Officer in the order of the Judicial Member should be retained or deleted, either wholly or partly ?"
According to the learned Judicial Member, the point of difference of opinion is as under :
"Whether, on the facts and in the circumstances of the case, the assessee/appellant has satisfactorily explained as laid down in section 69 of the Act in respect of sum of Rs. 78,000 being amount spent/invested in purchase/construction of house property at Bokaro Steel City ?"
2. The appeal was referred to me under section 255(4) of the IT Act, 1961, to express my opinion as a Third Member.
3. The facts of the case giving rise to the controversy, as they emerge from the assessment order, lie in a narrow compass. The assessee, an individual, derived income from salary and house property. For the year under consideration, return filed on 30-6-1989, declaring an income of Rs. 43,780 was processed under section 143(1)(a) of the Act on 29-9-1989. During the course of assessment proceedings for the assessment year 1990-91, the Assessing Officer (A.O.) initiated enquiries about the source of investment of Rs. 3,15,000 in the purchase and construction of a house property, No. 213, Co-operative Colony, Bokaro Steel City, during the previous year relevant to assessment year 1989-90 (year under appeal). The assessee explained the source as under :-
(a) Out of savings from salary income Rs. 52,000
(b) Out of loans from
(i) Dr. S. P. Misra, father Rs. 1,17,000
(ii) Sh. Anup Misra brother Rs. 68,000
(iii) Smt. Swapna Misra, wife Rs. 78,000
While the two creditors, S/Sh. S. P. Misra & Anup Misra, were produced before the Assessing Officer and examined by him, Smt. Swapna Misra, assessee's wife, was not produced. The Assessing Officer felt that the funds available with the loan creditors were not adequate to enable them to advance the amounts in question. Moreover, one of the loan creditors, Smt. Swapna Misra, was not produced for examination. He, therefore, formed a belief that income chargeable to tax for the assessment year 1989-90 had escaped assessment. Accordingly, a notice under section 148 of the Act was issued on 6-1-1992 for the assessment year 1989-90. The assessee did not furnish the return but filed a letter requesting to treat the return filed on 30-6-1989 as the return filed in compliance to the notice under section 148 of the Act. According to the Assessing Officer, during the course of proceedings (re-assessment) for the assessment year 1989-90 it was stated on behalf of the assessee that the reply regarding source of investment in the property and the statements given by S/Sh. S. P. Misra & Anup Misra during the course of assessment proceedings for the assessment year 1990-91 may be inserted in the assessment records for the assessment year 1989-90. After discussion with the authorised representative of the assessee who appeared before him in response to the notice under section 143(2), the Assessing Officer proceeded to complete the assessment. For reasons discussed in the order, he accepted the genuineness of loans from S/Sh. S. P. Misra and Anup Misra. As regards the loan from Smt. Swapna Misra, the Assessing Officer referred to the fact that her affidavit was filed by the assessee. After commenting on the facts stated in the affidavit and the evidence filed by the lady about her being an income tax assessee, the Assessing Officer refused to accept the genuineness of the loan. An amount of Rs. 78,000 was included in the total income of the assessee. It would be pertinent to reproduce the observations made by the Assessing Officer for arriving at this conclusion :
"The loan creditor has stated that she was a teacher since the year 1981-82 and in 1984 she started a Nursery School and ran the same till the year 1988 - No documentary evidence in support of this was adduced by the assessee in the course of hearing. No register of school or the name of other teachers was furnished. Further the bank a/c was opened by this loan creditor on 26-7-1988 and during a very short period a sum of Rs. 78,000 was deposited all by cash exactly the same amount which was lent to the assessee. Further the occupation column of bank pass book of this creditor shows the lady as house wife. The a/c was opened in July, 1988 whereas the lady as per her statement was doing teaching work since 1980-81 onwards. Thus filing of returns for three assessment years viz., 1986-87 and 1988-89 at one time showing availability of capital to the extent near about the amount to be advanced as loan to the assessee is nothing but a concocted story put forth by the loan creditor Smt. Swapna Mishra. In fact it was the assessee's money which was shown in the guise of loan by the assessee's wife Smt. Swapna Mishra."
