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Baij Nath Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 8 of 1976
Judge
Reported in[1981]132ITR7(P& H)
ActsIncome Tax Act, 1961 - Sections 251
AppellantBaij Nath
RespondentCommissioner of Income-tax
Appellant Advocate Bhagirath Dass and; B.K. Gupta, Advs.
Respondent Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Excerpt:
..... by the state or regional transport authority should result in commencement of the period of limitation. thus,. in cases where the state or regional transport authority has not communicated the order of refusal passed to the persons concerned, the period of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order. - faquir singh 8,000 13-11-66 11-4-67 pahuja 2. the ito was satisfied with the genuineness of the cash credit of its. it is well settled that the aac while sitting in appeal has plenary jurisdiction and it is always open to him to pass a remand order with a view to do justice to the parties......singh20,0002-6-6630-1-67surbirsingh 2.m/s.chandi ram15,0007-11-664-2-67jagdishlal 3.m/s.didar singh30,00011-11-668-3-67charansingh 4.m/s.faquir singh8,00013-11-6611-4-67pahuja 2. the ito was satisfied with the genuineness of the cash credit of its. 20,000 appearing in the name of m/s. pratap singh surbir singh.3. in order to prove the genuineness of the other cash credits, the assessee, vide his applications dated june 11, 1971, september 6, 1971, and january 11, 1972, under section 131 of the i.t. act, 1961 (hereinafter referred to as 'the act '), requested the ito to examine on commission m/s. chandi ram jagdish lal, m/s. didar singh charan singh and m/s. faquir singh pahuja, as they had shifted to delhi. the ito, vide his letter dated march 9, 1972, informed the assessee.....
Judgment:

Bhopinder Stngh Dhillon, J.

1. In the course of the assessment proceedings for the assessment year 1967-68, relevant to the accounting period ending on March 31, 1967, the ITO found the following cash credits in the account books of the assessee :

Sr. No.

Name ofthe party

Amount

Date ofreceipt

Date ofreturn

Rs.

1.

M/s.Pratap Singh

20,000

2-6-66

30-1-67

SurbirSingh

2.

M/s.Chandi Ram

15,000

7-11-66

4-2-67

JagdishLal

3.

M/s.Didar Singh

30,000

11-11-66

8-3-67

CharanSingh

4.

M/s.Faquir Singh

8,000

13-11-66

11-4-67

Pahuja

2. The ITO was satisfied with the genuineness of the cash credit of Its. 20,000 appearing in the name of M/s. Pratap Singh Surbir Singh.

3. In order to prove the genuineness of the other cash credits, the assessee, vide his applications dated June 11, 1971, September 6, 1971, and January 11, 1972, under Section 131 of the I.T. Act, 1961 (hereinafter referred to as 'the Act '), requested the ITO to examine on commission M/s. Chandi Ram Jagdish Lal, M/s. Didar Singh Charan Singh and M/s. Faquir Singh Pahuja, as they had shifted to Delhi. The ITO, vide his letter dated March 9, 1972, informed the assessee that the notices for the service of the said parties were returned unserved and it was the duty of the assessee himself to produce them. By his application dated March 16, 1972, the assessee offered to accompany the process-server for getting the aforesaid parties served and requested the ITO to examine the parties on commission. Thereupon, the assessee produced the following documents in support of his case :

(i) Discharged pronotes/hundis executed by the assessee in favour of the parties concerned.

(ii) Copies of the account of the assessee in the account books of the parties.

(iii) Affidavits of Jagdish Lal and Didar Singh, confirming their respective loans.

4. The assessee also produced Shri Anup Singh (ex-manager of M/s. Didar Singh Charan Singh) and Shri Prithipal Singh, son of late Sardar Faquir Singh. Shri Anup Singh admitted the correctness of the loan advanced by M/s. Didar Singh Charan Singh to the assessee and accepted his signatures on the discharged pronotes on their behalf. Shri Prithipal Singh identified the signature of his deceased father on the discharged pronote and the certificate dated April 11, 1967, issued by Shri Faquir Singh. In addition to this evidence, the assessee also wrote a letter dated March 20, 1972, and produced his own affidavit dated March 20, 1972, confirming the loans in question.

5. The ITO rejected the evidence produced by the assessee. He observed that M/s. Didar Singh Charan Singh, M/s. Chandi Ram Jagdish Lal and M/s. Faquir Singh Pahuja were mere name-lenders and that many other parties had surrendered cash credits appearing in their names. He refused to accept the genuineness of the cash credits appearing in the names of the said parties on the ground that they were not produced by the assessee. He also remarked that Shri Faquir Singh was not a man of means and that he had no capacity to advance the loan in question to the assessee. The ITO, therefore, added the sum of Rs. 53,000 to the income of the assessee as income from undisclosed sources.

6. On appeal, the AAC set aside the assessment order on the ground that the ITO was not justified in refusing the request of the assessee to examine the parties, namely, M/s. Chandi Ram Jagdish Lal and M/s. Didar Singh Charan Singh on commission. He, accordingly, directed the ITO to re-examine the case after giving full assistance and opportunity to the assessee to produce evidence in support of his case. The AAC also directed the ITO to reconsider the genuineness of the cash credit appearing in the name of Shri Faquir Singh after allowing the assessee to produce any further evidence, if he so desired.

