1965 (11) TMI 3 - HC - Income Tax

Tribuanl refused to entertain the additional ground of appeal - leave can be granted if the new plea does not require a further investigation into facts which are not already on record - leave can be granted does not mean that the leave must be granted when the circumstances exist - Tribunal exercised their discretion judicially in refusing to entertain the additional ground of appeal and in deciding it

Issues Involved:
1. Whether the Tribunal exercised its discretion judicially in refusing to entertain the additional ground of appeal.
2. Whether the cash credit entries could be included in the assessment for the year 1955-56.

Detailed Analysis of the Judgment:

1. Tribunal's Exercise of Discretion:
The primary issue referred to the court was whether the Tribunal exercised its discretion judicially in refusing to entertain the additional ground of appeal. The Tribunal's refusal was based on several reasons:

- The assessee did not take the plea before the Income-tax Officer or the Appellate Assistant Commissioner.
- The application to urge the new ground was perceived as an attempt to delay the proceedings.
- The ground was not purely legal and required an investigation of facts.
- The Tribunal found no sufficient explanation for the delay in raising the ground.

The court emphasized that an appellant must confine arguments to the grounds taken in the memorandum of appeal unless leave of the Tribunal is obtained. The Tribunal has the discretion to grant or refuse such leave, and this discretion must be exercised judicially, not arbitrarily. The Tribunal's reasons for refusal, including the need for factual investigation and the timing of the new ground, were found to have a logical connection to the decision, thus not arbitrary.

2. Inclusion of Cash Credit Entries in the Assessment:
The assessee argued that the cash credit entries of Rs. 20,000, dated November 25 and 27, 1953, should not be included in the assessment for the year 1955-56 as they were derived prior to the relevant previous year commencing on April 1, 1954. The Tribunal rejected this argument, noting that:

- The determination of the "previous year" relevant to a particular source of income is a question of fact.
- The assessee claimed it did not maintain accounts for the undisclosed source, implying the previous financial year should be considered.
- The Tribunal found that the new ground required investigation into whether accounts were maintained and whether any option regarding the previous year had been exercised.

The court supported the Tribunal's view that these questions are factual and not purely legal. The shifting of onus from the assessee to the department to show the relevant previous year does not change the nature of the question from factual to legal.

Judicial Precedents:
The court referenced several cases to support its decision:

- Commissioner of Income-tax v. P. Darolia & Sons: Confirmed that the question of undisclosed income's source is a factual one.
- Gangadas Sarda v. Commissioner of Income-tax: Followed the above decision.
- Moti Ram v. Commissioner of Income-tax: Affirmed the Tribunal's discretion in refusing new questions requiring further evidence.
- Sushil Chandra Ghose v. Income-tax Officer: Held that the previous year for a disclosed source is not presumed to be the same for an undisclosed source.
- Bishan Dutt v. Commissioner of Income-tax: Emphasized that the previous financial year is the previous year for undisclosed income only in the absence of a system of accounting and an option.
- Commissioner of Income-tax v. Hazarimal Nagji & Co.: Stated that leave can be granted if no further investigation into facts is required.
- Commissioner of Income-tax v. M. P. Kolhe: Addressed the plea of pure law.

Conclusion:
The court answered the question in the affirmative, affirming that the Tribunal exercised its discretion judicially. The Tribunal's refusal to entertain the additional ground of appeal was not arbitrary, as it was based on relevant considerations and logical connections to the issue at hand. The assessee was ordered to pay costs to the Commissioner of Income-tax.

Separate Judgment:
PATHAK J.: Agreed with the decision but emphasized that the Tribunal's jurisdiction in refusing the additional ground of appeal is discretionary. The Tribunal's consideration of the application as not bona fide and the need for factual investigation were relevant factors. The Tribunal's discretion was exercised judicially, and the question was answered in the affirmative.

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