3.1 In appeal by the assessee, the CIT(Appeals), after reproducing the relevant portion of the assessment order, summarily stated that the creditworthiness of the assessee's wife is not beyond doubt and, therefore, the findings given by the Assessing Officer were quite reasonable. Accordingly, the appeal was dismissed.
4. The appeal was heard by the Appellate Tribunal on 19-9-1995. As per facts recorded by the ld. Accountant Member in his proposed order, sent on 22-9-1995, the ld. counsel for the assessee had, while inviting the Tribunal's attention to a notice dated 11-6-1991 issued by the Assessing Officer requiring the assessee to produce his wife, Smt. Swapna Misra, for examining the genuineness of the loan of Rs. 78,000 state to have been advanced by her, submitted that in compliance an affidavit dated 9-3-1992 was filed, stating, inter alia, the source of her earnings out of which savings were effected and the particulars of the returns filed by her. According to the ld. counsel, no further questions were asked and neither any clarification was sought nor the lady was cross-examined. In this background, the ld. counsel submitted that in view of the decision of the Supreme Court in the case of Mehta Parikh & Co. (supra), the affidavit could not be rejected without cross-examination. He, therefore, submitted that the matter may be restored to the file of the Assessing Officer for doing the needful and thereafter proceedings as per law. The ld. Accountant Member referred to the decision of the M.P. High Court in the case of Smt. Gunwantibai Ratilal (supra) explaining the Apex Court decision in the case of Mehta Parikh & Co. (supra), and observed that apart from raising his doubts, the Assessing Officer had not placed on record any material for doubting the veracity of the statements made in the affidavit, copy of which was placed before them. He also pointed out that the explanation was sought as early as on 11th June, 1991 but the affidavit in question was filed only in March, 1992, when the limitation for completing the assessment was due to come to an end. In the circumstances, he considered it in the interest of justice to restore the matter to the file of the Assessing Officer with a direction to cross-examine the deponent and to afford the assessee a reasonable opportunity of being heard. In case, there was no response from the assessee, the Assessing Officer could draw his own conclusion, but at the same time he was directed to make attempt to place positive material on record regarding the veracity of the contents of the affidavit of the assessee's wife. Accordingly, the orders of the Assessing Officer & CIT (Appeals) were set aside.
4.1 The ld. Judicial Member, who received the proposed order on 22-9-1995, did not agree for the remand of the case to the Assessing Officer nor with the directions given to the Assessing Officer by the ld. Accountant Member, because in his view the addition of Rs. 78,000 deserved to be confirmed. In support of his view, after elaborating the facts of the case, emphasising upon the fact that the lady was not produced before the Assessing Officer and pointing out the conduct of the assessee in not filing the return in response to notice under section 148 but filing a letter requesting to treat the original return as having been filed in compliance to this notice and to insert the material regarding source of investment in the property, made available by him during the course of assessment proceedings for the assessment year 1990-90, in the file for the assessment year 1989-90, observed that in spite of such a negative and non-cooperative attitude, the Assessing Officer demonstrated his fairness and, instead of completing the assessment by making the addition, addressed a letter to the assessee on 11-6-1991 requiring him to produce the lady within a week of the receipt of the letter. However, admittedly no compliance was made and the assessee's wife did not present herself before the Assessing Officer for her examination in connection with the loan of Rs. 78,000.
4.1-1 In order to finding out as to what had happened and transpired between 11-6-1991 (when the Assessing Officer issued the letter) and 9-3-1992 (on which date the affidavit of assessee's wife was filed) and thereafter upto 31-3-1992, when the assessment was made, on which aspect neither party was able to throw any light, the ld. Judicial Member directed his P.A., on 22-9-1995, to address a letter to the Jr. Departmental Representative for obtaining the assessment records from the Assessing Officer. These were not made available to him till the date of his passing the order.
