1988 (2) TMI 136 - AT - Income Tax

Summary

Issues Involved:
1. Non-consideration of grounds of appeal Nos. 4 & 5.
2. Ownership of the liquor business based on Diary No. 10.
3. Allegation of error in the Tribunal's findings due to non-examination of Diary No. 10.
4. Consideration of affidavit by the counsel for the applicant.

Issue-wise Detailed Analysis:

1. Non-consideration of grounds of appeal Nos. 4 & 5:
The applicant contended that the grounds of appeal Nos. 4 & 5 were not addressed by the Appellate Tribunal. The applicant argued that during the pendency of the application with the Settlement Commission, the revenue authorities were not justified in proceeding with the assessments for the relevant years. However, the Tribunal found that the applicant failed to establish that the ITO was not justified in proceeding with the assessments while the application for settlement was pending. The Tribunal noted that there is no statutory bar preventing the ITO from proceeding with an assessment pending before the Settlement Commission. The Tribunal also observed that the applicant did not pursue the application with the Settlement Commission, leading to the inference that the application was either not admitted or allowed to lapse. Consequently, the plea raised by the applicant was rejected, and the appeal regarding grounds of appeal Nos. 4 & 5 was dismissed.

2. Ownership of the liquor business based on Diary No. 10:
The applicant challenged the findings of the ITO and CIT(A) that the liquor business belonged to him individually, rather than to the partnership firm M/s Mohammad Umar. The Tribunal upheld the findings of the lower authorities, concluding that the diary indicated the applicant was the proprietor of the business. The ITO had assessed the entire profit of the liquor business in the applicant's hands and made protective assessments in the hands of the firm, withdrawing the benefit of registration allowed earlier. The Tribunal affirmed this position, rejecting the applicant's plea.

3. Allegation of error in the Tribunal's findings due to non-examination of Diary No. 10:
The applicant contended that the Tribunal committed a grave error by not examining Diary No. 10, which was crucial to determining the ownership of the liquor business. The applicant's counsel, Mr. K. N. Jain, filed an affidavit stating that the diary was not produced before the Tribunal. The Tribunal, after considering the facts and the affidavit, concluded that the diary was indeed not produced by the revenue during the hearing. The Tribunal reasoned that if the diary had been produced, it would have provided detailed reasons and discussed the entries therein. As such, the Tribunal found that there was an error apparent from the record and ordered the recall of its previous order for rehearing the appeal.

4. Consideration of affidavit by the counsel for the applicant:
The revenue objected to the consideration of the affidavit filed by Mr. K. N. Jain, arguing that it did not comply with the provisions of Civil Procedure Code Order 19, Rule 3. The revenue contended that the affidavit should have separately stated which facts were true to the counsel's knowledge and which were true to his belief. The Tribunal, however, accepted the affidavit, noting that the counsel was affirming what had happened during the proceedings before the Tribunal. The Tribunal found that the revenue's failure to file a counter affidavit or cross-examine Mr. Jain made his testimony irrefutable. Thus, the Tribunal accepted the affidavit and concluded that the diary was not produced during the hearing.

Separate Judgment by Accountant Member:
The Accountant Member disagreed with the Judicial Member's decision to reopen the case. He argued that the affidavit of Mr. K. N. Jain was not acceptable due to non-compliance with procedural requirements and should be rejected. He also opined that the Tribunal has no power to review its orders and that the miscellaneous petition lacked merit. He emphasized that the Tribunal's decision could be based on the facts on record and the orders of the lower authorities without necessarily examining the diary. Therefore, he concluded that there was no mistake apparent from the record, and the miscellaneous petition should be rejected.

Third Member's Decision:
The Third Member was called to resolve the difference of opinion between the Judicial Member and the Accountant Member. After considering the submissions and the Tribunal's order, the Third Member concluded that there was no mistake apparent from the record in the Tribunal's original order. He emphasized that a mistake apparent on the record must be obvious and patent, not something requiring a long drawn process of reasoning. He held that the miscellaneous petition amounted to a review of the Tribunal's order, which the Tribunal has no power to undertake. Consequently, he rejected the miscellaneous petition, agreeing with the Accountant Member's view.

Final Order:
The Tribunal, in light of the Third Member's decision, rejected the miscellaneous petition filed by the applicant. The Tribunal concluded that there was no mistake apparent from the record in its original order, and thus, there was no basis for recalling the order for rehearing.