Per Shri V. P. Elhence, Judicial Member - The assessee is aggrieved of the order dated 16-10-1981 of the learned Commissioner (Appeals).
2. The assessee is a HUF. It derives income from house property, share income from Mayfair Theatre and other sources. The only point urged before us in this appeal related to the assessment of income from rent received from the Vijaya Bank Ltd. who is the tenant of the assessee in the shop in Thadani Mansion adjacent to Mayfair Theatre building. In that connection, the facts are that those premises were earlier in the tenancy of the Allied Electric and Radio Corpn. Lucknow, since 1973 (Allied). An arrangement was arrived at between Allied, the Vijaya Bank Ltd. and the assessee whereby it was agree that Allied would vacate the portion occupied by them in favour of the Vijaya Bank Ltd. Vijaya Bank Ltd. paid a sum of Rs. 75,000 to Allied who vacated the shop. The Vijaya Bank Ltd. got this portion allotted to itself with the consent of the assessee. The rent of the portion occupied by the Vijaya Bank Ltd. was fixed at Rs. 2,500 per month but it was agreed that till the bank was in a position to recover Rs. 75,000 given to Allied on behalf of the assessee, it would pay to the assessee a sum of Rs. 1,250 per month only toward its rent liability, the remaining Rs. 1,250 being adjusted towards the aforesaid amount of Rs. 75,000. On the above facts, it was claimed by the assessee-HUF before the IAC (Assessment) that the assessee-HUF should be assessed on an income of Rs. 1,250 per month only ad not on Rs. 2,500 per month. However, the IAC (Assessment) did not accept this contention and assessed the income from rent from the Vijaya Bank Ltd. at the rate of Rs. 2,500 per month.
3. The assessee, being aggrieved, came up in appeal before the learned Commissioner (Appeals). The learned Commissioner (Appeals) took the view that the sum of Rs. 75,000 was in fact a payment by the assessee to get the premises vacated and was in the nature of capital expenditure which enabled the assessee to earn higher rent. According to him, the recovery of the loan taken for making this payment in installments of Rs. 1,250 per month out of the rent of Rs. 2,500 per month payable by the Vijaya Bank Ltd. could not affect the taxability of the rental income at the rate of Rs. 2,500 per month. Accordingly, he confirmed the order of the IAC (Assessment).
4. The assessee being aggrieved, has come up in appeal before us. At the time of the hearing of the appeal, on behalf of the assessee an application dated 17-2-1983 was moved for leave to file the following papers :
(i) Copy of the letter from the assessee to Shri Sadanand Shetty of the Vijaya Bank Ltd. dated 10-4-1973;
(ii) Copy of the letter dated 14-4-1973 from the assessee to Shri A. Narasimha, Manager Designate, the Vijaya Bank Ltd., Lucknow;
(iii) Copy of the letter dated 2-5-1973 from Allied Electric and Radio Corporation to the Vijaya Bank Ltd.;
(iv) Copies of 8 pay orders of the Vijaya Bank Ltd. to the assessee;
(v) Copy of the letter dated 15-1-1983 of Vijaya Bank Ltd. admitting that the goodwill was paid by it; and
(vi) Copy of the letter dated 2-5-1973 of the Vijaya Bank Ltd. to the assessee acknowledging receipt of documents of title, etc., in pursuance of the security clause in the proposed lease agreement.