4.1-2 After referring to the contents of the affidavit of assessee's wife, the fact that it was not supported by any corroborative evidence, the real purpose of initiation and commencement of re-assessment proceedings was known to the assessee, the affidavit was filed suo motu and the conclusion arrived at by the Assessing Officer, the ld. Judicial Member discussed at length the circumstances in which the power of remanding a case could be exercised by an appellate authority. According to him, in the circumstances, no case was made out nor was it pleaded by the assessee in the first appeal for the remand of the case to the Assessing Officer and even in the appeal before the Tribunal the only grievance in the grounds raised was that the addition of Rs. 78,000 was unwarranted and should have been deleted by the first appellate authority. He pointed out that it was only during in course of arguments before the Tribunal that the ld. counsel pleaded for restoring the matter to the Assessing Officer for cross-examination of assessee's wife in respect of the averments made by her in the affidavit. After referring to the provisions of section 131 of the Income-tax Act, the Civil Procedure Code rules governing the procedure for filing of affidavits, the value of affidavits, in the light of salutary principles emerging in this behalf from certain judicial decisions, the ld. Judicial Member opined that the judgment of the Apex Court in Mehta Parikh & Co.'s case (supra) has not laid down that whenever an affidavit is filed before the Income-tax authorities, then the declarant must necessarily be cross-examined. He concluded that there was no warrant or justification to remand the matter to the Assessing Officer, as was proposed by the ld. Accountant Member. According to him, any indulgence by the Tribunal at this belated stage will only give greater scope and chance to the assessee to tinker, manoeuvre and muster with the evidence, thereby causing grave prejudice to the Revenue's case. Finally, ld. Judicial Member concluded that the order of the Appellate Commissioner confirming the addition of Rs. 78,000 is required to be upheld.
5. As mentioned above, the ld. Judicial Member had directed his Sr. P.A. on 22-9-1995 to send communication for obtaining the assessment records. After referring to the sequence of events and the efforts made by him to obtain the records, which did not yield any results, the ld. Judicial Member pointed out that he was compelled to presume that there was intentional and deliberate disobedience on the part of the departmental officers and they had rendered themselves liable for imposition of penalty as laid down in section 272A(1)(c) of the IT Act and had committed offences punishable under sections 175, 186, 187 and 188 of the Indian Penal Code and were also liable for departmental action as provided in Rule 3 of the CCS (Conduct) Rules, 1964. He directed the Assistant Registrar of the Bench to send an extract of paras 15 and 16 of his order to the Commissioner of Income-tax, Ranchi (under whose jurisdiction the concerned Assessing Officer was functioning) with a direction to the CIT to initiate appropriate Departmental enquiry into the whole matter and fix responsibility of concerned officer(s) with a further direction to take suitable action as provided in law against delinquent Departmental Officers and to record their misconduct in the annual confidential report/service records. A copy of the letter was also directed to be sent to the Chief Commissioner of Income-tax, Bihar, to make him aware as to what was happening under his charge and how the Income-tax Department Officials were conducting themselves in relation to appeals before the Tribunal.
6. After the differing order of the ld. Judicial Member, the ld. Accountant Member proceeded to pass a supplementary order. For adopting this course, be drew support from the decision in the case of Vasantbhai B. Patel, (HUF) (supra). He pointed out that hearing of the appeal was concluded on 19-9-1985 and the case was kept for orders. A proposed order was sent by him on 22-9-1995. Thereafter, the ld. Judicial Member acted singly in the matter throughout. For more than one reason, he pointed out that the ld. Judicial Member had no authority in law to act singly and the requisitioning of the assessment records by the ld. Judicial Member was not valid. Proceeding further, he pointed out that when the case records could not have been requisitioned, there was no question of any default by the Departmental Representatives or the Assessing Officer. According to him, the condemnation of the conduct of the Departmental Officers and observations regarding imposition of penalty under the IT Act, initiating proceedings under the Indian Penal Code as and the CCS (Conduct) Rules, 1964 and making entries in their Annual Confidential Character Report/Service Records were uncalled for. Otherwise also, according to him, the Tribunal had no power to impose a penalty under section 272A(1)(c) nor was it competent to pronounce on the applicability of provisions of sections 175, 188, 187 and 186 of the IPC and Rules 3 of the CCS (Conduct) Rules. In his considered opinion, there was no warrant or justification for recording any adverse remarks against the Sr. Departmental Representative, Jr. Departmental Representative or the Assessing Officer and, therefore, the relevant observations deserved to be deleted.
