2002 (11) TMI 69 - HC - Income Tax

High Court affirms Tribunal's undisclosed income assessment via promissory note; rejects rectification petition under section 254(2).

The High Court upheld the Appellate Tribunal's decision on assessing undisclosed income through a promissory note. The Court rejected the rectification ... Unexplained Money - '1. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in holding that there is no error apparent on the face of the records? - 2. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in declining to remand the matter to the assessing authority affording an opportunity to the applicant to prove the source of income?' It is not the case of the assessee that she sought an opportunity before the Appellate Tribunal at the time of hearing of the appeal to produce certain materials which was denied by the Appellate Tribunal. In the circumstances, we are of the view that the Appellate Tribunal was correct in holding that there was no error apparent from the record which called for rectification of its order. – Further, Tribunal was right in declining the request of the assessee to remand the matter while considering the petition for rectification. The prayer for remand should have been made at the time of passing of the original order in the appeal Issues:1. Assessment of undisclosed income based on a promissory note.2. Rectification petition under section 254(2) of the Income-tax Act, 1961.Issue 1: Assessment of Undisclosed Income:The case involved assessments of an individual, a Hindu undivided family, and the wife of a senior advocate, regarding the assessability of a sum advanced on a promissory note. The Appellate Tribunal found discrepancies in the income shown against the extent of lands owned and the nature of crops raised. The Tribunal observed that the family did not provide sufficient details to justify the funds available for advancing loans. The Tribunal concluded that the money was rightly assessed in the hands of the wife, based on her statement and lack of evidence supporting the family's income sources. The Tribunal set aside the assessments on the husband and the family. The wife sought rectification of the Tribunal's order, claiming errors in assessment and requesting a remand for further evidence. However, the Tribunal rejected the petition, stating that no error was apparent from the record, as the available materials were considered during the appeal process.Issue 2: Rectification Petition under Section 254(2):The wife's counsel argued that the Tribunal failed to consider the evidence presented, including details of lands owned and crops cultivated, leading to an incorrect assessment. Additionally, it was suggested that the husband's profession could have facilitated the transfer of funds to the wife. However, the Court held that the Tribunal's findings were based on factual assessments, not constituting a mistake apparent from the record. The Court emphasized that seeking a remand or additional opportunities for evidence presentation post-appeal did not qualify as rectifiable errors. The Court highlighted that the wife did not point out specific mistakes in the Tribunal's order but sought further opportunities to present evidence. Ultimately, the Court upheld the Tribunal's decision, denying the rectification petition and affirming the assessments made by the Tribunal.In conclusion, the High Court upheld the Appellate Tribunal's decision regarding the assessment of undisclosed income based on a promissory note. The Court rejected the rectification petition under section 254(2), stating that no error was apparent from the record justifying a remand or further evidence presentation. The Court ruled in favor of the Revenue, affirming the Tribunal's assessments and dismissing the wife's claims for rectification.