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TMI Blog1990 (2) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer rejected the assessee's book results and made additions under four heads Rs. (i) Amounts used for unaccounted purchases 30,000 (ii) Profit on sale of such purchases 9,000 (iii) Amount used in underinvoicing purchases 60,000 (iv) Short credit of sales and omission of sales 5,43,000 The assessee filed an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner deleted all the additions except Rs. 18,629 out of the addition of Rs. 60,000. The Department filed an appeal before the Tribunal against the deletions made by the Appellate Assistant Commissioner and the assessee filed an appeal against the retention of Rs. 18,629. The Tribunal dismissed the appeal filed by the assessee and partly allowed the appeal filed by the Department. By allowing the Departmental appeal partly, the Tribunal restored an addition of Rs. 1,15,000. The assessee wanted the questions set out in the first paragraph of this judgment to be referred for the decision of this court. The Tribunal has referred the questions for decision. We heard the contentions of the assessee and the Revenue. The Income-tax Officer made the additions to income based on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, in order to determine the fact that the findings are perverse, this court should examine the various documents produced in the case as evidence and also the deposition of the witnesses examined in the case. Counsel further submitted that when the Tribunal referred the questions of law to be answered with a statement of fact, it has not produced along with the statement of case, the evidence on which the Tribunal has recorded its findings and that this court should call for a supplementary statement and also the documents and deposition which formed the foundation of the case of the Department. Counsel for the Revenue submitted before us that the questions referred for our decision are purely questions of fact and that there is absolutely no reason for this court to call for a supplementary statement of the case along with the deposition and other documents in the case. Further, he submitted that the Tribunal has prepared the statement of facts with notice to the assessee and the Tribunal used to post the case for finalising the statement of case to be forwarded, to the High Court with notice to the assessee. The assessee has not submitted before the Tribunal that the statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts seized by the Department from Narayana Swamy Iyer are totally unreliable and no addition can be made on the basis of the papers found from a person whose veracity is discredited since he himself was subject to search by the Department. The assessee contended that though the books and records seized during search of the premises of Narayana Swamy lyer, reflected transactions with the assessee, the Tribunal ought not to have relied on the statements found in those books of account of Narayana Swamy Iyer, because the Department obtained those books of account during search. But the Tribunal did not accept this contention. The evidentiary value of these books of account does not depend upon the fact whether they were seized when a search was made or not. It depends upon the corroboration of the statements in the books by other evidence, materials and circumstances involved in the case. The Tribunal has considered the individual items seriatim on the basis of which certain additions were made. The first item that was considered is goods covered by R. R. No. 899052 dated July 15, 1970. By this, R. R. 226 bundles of M. S. rods were despatched by Messrs. Ganesh Exports and Import Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has gone wrong in relying on certain items of evidence. It is for the Tribunal to weigh and assess the evidentiary value of materials placed before it and the testimony of witnesses and the records produced before it. The question referred for the decision of this court is not one wherein it is stated that the findings of the Tribunal are based on no evidence. A similar situation was considered by the Supreme Court in CIT v. Kamal Singh Rampuria [1970] 75 ITR 157. The court observed thus (at page 160): "In other words, the argument was that, in the absence of a question whether the finding of the Tribunal was based on no evidence or that it was perverse, the High Court exceeded its jurisdiction in examining for itself the materials in support of the Tribunal's finding and acting as court of appeal. In our opinion, there is justification for the argument put forward on behalf of the appellant." The first question referred for decision is "whether there is any evidence in the case to support the rejection of the accounts of the assessee firm ?" This question does not reveal a clear challenge to the finding of the Tribunal to the effect that the finding is perverse. The Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Department has proved that the goods covered by the two railway receipts were really bought by the assessee." From the above observation of the Tribunal, it is clear that the Tribunal has made an assessment of the evidence, not considering or valuing the items of evidence individually, but appreciating all the materials and circumstances, the books of account and the testimony of witnesses as a whole. On this aspect of the matter, the Tribunal has said that "to round up the discussion on this point, we agree that the evidence of the goods clerk by itself is not against the assessee. But it does take colour when seen in the background of the other pieces of evidence." The Tribunal has considered separately the additions on account of under-invoicing. The basis of the addition is the papers seized from the accounts of the business premises. The assessee contended that he did not get a proper opportunity to cross-examine the witnesses at the first stage. The Tribunal has said that they have no doubt about the genuineness of the books seized from the premises of Narayana Swamy lyer and that the nexus with the assessee and the purchases are undeniable. It was also found that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that there is evidence to show that the assessee has suppressed purchases, paid on money on certain purchases and underestimated some sales. The Income-tax Officer has made separate additions on each of such findings. The Tribunal further made it clear that, from the evidence, the Tribunal will treat the books of account as unreliable and so, the proviso to section 145 should be applied. Counsel for the assessee argued before us that the questions of law framed in this case basically depend upon the fact whether the findings of the Tribunal are perverse or not. Now, we have considered some aspects of the matter in order to show that we have examined the reasons given by the Tribunal for recording findings against the assessee just to know whether it is possible to characterise the findings as perverse. In deciding the question whether an order or decision of an authority based on finding of facts is a decision or order which can be characterised as perverse, it is always better to keep in mind the words of caution predicated by Lord Hailsham L. C. in In re : W (an infant) [1971] 2 All E. R., 49 (HL) at p. 56. "Two reasonable parents can perfectly reasonably come to opposite ..... 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