The contention of the assessee was that the aforesaid papers went to the root of the matter and were necessary for deciding the controversy in issue. It was also submitted that the question as to what was the rent paid by the Vijaya Bank Ltd. for the premises let out by the assessee was also the subject-matter of dispute before the additional District Judge, Lucknow, in MCA No. 287 of 1979 in proceedings taken by the Nagar Mahapalika, Lucknow. The assessee also sought to file the copy of the judgment dated 18-1-1983 of the learned Additional District Judge, Lucknow, which was said to be relevant for deciding the controversy in the appeal. Shri Gulati for the assessee submitted that the letter dated 14-4-1973 was not filed by the assessee before the Commissioner (Appeals) and, therefore, it had become necessary to file copies of both the letters dated 10-4-1973 and 14-4-1973. The letter dated 15-1-1983 was said to be not in existence on the date when this matter was decided by the lower authorities. The judgment dated 18-1-1983 was said to be not available to the assessee when the matter was decided by the authorities below. It was, therefore, submitted that these documents be taken into consideration. Reliance was also placed on behalf of the assessee on the following decisions : Omar Salay Mohamed Sait v. CIT : 37ITR151(SC) , Sultan Bors. (P.) Ltd. v. CIT : 51ITR353(SC) , CIT v. Mahalakshmi Textile Mills Ltd. : 66ITR710(SC) , R. S. S. Shanmugam Pillai & Sons v. CIT : 95ITR109(Mad) , CIT v. Gangappa Cables Ltd. : 116ITR778(AP) , Smt. Lalita Todi v. CIT : 123ITR40(Patna) , Atlas Cycle Industries Ltd. v. CIT and CIT v. Cawnpore Club Ltd. 1983 UPTC 243. Shri Gulati submitted that an alternative plea also arose and the assessee could claim deduction form income from house property under section 24(1)(iv) of the Income-tax Act, 1961 (the Act), relating to annual charge which stood defined under section 27(iv) of the Act. He urged that even thought this plea had not been raised before the income-tax authorities earlier, the assessee was entitled to raise this claim for the first time before the Tribunal because the income chargeable under the hear 'Income from house property had to be determined and the deduction claimed by the assessee under section 24(1)(iv) was relevant for the same. He also submitted that the letter dated 2-5-1973 of the Vijaya Bank Ltd. referred to above was relevant in this connection. He submitted that one of the questions for determination would be that if the amount of goodwill was paid by the assessee, whether that amount could constitute a charge on the property. According to him, the matter had been decided by the authorities below without referring to any material and that at no state the assessee was required to prove its case in that light.
5. On the other hand, Shri R. K. Upadhyay, the learned departmental representative strongly opposed the reception of the aforesaid documents in evidence. Reliance was also placed by him on the following decisions; Velji Deoraj & Co. v. CIT : 68ITR708(Bom) A. K. Babu Khan v. CWT : 102ITR757(AP) , Ram Prasad Sharma v. CIT : 119ITR867(All) , and CIT v. Anand Prasad : 128ITR388(Delhi) . Shri Upadhyay also submitted that the rent agreement, which was very material document, had not been produced by the assessee before the income-tax authorities. Thereupon the learned council for the assessee file the copy of the lease deed dated 25-4-1974.
6. We have considered the rival submissions as also the decisions referred to above, whether or not specifically referred to in this order. There is no doubt that the lease deed now filed on behalf of the assessee is a very relevant piece of evidence which requires to be taken into consideration by the income-tax authorities for deciding the matter in issue. So is the position of the certificate dated 15-1-1983 of Vijaya Bank Ltd. which was obtained by the assessee after the impugned order of the learned Commissioner (Appeals) and which could not have been filed earlier. Similar is the position of the order dated 18-1-1983 of the learned Additional District Judge, Lucknow, in second appeal under section 476 of the Nagar Mahapalika Adhiniyam. Therefore, the assessees application would be justified with reference to these papers. So far as the copies of the letters dated 7-4-1973, 10-4-1973, 14-4-1973, 2-5-1973, 8-5-1973 and copies of the pay orders are concerned, they are also relevant and necessary for the proper determination of the controversy in issue. We are, therefore, only left with the letter dated 2-5-1973 from the Vijaya Bank Ltd., which the assessee seeks to file. So far as the decision in the case of Omar Salay Mohammed sait (supra) is concerned, it is not relevant as it refers only to the improper rejection of material on the record and not to the improper reception of material. So far as the scope of rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 (the 1963 Rules) is concerned, it was held by the Honble Bombay High Court in the case of Velji Deoraj & Co. (supra) that the admission of additional evidence at the appellate stage is dependent solely on the requirement