1967 (9) TMI 22 - HC - Income Tax

Admissibility of additional evidence under r. 29 of Appellate Tribunal Rules or under O. 41 r. 27 of Civil Procedure Code

Issues Involved:
1. Whether the Tribunal's discretion was judicially exercised in refusing to admit the bank certificate as evidence.
2. Whether there was any evidence to justify the Tribunal's finding that the sum of Rs. 95,483 was the assessee's own money representing income from an undisclosed source.

Detailed Analysis:

Issue 1: Tribunal's Refusal to Admit Bank Certificate as Evidence

The first issue concerns whether the Tribunal was justified in refusing to admit additional evidence, specifically a bank certificate, during the appeal. The assessee argued that the bank certificate was a "vital, important and clinching piece of evidence" that could prove the money was received from Aden through an approved manner, thereby refuting the Income-tax Officer's claim that it was the assessee's own concealed income.

The Tribunal's power to admit additional evidence is governed by rule 29 of the rules and orders relating to the Appellate Tribunal, similar to Order 41, rule 27 of the Code of Civil Procedure. The admissibility of additional evidence depends on whether the appellate court requires the evidence to pronounce judgment or for any other substantial cause. The court emphasized that the admission of additional evidence is not a right of the party but is dependent on the court's requirement. The Tribunal found no difficulty in pronouncing its judgment on the existing material and did not discover any lacuna that needed curing.

The court cited the Privy Council's decision in Parsotim v. Lal Mohar, which clarified that additional evidence could only be admitted if the court itself requires it. The Tribunal did not find the additional evidence necessary, and its refusal to admit the bank certificate was neither illegal nor improper. Thus, the first question was answered in the negative.

Issue 2: Evidence Justifying the Tribunal's Finding on Rs. 95,483

The second issue is whether there was any evidence to justify the Tribunal's finding that the sum of Rs. 95,483 was the assessee's own money from an undisclosed source. The assessee's books showed an opening credit balance of Rs. 95,483 in the account of Maneklal Bhanji of Aden, for which no account books were produced. The Income-tax Officer suspected that this amount represented concealed income due to exchange restrictions between India and Aden, making it unlikely that the Aden party could remit money in excess of the value of goods exported.

The assessee provided varying and conflicting explanations for the credit, including that it might relate to earlier dealings or advance payments. The Tribunal and income-tax authorities found these explanations unsatisfactory and inconsistent. The affidavit from the Aden party did not clarify how the credit balance arose or confirm that the amount was remitted from Aden to Bombay.

The court noted that the consistent pattern of transactions in subsequent years showed that remittances from the Aden party always matched the value of goods supplied, except in the year in question. This anomaly, combined with the lack of a satisfactory explanation, led the Tribunal to conclude that the amount likely represented the assessee's concealed income.

The court referred to several cases cited by the assessee's counsel but found them distinguishable. In Narayandas Kedarnath v. Commissioner of Income-tax, the court held that the burden of proof shifted to the department only after the assessee established the genuineness of the remittance, which was not done in this case. Similarly, in Orient Trading Co. Ltd. v. Commissioner of Income-tax, the court held that the assessee must prove the genuineness of the entry, not just the identity of the third party.

The court concluded that there was material on record to support the Tribunal's finding that the sum of Rs. 95,483 was the assessee's own money from an undisclosed source. Therefore, the second question was answered in the affirmative.

Additional Observation: Nature of Income

The court did not address the Tribunal's observation that the nature of the income from the undisclosed source was business income, as this issue was not part of the questions referred to the court. The assessee's application for a reference on this point was specifically rejected.

Notice of Motion

The assessee's notice of motion to admit orders from penalty proceedings, which included the bank certificate, was also rejected. The orders did not form part of the record before the Tribunal and were passed after its decision. Since the Tribunal's refusal to admit the bank certificate was upheld, there was no necessity to allow the production of these orders.

Conclusion

Both questions were answered in the affirmative, and the assessee was ordered to pay the costs of the department. The notice of motion was rejected with costs.

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