6.1 In this background, the ld. Accountant Member proposed two questions but the ld. Judicial Member felt that as per provisions of sub-section (6) of section 255 of the Income-tax Act, he had a right to know the true hidden facts by summoning documents and this is precisely what he had done. In his view, it was not incumbent upon him, while discharging judicial functions, to take guidance, advice or consent either of his colleague who shared the Bench or of the parties or their respective representatives for examining and relying on any document, commentary or judicial proceedings for writing or passing a judgment. Therefore, he felt that there was no necessity to obtain an answer under section 255(4) from another Tribunal member on question No. 2 framed by the ld. Accountant Member. He also disagreed with the question at serial No. 1 as framed by the ld. Accountant Member because, in his opinion, it was argumentative. He drafted his own question which is reproduced above.
7. In the background of the facts of the case narrated above, dissenting orders of the ld. Members and there being no unanimity about the points of difference, I have first to determine as to what is/are the point(s) of difference of opinion. From the sole question suggested by the ld. Judicial Member, it is quite evident that he was of the view that as the assessee has not satisfactorily explained the investment of Rs. 78,000 in house property, the amount should straightway be assessed under section 69 of the Income-tax Act and there was nothing to warrant restoration of the matter to the Assessing Officer, as was proposed by the ld. Accountant Member (as per question No. 1 of his reference). The background of raising the question in the manner the ld. Judicial Member has done appears to be, as is evident from para 5 of his dissenting order, the pleadings on the ground taken by the assessee before the ld. CIT(Appeals) that he had discharged the legal burden which lay on him to prove the genuineness of the loan obtained by him from his wife. I am of the opinion that even if the plea of the assessee was to delete the addition, the Tribunal, if on examination of the material placed on record, finds that it is not possible for it to make a just order on the appeal without the assistance of further evidence or material, it would be legally justified to remand the matter to the appropriate authority. In this connection, it may be mentioned that though a power of remand is not expressly given to the Appellate Tribunal by section 254(1) of the IT Act, such power is implicit in the expression "pass such orders thereon as it thinks fit" employed therein. In CIT v. Assam Travels Shipping Service [1993] 199 ITR 1/67 Taxman 269 the Supreme Court has clarified that the above expression is wide enough to include the power of remand to the authority competent to make the requisite order in accordance with law. Rule 28 of the Appellate Tribunal Rules, 1963 confers the power of remand on the Tribunal. Where the Tribunal is of the opinion that the case should be remanded, it may remand it to the authority from whose order the appeal has been preferred or to the Assessing Officer, with such directions as it may think fit. The power of remand conferred by Rule 28 of the Appellate Tribunal Rules is only incidental to the Tribunal's power to hear and dispose of the appeal. A remand may be made by the Tribunal for making a fresh or further enquiry and to dispose of the case on the basis of such enquiry. At the same time, the power of remand is to be exercised judicially and not in an arbitrary or capricious manner.
7.1 It will, therefore, have to be considered whether in the present case valid reasons existed or not to remand the matter to the Assessing Officer. If that is so, the difference is better projected in question No. 1 referred by the ld. Accountant Member. This is what the ld. counsel for the assessee also has submitted in his arguments before me. I would, therefore, proceed to answer question No. 1 referred by the ld. Accountant Member.
8. On a consideration of the respective orders of the Ld. Members, I am of the opinion that the Assessing Officer's letter dated 11-6-1991 requiring the assessee to produce his wife for cross-examination is the root cause of the whole controversy. The reason for my saying so is that according to the ld. Accountant Member, the plea of the assessee was that the lady's affidavit dated 9-3-1992 was filed in compliance to the notice dated 11-6-1991, after which no further questions were asked or clarification sought by the Assessing Officer nor the lady was cross-examined but an adverse inference drawn. It is primarily this situation which has led the ld. Accountant Member to accept the assessee's submission that the matter may be restored to the file of the Assessing Officer. The inference from this letter is more patent in the order of the ld. Judicial Member and his following observations clearly show that he has proceeded on the assumption that the letter dated 11-6-1991 was issued by the Assessing Officer during the course of assessment proceedings for the assessment year under consideration.
