1962 (3) TMI 96 - HC - Income Tax

Court overturns Tribunal decision, finds Rs. 50,000 cash credit supported by evidence.

Commissioner of Income-Tax Versus Babulal Nim

Commissioner of Income-Tax Versus Babulal Nim - 1963 (47) ITR 864 Issues Involved:1. Whether there is any evidence to support the finding of the Tribunal that the sum of Rs. 50,000 was not credited in cash by the assessee on 24th March, 1954, with Ramchandra & Sons, the bankers, and that the relevant entry in the passbook was merely a transfer entry.2. Whether the material, if any, on the basis of which the Tribunal came to this conclusion could be legally taken into consideration.Issue-Wise Detailed Analysis:1. Evidence Supporting the Tribunal's Finding:The assessee, a Hindu undivided family, claimed a cash deposit of Rs. 50,000 on 24th March, 1954, with Ramchandra & Sons, which was later withdrawn on 3rd April, 1954. The Income-tax Officer demanded an explanation for the source of this deposit. The assessee initially stated that the amount consisted of past savings and a legacy left by an ancestor, and was deposited to obtain a solvency certificate for contractor registration. This explanation was not accepted by the Income-tax Officer, who included the Rs. 50,000 as income from 'undisclosed sources.'Upon appeal, the Appellate Assistant Commissioner upheld this decision. However, in a second appeal before the Tribunal, the assessee contended that no actual deposit or withdrawal of Rs. 50,000 occurred, and the entries were made by the banker to facilitate obtaining a solvency certificate. The Tribunal accepted this new explanation based on an affidavit filed by the assessee and a ledger entry indicating a loan from the banker. The Tribunal's reliance on this new explanation was challenged by the Commissioner of Income-tax, leading to the present reference.The High Court found that the Tribunal's acceptance of the new explanation and affidavit was improper. The new explanation was not presented before the Income-tax Officer or the Appellate Assistant Commissioner, and the Tribunal admitted it without proper justification, contrary to Rule 29 of the Appellate Tribunal Rules, 1946. The High Court concluded that there was no evidence to support the Tribunal's finding that the Rs. 50,000 was not credited in cash.2. Legal Admissibility of the Material Considered by the Tribunal:The High Court analyzed Rule 29 of the Appellate Tribunal Rules, 1946, which limits the admissibility of additional evidence to situations where the Tribunal requires it to pass orders or for substantial cause, or if the Income-tax Officer did not give sufficient opportunity to the assessee to adduce evidence. The rule does not permit the introduction of fresh evidence to support a new point or case.The Tribunal's acceptance of the new explanation and affidavit constituted additional evidence admitted contrary to Rule 29. The High Court emphasized that the discretion to admit additional evidence is judicial and not arbitrary, and must adhere to the limitations of Rule 29. The Tribunal allowed the assessee to present a new case without sufficient justification, and the affidavit and material produced before the Tribunal were excluded from consideration.The High Court referenced the Supreme Court decision in Arjan Singh vs Kartar Singh, which established that additional evidence admitted contrary to the principles governing its reception must be ignored. Consequently, the High Court concluded that the Tribunal's finding lacked material support, and the Rs. 50,000 was indeed credited in cash.Conclusion:The High Court answered the questions referred by stating that there was no evidence to support the Tribunal's finding that the Rs. 50,000 was not credited in cash, and the affidavit filed by the assessee could not legally be taken into consideration. The department was awarded the costs of the reference, with counsel's fee fixed at Rs. 200.