of the Court and that the mere fact that the evidence sought to be produced is vital and important does not provide a substantial cause to allow its admission especially when the evidence was available to the pray at the initial stage and had not been produced by him. In the case of A. K. Babu Khan (supra), the Honble Andhra Pradesh High Court held that rule 29 does not intend to allow that parties to patch up weak particulars or to fill up omissions. It was also held in that case that the assessees who are guilty of remissness and gross negligence were not entitled to indulgence to be shown to adduce additional evidence in second appeal. In the case of Ram Prasad Sharma (supra), it was held by the Honble Allahabad High Court that the powers of the Tribunal to admit additional evidence under rule 29 were limited and that the discretion had to be exercised reasonably. In the case of atlas Cycle Industries Ltd. (supra), the Honble Punjab and Haryana High Court also held that the power of the Tribunal in appeal to allow an additional plea and, consequently for additional evidence being taken, has been given to do substantial justice between the parties and that the judicial mind has to be applied. So far as the raising of alternative plea is concerned, it was held by the Honble Supreme Court in the case of Mahalakshmi Textile Mills Ltd. (supra) that whether the allowance was admissible under one head or another, the subject-matter for the appeal remained the same and that for reasons recorded by the departmental authorities, the grant of relief on anther ground was justified. It was, therefore, held that it was open to them and to the Tribunal to grant that relief. In the case of Anand Prasad (supra), the Honble Delhi High Court was considering the case of profit from sale of plots assessed as business income. The ITO did not raise an alternative contention that capital gains tax arose. The Appellate Tribunal refused to permit the ITO to raise such a contention on the ground that the ITO ought to have raised it before the AAC. The High Court upheld the order of the Tribunal. Lastly, in the case of Gangappa Cables Ltd. (supra), the Honble Andhra Pradesh High Court held that the Tribunal had the power to allow the assessee to put forward a new claim, notwithstanding the fact that such a claim was not raised by him before the ITO or the AAC, provided there was sufficient material on record to allow such a claim. This point had come up before the Honble Supreme Court in the case of Addl. CIT v. Gurjargravures (P) Ltd. : 111ITR1(SC) and the following observations therein are illumination :
'... We are not here called upon to consider a case where the assessee failed to make a claim though there was evidence on record to support it, or a case where a claim was made but no evidence or insufficient evidence was adduced in support. In the present case neither any claim was made before the Income-tax Officer, nor was there any material on record supporting such a claim ...' (p. 5).'
Thus, it is clear that there can be three distinct situations. Firstly, there can be a situation where the claim or plea raised by the party is there but the party wishes to adduce additional evidence. In such a case, additional evidence can be received if adequate explanation is given as to why the additional evidence could not be produced or was not in its power. The second situation can be where there exists material on the record for supporting a claim which is newly raised for the firsts time before the Tribunal. There can be no difficulty in allowing such a claim to be raised. Then comes the third situation where not only the plea raised is new but also the evidence sought to be adduced is new in the sense that either it has been newly obtained or satisfactory explanation is not afforded as to why evidence was not forthcoming earlier. This is the exact situation with which we are seized at the moment with reference to the letter dated 2-5-1973 of the Vijaya Bank Ltd. There is no explanation whatsoever of the assessee for not being able to file this letter earlier before either of the income-tax authorities. In our view, for this inadvertence or remissness, the assessee has to thank itself and there would be no justification for permitting the assessee to bring in evidence this paper at this stage. We are, therefore, clearly of the view that the letter dated 2-5-1973 of the Vijaya Bank Ltd. cannot be allowed to be taken as additional evidence at this stage nor the plea which is sought to be newly taken with reference thereto. However, with reference to the other papers, we are of the view that the matter should be restored to the learned Commissioner (Appeals) for a decision afresh in accordance with law after giving a due opportunity of hearing to the assessee as also to the department to meet them and if necessary after obtaining a remand report from the IAC (assessment). We, accordingly, set aside the order of the learned Commissioner (Appeals) subject to the above observations. We, therefore, express no opinion on the merits of the assessees claim.
7. In the result, the appeal is partly allowed as above.