Para 2 :
"In spite of such a negative and non-cooperative attitude of the assessee, the Assessing Officer did not finalise the assessment making the addition, though in law under such circumstances he was competent to do so. But he demonstrated his fairness by addressing a letter to the assessee on 11-6-1991 ...".
Para 15 :
"I do not wish to forget that the assessee has, fairly and justly, been given ample time and opportunity to prove and meet his case and explain to the Assessing Officer about the genuineness and source of the sum of Rs. 78,000 with his wife which amount is stated to have been loaned by her to him. The assessee has been given a very long rope, but he has been negligent and callous and did not care to respond to the requisition or demand of the Assessing Officer or the requirement of law. The assessee in my view thus missed the bus."
8.1 Thus, it is the failure of the assessee to comply with the Assessing Officer's letter dated 11-6-1991 that has led the learned Judicial Member to conclude that the affidavit could not be filed as a substitute and, if filed, it loses its evidentiary value. However, this assumption is not in consonance with the material available on record. In this connection, it may be mentioned that as per Assessing Officer's order, notice under section 148 for the year under consideration was issued only on 6-1-1992 whereas the letter in question is dated 11-6-1991. Obvious as it is, the letter dated 11-6-1991 was not issued during the course of assessment proceedings for the assessment year 1989-90 but during the course of proceedings for the assessment year 1990-91 and, amongst other things, the primary reason for the Assessing Officer to form an opinion that the income chargeable to tax for the assessment year 1989-90 had escaped assessment was the failure of the assessee to produce the lady for examination in connection with the loan alleged to have been taken by the assessee from her. The entire confusion in the matter has arisen because of the failure of the parties to present the facts in proper perspective and the non-availability of the records before the Bench.
8.2 The position becomes further clear from the copy of the order sheet filed at the time of hearing before me, which is reproduced below, and the submissions made by the ld. counsel for the assessee, set out in the succeeding paragraphs :
Dr. A. K. Mishra 213 Co-operative Colony, B.S. City
----------------
"6-1-1992 :
The assessment for this assessment year was completed under section 143(1)(a) on 20-9-1989 accepting the income returned by the assessee. Subsequently it was learnt that the assessee has invested a sum of Rs. 3,15,000 in this assessment year in the purchase and construction at a house property situated at Co-operative Colony, B.S. City. The assessee was asked to explain the sources of this investment. The assessee has given the following sources of investment :-
Rs. 52,000 out of savings from salary income.
Rs. 1,17,000 out of loan from father Dr. S. P. Mishra.
Rs. 68,000 out of loan from Anup Kr. Mishra.
Rs. 78,000 out of loan from wife Smt. Swapna Mishra.
The loan creditors namely Sri Anup Kr. Mishra and Dr. S. P. Mishra were examined and the sources of fund available with these loan creditors are not adequate to enable them to advance this huge amount of loan. Besides the loan creditors Smt. Swapna Mishra is not assessed to tax and the assessee did not produce the creditor for examination regarding the availability of fund with her to advance the loan of the assessee.
In view of the facts mentioned above I have reason to believe that income chargeable to tax has escaped assessment for this assessment year. Issue notice under section 148."
Sd/-ITO 10-1-1992 :
"Assessee's reply to treat the original return as return filed in response to notice under section 148 filed."
Sd/-ITO 17-2-1992 :
"Issue notice section 143(2) for compliance on 26-2-1992."
Sd/ ITO 26-2-1992 :
"The assessee's representative appeared and filed written reply.
Case discussed. Adj. to 9-3-1992."
Sd/-ITO 9-3-1992 :
"The A.R. of the assessee appeared. Case discussed."