7. In second appeal before the Income-tax Appellate Tribunal (hereinafter referred to as 'the Tribunal'), it was contended on behalf of the assessee that the ITO was requested time and again by the assessee to summon or examine the parties on commission and that if the ITO did not assist the assessee in producing the witnesses, the assessee should not suffer for the consequences. It was contended that the remand of the case by the AAC to the ITO would put the department in a more advantageous position and afford a further chance to it to plug the loopholes in the case. It was, therefore, urged that the order of the AAC be set aside and the case should be decided by the Tribunal on merits. This prayer was opposed on behalf of the department and it was contended that it was on the plea of the assessee that he had not been given full opportunity ofproducing evidence that the case was remanded. It was pleaded that the AAC had plenary powers and, therefore, the remand order was justified.

8. The Tribunal came to the conclusion that the AAC was legally competent to set aside the order and direct the ITO to make further enquiries. As regards the second plea whether the AAC had rightly remanded the case, keeping in view the facts and circumstances of the case, the Tribunal held as follows :

'The next question for consideration is whether the Appellate Assistant Commissioner was justified in setting aside the order of the Income-tax Officer in the present case. In this connection, we may state thatthough the Appellate Assistant Commissioner has very wide powers in disposing of an appeal, the same are subject to one important limitation, i.e.,he must exercise these powers in a judicial manner. He should not actarbitrarily or capriciously. Now, it is not disputed that the AppellateAssistant Commissioner is quasi-judicial Tribunal. According to BipanLal Kuthiala v. CIT [1957] 32 ITR 361, the discretion conferred on ajudicial or quasi-judicial Tribunal is an impartial legal discretion to beexercised in conformity with the spirit of the law and in a manner to subserve rather than defeat the substantial justice. It should be guided bylaw and inspired by a desire to promote justice. It should not be arbitrary,vague and fanciful and should not be ruled or governed by humour, unthinking folly or rash injustice. The very wide statutory discretion which hasbeen conferred on a judicial or quasi-judicial authority for disposing of anappeal is a judicial discretion which must be exercised in accordance withthe legal painciples and not in an arbitrary or capricious manner. According to this very authority, the Appellate Assistant Commissioner shouldnot exceed the bounds of reason and an appellate court should remand thecase, only when the records of the case cannot enable it to determine therights of the parties.

Now, in the present case, so far as the cash credits appearing in the names of M/s. Didar Singh Charan Singh and M/s. Chandi Ram Jagdish Lal are concerned, the assessee did not produce the parties concerned. The case of the assessee before the Appellate Assistant Commissioner was that reasonable opportunity had not been granted by the Income-tax Officer to him to produce these parties, even though he had made several requests to examine them on commission. In these circumstances, the Appellate Assistant Commissioner was quite fair to direct the Income-tax Officer to assist the assessee in summoning or examining these parties on commission. The mere omission on the part of the Income-tax Officer to examine M/s. Didar Singh Charan Singh and M/s. Chandi Ram Jagdish Lal does not automatically prove the case of the assessee.

The secondary evidence produced by the assessee can be conclusive only if the primary evidence is not available. Thus, the Appellate Assistant Commissioner did not act in an arbitrary or capricious manner in asking the assessee to produce the primary evidence and in directing the Income-tax Officer to re-examine the genuineness of the cash credits appearing in the names of M/s. Didar Singh Charan Singh and M/s. Chandi Ram Jagdish Lal after allowing the assessee to examine them on commission or otherwise. We, therefore, uphold this part of his order.'

9. At the instance of the assessee, the Tribunal has referred the following question of law for the opinion of this court :

'Whether, on the facts and in the circumstances of the case, the Tribunal has rightly maintained the order of the Appellate Assistant Commissioner in respect of the cash credits appearing in the names of (i) M/s. Didar Singh Charan Singh, and (ii) M/s. Chandi Ram Jagdish Lal.'

10. After hearing the learned counsel for the parties and going through the records of the case, we are of the opinion that the question of law referred to us has to be answered in the affirmative, i.e., against the assessee and in favour of the revenue. It may be observed that the grievance of the assessee before the AAC was that in spite of the assessee having insisted for the issue of commission for the examination of the parties, namely, M/s. Chandi Raili Jagdish Lal and M/s. Didar Singh Charan Singh, the ITO refused this prayer and thus the assessee was not in a position to bring the necessary material on the record to prove his case. It was on this plea that the AAC reminded the case to the ITO. The relevant portion of the order of the Tribunal has been produced in the earlier part of this order and we have no reason to take a different view than the one taken by the Tribunal. The contention of Mr. Bhagirath Dass that since the ITO wrongly refused the isstance of the commission for the examination of the parties referred to above, and, therefore, the presumption should be taken against the revenue, is without any merit. It is well settled that the AAC while sitting in appeal has plenary jurisdiction and it is always open to him to pass a remand order with a view to do justice to the parties. Therefore, no exception can be taken to the findings recorded by the Tribunal. We, accordingly, answer the question. There will be no order as to costs.


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