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2 Counsel for the Appellant submitted at the out set that the order of the Income Tax Appellate Tribunal dated 6 April 2010 needs to be set aside and the proceedings remanded for fresh consideration, as the ASN 4 ITXA - 5518 Tribunal has relied upon a decision of the Supreme Court in Sumati Dayal reported in (1995) 214 ITR 801 (SC) without any party to the proceedings relying upon the same before the Tribunal. Consequently, it is submitted by Counsel that there was a violation of the principles of natural justice. It was submitted that the Appellant would have been able to distinguish the applicability of the decision to the facts of its case.
11 To our mind, the test laid down by the Supreme Court in the decision in Sumati Dayal is well a settled test which is applied in all civil proceedings particularly, with regard to testing the genuineness of a transaction. In fact the CIT (Appeals) has also applied the same test to reach the conclusion that the transactions claiming a Capital loss on account of sale of shares were not genuine. Counsel for the Appellant submitted that the Tribunal by referring to the decision of the Supreme Court in Sumati Dayal (supra), was in breach of the proviso to Rule 11 of the Income Tax Appellate Tribunal Rules, 1963. Rule 11 of the Income Tax Tribunal Rules reads as under :
Counsel for the Appellant also relied upon a decision of this court in CIT Vs. Jamnadevi Agarwal reported in 328 ITR 656 to contend that this Court has not applied the decision of the Supreme Court in the matter of Sumati Dayal (supra) in the above case as the documentary evidence produced before the authorities, conclusively proved that there was no question of introducing unaccounted money, as the transaction of sales took place at the rates prevailing on that date in the stock market. The aforesaid decision in the matter of Jamnadevi (supra) proceeded on its own facts and the decision of the Supreme Court was held to be inapplicable in the factual context existing in that case. However, the decision of the Supreme Court in the matter of Sumati Dayal (supra) would be applicable, when ever there are reasons to believe that the apparent is not real; then the taxing authorities are ASN 19 ITXA - 5518 entitled to look into surrounding circumstances to find out the reality by looking at the surrounding circumstance and applying the test of human probabilities. A reference to the decision in Sumati Dayal's case on a principle of law cannot be said to have caused prejudice to the Appellant. This conclusion is based while proceeding on an assumption that the aforesaid decision of the Supreme Court was not cited and/or referred to during the course of the hearing leading to the order dated 6 April 2010. In view of the above, no substantial question as framed at (i) above arises in the present case.
12. So far as questions No. (ii) to (vii) are concerned, Counsel for the Appellant did not separately address on each question of law but submitted that as the Tribunal was guided by the decision of the Supreme Court in Sumati Dayal (supra) that led to a miscarriage of justice leading to a substantial question of law. As pointed out hereinabove, while disposing of question No.(i) raised by the Appellant, the Tribunal merely records a well settled position of law and in the course of recording the same, referred to the decision of the Supreme Court in the matter of Sumati Dayal (supra) and same test had been applied by CIT(Appeal) without referring to the decision. Counsel for the Appellant relied upon the decision of the Supreme Court in Omar Salay Mohamed Sait reported in 1959(37) ITR 372 to contend that where the findings of the Tribunal are based on suspicion, conjectures or surmise or on no evidence then even if they are questions of fact they are liable to be set aside. Counsel for the Appellant further submitted that in the present case the shares had in fact been purchased and transferred and all documents were on record to establish to purchase and ASN 20 ITXA - 5518 sale of shares. Consequently, there is no reason to deny the benefit of loss on account of capital gain on account of sale of shares. So far as Question No.