Sd/-ITO 13-3-1992 :
"Penalty proceedings under section 271(1)(c) initiated. Charge interest as per rule. Assessed under section 143(3) as per order of date. Issue D.N. etc. Sd/-ITO"
8.3 The submission of the ld. counsel for the assessee before me was that the re-assessment proceedings for the assessment year 1989-90 were initiated by issue of the notice dated 6-1-1992, whereas the letter asking the assessee to produce the lady being of an earlier date, i.e., 11-6-1991, was not relevant for the assessment for the assessment year 1989-90. It was stressed that during the course of proceedings for the assessment year 1989-90, no such notice or letter was issued nor any requirement made to produce the lady. In the context of the order sheet entry, while admitting that it cannot be gathered as to what transpired on 26-2-1992, it was submitted that on the next date of hearing, i.e., 9-3-1992, affidavit of the lady dated 9-3-1992 was filed. It was contended that in the sequence of these events, it can be safely inferred that during the course of assessment proceedings for the assessment year 1989-90, there was no requirement to produce the lady and in effect even the requirement made during the course of assessment proceedings for the assessment year 1990-91 was dispensed with. While referring to the Apex Court's decision in Mehta Parikh & Co.'s case (supra), Shri K. N. Jain, the ld. counsel, submitted that the M.P. High Court's decision in the case of Smt. Gunwantibai Ratilal (supra) referred to by the ld. Accountant Member, only explains the decision of the Apex Court. It reiterates that if there is no material on record for doubting the veracity of the statements made in the affidavits, and the deponents have not been subjected to cross-examination for bringing out the falsity of their statements, the Tribunal would not be justified in doubting the correctness of the statements made by the deponents in the affidavits. It was vehemently submitted that in the present case no material whatsoever has been brought on record by the Assessing Officer for doubting the veracity whereas by filing the affidavit the assessee had discharged the initial onus that lay on him. In this connection, a reference was made of the decision of the Patna High Court in Sarogi Credit Corpn. v. CIT[1976] 103 ITR 344. Reliance was also placed upon the decision of Patna High Court reported in Addl. CIT v. Hanuman Agarwal[1985] 151 ITR 150/[1984] 17 Taxman 19. It was further submitted that in view of assessee's explanation and filing of creditor's affidavit, the onus was on the Assessing Officer to issue summon under section 131 to the lady, if he considered it necessary to cross-examine her. The ld. counsel submitted that even from the point of view of section 69 of the Income-tax Act, the question whether the source of expenditure is satisfactorily explained or not cannot be decided arbitrarily but has to be adjudicated on consideration of the material available on the record, which in the present case goes in favour of the assessee. While assailing certain observations of the ld. Judicial Member, the ld. counsel submitted that all the facts have not been considered by him. It was vehemently argued that it is a fit case for being remanded to the Assessing Officer.
8.4 The submission of the ld. Departmental Representative was to the effect that an affidavit is not a conclusive proof and in the absence of any evidence to corroborate its contents it deserved to be rejected. He stressed upon the fact that vide his letter dated 11-6-1991 the Assessing Officer had required the assessee to produce the lady for cross-examination. But this was not done. After the initiation of the proceedings for the year under consideration, the assessee had admittedly requested the Assessing Officer that the material made available during the course of proceeding for the assessment year 1989-90 should be inserted in the file for the assessment year 1989-90. This implied that the fact about non-production of the lady by the assessee formed part of the records for the assessment year under consideration. The ld. Departmental Representative strongly relied upon the facts and the inference of the ld. Judicial Member contained in paras 10 to 15 of his dissenting order.
8.5 In reply, the ld. Counsel for the assessee referred to the provisions of section 143(2) and submitted that these give a choice to the assessee to produce such evidence on which he relies. Hence, the affidavit filed by the assessee met the requirements of the notice under section 143(2) issued by the Assessing Officer and there being no specific requirement from the Assessing Officer, as is envisaged in section 143(3), no adverse inference could be drawn.
