Elji Deeraj & Co v. Commissioner Of Income Tax Bombay City 2, Reported In 68 I

ITA 5/2008BEFORETHE HON’BLE MR. JUSTICE RANJAN GOGOITHE HON’BLE MR. JUSTICE B. P. KATAKEY JUDGMENT & ORDER (oral) Ranjan Gogoi, J. 1.This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act) has been admitted on the following substantial question of law:- �Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in allowing the appeal of the Respondent and in restoring the same to the file of the Assessing Officer for adjudication afresh? 2.The facts, very briefly, may be noticed at the outset. For the assessment year 1999-2000 return was filed by the assessee on 30.3.2000 showing a total income of Rs.4,10,819/-. The said return was processed on 22.3.2001. On 1.4.2003 notice under Section 148 of the Income Tax Act was issued. As it now appears, the proceeding under Section 147 of the Act was initiated on the basis of information from the Joint Director of Income Tax (Investigation), Guwahati, that the assessee had invested a sum of Rs.18,11,437/- on different dates during the financial year 1998-99 with the Silpukhuri Branch of the Central Bankof India which investment as well as interest thereon was not disclosed in the return filed for the assessment year 1999-200. The assessee did not respond to the notice. Thereafter, notice under Section 142(1) was issued. What has happenedthereafter is not very relevant save and except to state that eventually summons under Section 131 of the Act came to be issued to the assessee who appeared before the Assessing Officer pursuant thereto. The assessee could not/did not furnish the details of the investment made including the years in which such investment was made. Consequently, the assessment order dated 28.5.2005 was passed whereby an amount of Rs.18,11,437/- was added as undisclosed investment of the assessee along with interest thereon of Rs.1,29,043/-. 3.Aggrieved, the assessee filed an appeal before the learned Commissioner of Income Tax (Appeals) which was rejected by order dated 29.7.2005. Before the first appellate authority also the assessee did not bring on record the relevantdetails with regard to the investments made. 4.The assessee, thereafter, moved the learned Tribunal by way of a furtherappeal. The learned Tribunal by the order dated 5.9.2007 took note of the fact that the learned counsel for the assessee had laid before the Tribunal evidence which was not led before the Assessing Officer. Recording the said fact and alsothat the learned departmental counsel does not have any serious objection if the matter is remanded to the Assessing Officer, the learned Tribunal took the view that the interest of justice require an opportunity to the assessee to introduce the materials laid before the learned Tribunal by way of additional evidence.Accordingly, the matter was remanded to the Assessing Officer. Aggrieved, the Revenue is before this Court. 5.We have heard Sri U. Bhuyan, learned counsel for the Revenue and Sri R. Goenka, learned counsel for the respondent- assessee. 6.Sri Bhuyan, learned counsel for the appellant, has placed before us the provisions of Rule 29 of the Income Tax Appellate Tribunal Rules to show that the conditions precedent for the exercise of the power to permit additional evidence to be introduced did not exist in the present case. Reliance has also been pl aced in this regard by Sri Bhuyan on two decisions of the Bombay High Court in Velji Deeraj & Co. vs. Commissioner of Income Tax Bombay City 2, reported in 68 ITR 708 (Bombay) and in CIT -V- Smt. Kamal C. Mehbebhani, reported in 214 ITR 15 (Bombay). Another judgment of the Madhya Pradesh High Court in CIT, MP VS. Babulal Nim, reported in 47 ITR 864 (MP) has also been relied upon by the learned counsel for the appellant. On the said basis it is contended that the order dated 5.9.2007 passed by the learned Tribunal discloses apparent errors of law which needs to be corrected by this Court in the present appeal. aced in this regard by Sri Bhuyan on two decisions of the Bombay High Court in Velji Deeraj & Co. vs. Commissioner of Income Tax Bombay City 2, reported in 68 ITR 708 (Bombay) and in CIT -V- Smt. Kamal C. Mehbebhani, reported in 214 ITR 15 (Bombay). Another judgment of the Madhya Pradesh High Court in CIT, MP VS. Babulal Nim, reported in 47 ITR 864 (MP) has also been relied upon by the learned counsel for the appellant. On the said basis it is contended that the order dated 5.9.2007 passed by the learned Tribunal discloses apparent errors of law which needs to be corrected by this Court in the present appeal. 