1. The Income-tax Appellate Tribunal, Delhi Bench-E, (hereinafter 'the Tribunal'), has, in compliance with a direction given by this court on the assessee's application under Section 66(2) of the Indian I.T. Act, 1922, referred the following question for the opinion of this court :
'Whether the finding of the Tribunal that an amount of Rs. 1,42,706 had not been incurred for loading and unloading is vitiated on account of the fact that it is based on unwarranted assumptions, and on inadmissible evidence and failure to consider relevant material '
2. The facts briefly stated are these. The assessee, Sir Shadilal Sugar and General Mills Ltd., Mansurpur, is a limited company and is engaged in the manufacture and sale of sugar. For the assessment year 1961-62, the accounting period ending June 30, 1960, in its assessment to income-tax the assessee claimed an expenditure of Rs. 1,60,67,168 under the head 'Raw materials consumption account'. This amount included a sum of Rs. 3,02,027 being commission paid to the following loading and unloading contractors: 1. Anand Prakash, 2. Chattar Singh, 3. Mangal Sen, 4. Rajendra Kumar, 5. Avinash Chand, 6. Rameshwardass, 7. S. C. Goel and some others. According to the assessee the rates of commission paid to these contractors for loading and unloading were increased in the relevant accounting year and were as under :
A. 101/2 pies per maund at road centres ;
B. 111/2 pies per maund at rail centres.
3. Prior to that these rates were 91/2 and 10 pies at road and rail centres, respectively. The assessee also claimed a shortage at one per cent. for the month of April for the reason that sugarcane dries up during this time of the year. According to the assessee for the relevant previous year it was to bear the shortage which represented the difference between the quantity of purchases made at the centres and those received at the mill gate. The ITO, relying on the statements of Dharam Prakash, Assistant General Manager and Secretary of the assessee-company, Madan Lal and Prem Chand Garg, two other employees of the assessee, and the periodical fortnightly and final statements, which he could secure, came to the conclusion that the shortage was actually not borne by the assessee but it recovered and/or reimbursed the same from the loading and unloading contractors and the actual value of shortage was 3 pies per maund. Accordingly, he added back a sum of Rs. 1,49,964 to the income of the assessee.
4. The assessee filed an appeal. The AAC, on a reappraisal of the evidence on record, took a contrary view and deleted the addition. He did not rely on the statement of Dharam Prakash for the reason that he had been dismissed by the assessee from its service and, therefore, was a disgruntled person. He relied on the evidence which had been given by some of the contractors on behalf of the assessee in which it was stated that the assessee had not deducted any amount from their bills in respect of shortage. Aggrieved, the Revenue filed an appeal before the Tribunal.
5. The Tribunal at first appraised itself of the concept of admissible evidence 'and' relevant evidence with reference to some authorities and then proceeded to reappraise the material which was on record of the case. The Department was found in possession of fortnightly and final statements in which the relevant entries had been made by Madan Lal and Prem Chand Garg, who admittedly at the relevant time were in the service of the assessee. The entries in those statements tallied with the diary, which had been produced by Dharam Prakash, who, of course, was the dismissed employee of the assessee and on a comparison of these statements with the diary the figure which tallied come to Rs. 1,42,706. In the opinion of the Tribunal these statements could not be easily ignored and they constituted an admissible piece of evidence. Apart from this evidence there was the oral statement of Dharam Prakash as also of Anand Prakash Tyagi, one of the contractors, who had undertaken the job of loading and unloading. In the opinion of the Tribunal even if the statement of Anand Prakash Tyagi be ignored, the affidavits which had been given by the assessee of some of the other contractors could not be relied upon. It rejected those affidavits by observing :
' It is true that the assessee cannot compel that the loading and unloading contractors should maintain accounts. But the fact remains that transactions with these parties were not in small amounts. The statements of accounts of these parties with the assessee, in the circumstances of the case, are necessarily to be authenticated by some tangible evidence. Self-serving statements of these loading and unloading parties would not go to indicate that everything is correct because, when there are running accounts with the assessee in respect of these parties, these parties would not simply rely upon the ipse dixit of what has been recorded by the assessee. Had these parties proved from any note book or any accounts corroborating the entries of accounts of the assessee, then it would have been possible to weigh the evidence in favour of the assessee. Besides, another important factor is to be noted. It is true that equity and income-tax are strangers. But the maxim of 'Equity' cannot be ignored while considering the persuasive force of evidence. One of the general maxims of equity is that he who seeks equity must come with clean hands. In the instant case, the assessee conceded that in respect of insurance rebate, what Dharam Prakash and other employees had recorded is correct for which the assessee agrees to be assessed. The onus lies heavily upon the assessee to prove that such is not the case in the instant case. Thus, having regard to the common course of events with regard to fortnightly statements, final statements, diary and absence of direct corroborative evidence by way of diary or any contemporary book to show thatpersons other than Anand Prakash received the entire amount of commission and also having regard to the disclosure made by the assessee in regard to insurance rebate, the preponderance of probability in the circumstances of the case goes to indicate that in the instant year, the Revenue has proved that the amount of Rs. 1,42,706 has not reasonably been given to the parties concerned. '
6. In the result the Tribunal added back the said amount to the income of the assessee. Now, at the instance of the assessee, the question mentioned above has been referred to this court.
7. It was submitted before us on behalf of the assessee by its learned counsel, Sri R. R. Agrawal, that the Tribunal lost sight of the fact that Dharam Prakash in his statement admitted that the money representing the so-called inflated payments was paid to the directors of the assessee-company. That being so, the assessee could not have been held responsible for this disbursement of money, which so far as the assessee was concerned, had gone out of its coffers. According to the learned counsel the company is a separate legal entity. It paid the money to the contractors and if subsequently it was embezzled by its employees, it cannot be held responsible. We find no substance in this contention. It was not raised on behalf of the assessee at any stage either before the ITO or before the AAC or even before the Tribunal. In other words, this contention does not arise out of the Tribunal's order. Since it involves a consideration of facts, it cannot be entertained for the first time in reference. Apart from this it is not found embraced in the question referred to us. The position, pure and simple, is that on a re-appraisal of the evidence and the material on record, the Tribunal recorded a finding which was different from the one recorded by the AAC. It cannot be disputed that the Tribunal is the last fact-finding authority. It can, on a reappraisal of the facts and material on record, record its own findings which may be different from the findings recorded by the Revenue authorities. Such findings of fact are binding on us. We cannot question them because we are not sitting as a court of appeal but are hearing the reference only in exercise of advisory jurisdiction.
8. An attempt was also made by the learned counsel for the assessee to urge that the Tribunal ignored to consider certain aspects of the case. We do not find any merit in this contention either. The Tribunal considered the evidence and the relevant material on the record. It could not be shown that the finding is vitiated on account of its being based on any unwarranted assumption or on account of consideration of any irrelevant material or failure to consider any relevant material. In our opinion, the case stands concluded by the finding of fact.
9. We, therefore, answer the question in the negative, in favour of theDepartment and against the assessee. The respondent-Commissioner isentitled to costs, which we assess at Rs. 250.