9.1 I have carefully considered the entire gamut of facts, the material available on record and the rival submissions. Reasonable opportunity of being heard is a sine qua non of a fair hearing. If adverse inference is drawn without affording the assessee to meet the requirement, there will be violation of the principles of natural justice. In the present case, in response to letter dated 11-6-1991, issued during the course of assessment proceedings for the assessment year 1990-91, the assessee failed to produce his wife for cross-examination that was considered necessary to form an opinion about the genuineness of the loan Rs. 78,000. This could form a reasonable basis, and has, in fact formed, for initiating proceedings under section 147, the same not being under challenge, but it cannot be made sole basis for drawing an adverse inference in the assessment for the assessment year 1989-90. In M. M. Ipoh v. CIT [1968] 67 ITR 106, the Apex Court has explained that the assessment and the facts found are conclusive only in the year of assessment : the finding of questions of fact may be good and cogent evidence in subsequent years when the same question falls to be determined in another year, but they are not binding and conclusive. The position is much worse in the present case. There was no occasion for recording a finding in assessment year 1990-91 about the genuineness of the loan of Rs. 78,000 claimed to have been taken by the assessee from his wife. As mentioned above, the tentative inference in this behalf could be a good basis for initiating proceedings under section 147 for the assessment year 1989-90. Once this was done, it was incumbent upon the Assessing Officer to examine the question of genuineness of the loan totally afresh during the course of assessment proceedings for the assessment year 1989-90. Now, what the Assessing Officer did during the course of these proceedings, as is evident from the order sheet entry, is only to issue a notice under section 143(2) on 17-2-1992 fixing the hearing on 26-2-1992. It appears that at this stage the authorised representative merely filed a letter stating that the reply regarding the source of investment filed during the course of proceedings for the assessment year 1990-91 and the statements of the two persons recorded during the course of those proceedings may be inserted in the file for the assessment year 1989-90. Thereafter, the Assessing Officer adjourned the hearing to 9-3-1992. It is pertinent to mention that there is nothing to show that on this date the Assessing Officer required the assessee to produce his wife for cross-examination or to file any specific evidence in connection with the loan stated to have been given by her. On 9-3-1992, the assessee filed affidavit of his wife which was taken by the Assessing Officer on record. There is nothing to show that the Assessing Officer did not consider this evidence to be satisfactory, no further requirement heaving been made by the Assessing Officer. In such a situation, without going further into the procedure and the rules governing the filing of the affidavits, I respectfully disagree with the ld. Judicial Member that in this case the affidavit did not have any evidentiary value. I am inclined to agree with the ld. Accountant Member that the ratio of the Apex Court's decision in Mehta Parikh & Co.'s case (supra), as explained by the Madhya Pradesh High Court in the case of Smt. Gunwantibai Ratilal (supra) was applicable. It may be reiterated that no material or evidence whatsoever was brought by the Assessing Officer on record for doubting the veracity of the statement made by the lady in her affidavit. The lady having not been cross examined for bringing out the falsity of her statement, the correctness of the statements made in the affidavit could not straightway be rejected, as was done by the Assessing Officer I am, therefore, of the view that if in such a situation the ld. Accountant Member considered it appropriate and in the interest of justice to restore the matter to the file of the Assessing Officer, with specific directions, giving sufficient scope to the Assessing Officer to act in accordance with law, his approach is legally correct.
10. I now proceed to consider the second question raised by the ld. Accountant Member, of course, with some trepidation because, according to the ld. Judicial Member, this question does not arise out of the respective orders passed by them. I find that in its supplementary order, the ld. Accountant Member has given ample justification for raising the question and I agree with him that since there is a serious difference of opinion pertaining to the jurisdictional aspect of the Appellate Tribunal, the question needs to be answered.
11. The facts concerning this issue have been narrated in paras 5 & 6 above. While on this issue the ld. counsel for the assessee had nothing to say, the ld. Departmental Representative submitted that the appeal was heard by the Bench on 19-9-1995 and nothing happened upto 25-9-1995. On 26-9-1995, the Departmental Representative was called by the ld. Judicial Member in the chamber and despite the fact that at the time of hearing before the Bench, the records were not required to be produced, the Departmental Representative was asked to obtain and produce the records. Further, whether the directions were competent or not is a different matter, but the fact is that efforts were made by the Departmental Representative to obtain the records and a letter was sent to the Assessing Officer on 27-9-1995 itself. Reminders were also issued. Immediately after the records were received, the same were sent to the Sr. P.A. of the ld. Judicial Member under letter dated 1-12-1995. In this background, it was submitted that there has been no lapse on the part of the Departmental Representatives to obtain and place the records before the ld. Judicial Member, as per his directions.