7.In reply, Sri Goenka, learned counsel for the respondent has submitted that the assessee had applied for a copy of the reasons recorded for the reopening of the assessment of the respondent in response to which the said reasons werefurnished to him indicating six numbers of fixed deposit receipts totaling Rs.18,11,437/- with the Central Bank of India, Silpukhuri Branchy to be the undisclosed investment of the respondent assessee. Sri Goenka has further submitted thaton receipt of the said information an application was made to the Bank in question who furnished a certificate dated 28.3.2005. The said certificate showed that the fixed deposit accounts in question were opened on different dates in the calendar year 1995 i.e. that the investments sought to be treated as undisclosed investments for the assessment year 1999-2000 were actually made in the calendaryear 1995. Sri Goenka has submitted that as the aforesaid information indicatedthat a major part of the investment could not have been treated to be undisclosed investment or interest income for the assessment year in question a prayer was made before the learned Tribunal for leave to bring the said materials on record by way of additional evidence. It is further submitted that the learned departmental counsel on being confronted with the above situation did not object to the prayer made which fact is also recorded in the order of the learned Tribunal dated 5.9.2007. On the aforesaid basis Sri Goenka has submitted that no error orany improper exercise of the discretion or jurisdiction vested in the learned Tribunal by Rule 29 of the Income Tax Appellate Tribunal Rules is disclosed so asto warrant interference by the Court. 8.We have considered the rival submissions advanced on behalf of the parties. There is no material on record to hold that the facts of the case is otherwise than what has been stated before us by the learned counsel for the respondent-assessee. In fact, the said version stands amply supported by what was recordedby the learned Tribunal in the order dated 5.9.2007 i.e. that �The Ld. D.R. hasnot raised serious objection in case the matter is restored to the A.O. � 9.The power of the Tribunal to allow additional evidence is a circumscribed power as the provisions of Rule 29 of the Appellate Tribunal Rules would indicate. Additional evidence cannot be permitted to enable a party to the proceedingto improve his case. Neither can such additional evidence be insisted upon as amatter of right. It is essentially a power to enable the Tribunal to pass a just and fair order. Though such power can also be exercised if the Income Tax authorities had decided the case without giving sufficient opportunity to the assessee, the two situations contemplated by Rule 29 cannot be understood to be mutually exclusive. The purport of the power under Rule 29, in the last resort, being capable of being understood in the manner indicated above it will not be necessary for the purpose of the present case to go into a detailed analysis of the several case-laws that have been cited by Sri Bhuyan, learned counsel for the appellant, as the ratio of the said decisions is not in any way fundamentally different from what has been indicated above. 10.Applying the above law to the facts of the present case what transpires is that the respondent-assessee had come into possession of certain materials ona date subsequent to the assessment order which, prima facie, indicated that the addition made to the returned income for the assessment year 1999-2000 may notbe tenable to the full extent. What would be effect of due and proper consideration of such materials was not known to the learned Tribunal at that stage. If i n such a situation the learned Tribunal took the decision to permit additional evidence to be adduced and thereafter referred the matter to the Assessing Officer we do not see how any prejudice has been caused to the Revenue or how the power conferred by Rule 29 of the Appellate Tribunal Rules has been misdirected. 11.Consequently and in the light of the foregoing discussions we answer thequestion framed in the appeal in the affirmative i.e. against the Revenue and in favour of the appellant. 12.The appeal consequently is dismissed as indicated above. However, on thefacts and circumstances of the case there will be no order as to costs.