12. I have carefully considered the facts concerning the issue. The 'Appellate Tribunal' is a judicial body exercising judicial powers under the statute, viz., the IT Act, 1961. Therefore, whether it does, must be done within the limits of its jurisdiction and in consonance with sound judicial principles, the oft quoted maxim "audi alteram partem" being one of them. The maxim has many facets. Two of them are : (i) notice of the case to be met; and (ii) opportunity to explain. Apart from this golden rule of natural justice, there are statutory rules in the Income-tax Act itself. The powers of the Tribunal in dealing with the appeals are contained in section 254 which accords legal sanction to the 'Appellate Tribunal' to dispose of an appeal. Sub-section (1) of section 254 reads as under :
"The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit."
12.1 Obvious and manifest as it is and also as it ought to be in jurisprudence, the powers vested in the Tribunal in the widest possible terms by the expression "pass such orders thereon as it thinks fit" are subject to the condition "after giving both the parties to the appeal an opportunity of being heard." This mandate postulates that both sides openly get confronted with the material placed and arguments made to enable them to contradict, rebut or oppose the material or the submissions and build up their own case. In fact, by implication it is also expected of the Judge/Appellate Tribunal to put across any particular view in formation during the course of hearing which is likely to be used by him against the parties so that a clarification is secured from them and the court/Tribunal is fully assisted in the rendition of justice. However, I may not be misunderstood to say that informing any opinion or taking a final view after due hearing, the Judge/Tribunal has to put it across to the parties and/or their respective representatives.
12.2 The above exposition of procedure about the hearing of an appeal by the 'Appellate Tribunal' does not commend to the calling of records by an individual Member in the chamber for scanning it and taking a view in the matter. If this is permitted to be done, it would not and cannot produce a legal timbre or anything nearby, inter alia, for the reason that if the two Members constituting the Bench, jointly sitting while deciding an appeal, start hearing the parties separately in chamber or call for records from them, one may go northward while the other may go to the south most direction because they would be acting on different materials. This would create not only a dichotomy but would make the functioning of the Benches of the Tribunal legally impossible. Of course, in a case where one of the Members constituting the Bench is of the view that some clarification is required or some records, which were not or could not be produced at the time of hearing, need to be gone into, it is not as if he is helpless. In such a situation, he can informally discuss the matter with his other colleague on the Bench and subject to both of them agreeing, as is generally the practice, the matter could be re-fixed for clarification, records called for, both the sides provided an opportunity and hearing completed afresh on the missing aspects of the matter; for delivering the judgment. In this view of the matter, while I agree with the ld. Judicial Member that there is a right to know the true facts by summoning the documents or case records, as empowered by sub-section (6) of section 255 of the Income-tax Act, laying down the procedure of 'Appellate Tribunal', my opinion is that this cannot be done singly by any member constituting the Bench, which authority is that of the 'Appellate Tribunal'. In the case of a Division Bench, the Tribunal consists of two Members. Incidentally, even as per one of the settled conventions of the Tribunal, after the hearing of the case is over, there is a prohibition to the effect that neither party's representative would be invited for discussion in chamber and in case any clarification or further material is needed or tendered, an informal hearing of both the parties is to be held in the presence of both the Members.
13. In view of the foregoing, my opinion in respect of the status of adverse remarks against the Senior Departmental Representative, Junior Departmental Representative as also the Assessing Officer, is that they legally do not partake the character of an observation made or finding by the 'Appellate Tribunal'. In this view of the matter, the question whether the Tribunal is competent to direct/take or initiate action for imposition of penalty under the Income-tax Act and prosecution under the Indian Penal Code or disciplinary action under the CCS. Conduct Rules remains wholly academic and does not need to be answered by me as Third Member.
14. To conclude, answer to the points of difference referred to me are as under :
(i) Question No. (1) proposed by the ld. Accountant Member The addition of Rs. 78,000 cannot be confirmed. The matter should be restored to the file of Assessing Officer with directions given in the order of the ld. Accountant Member.
(ii) Question No. (2) proposed by the ld. Accountant Member :
The adverse remarks made against the Sr. Departmental Representative, Jr. Departmental Representative and the Assessing Officer should be wholly deleted.
15. The matter will now go before the regular Bench for decision according to the majority opinion.