URMILA RATILAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN the course of assessment proceedings for the assessment year 1969 -70, the ITO, Ward No. 1, Porbandar, noticed a cash credit of Rs. 25,000 in the assessee's books of account which was introduced on January 8, 1968. The assessee, who carries on transport business under the name and style of Ramesh Transport, was called upon to explain the nature and source of this cash credit. She did submit her explanation. The ITO, however, did not accept her explanation and made an addition of Rs. 25,000 to the total income of the assessee for assessment year 1969 -70. The assessee carried the matter in further appeal to the Income -tax Appellate Tribunal. The Tribunal, while upholding the view taken by the AAC, took into consideration additional evidence in the shape of bank and co -operative societies' certificates/statements produced by the revenue at the time of the hearing of the appeal. An objection was raised on behalf of the assessee against the production of additional evidence inasmuch as it was produced before the IAC in the penalty proceedings under s. 27(1)(c) of I.T. Act, 1961 (hereinafter referred to as 'the Act'). The Tribunal having confirmed the view taken by the AAC, at the instance of the assessee, the following question has been referred to us for our opinion under s. 256(1) of the Ac :

(2.) THE main grievance of Mr. K. H. Kaji, learned counsel for the assessee, is that the Tribunal ought to have given an opportunity to the assessee to explain or rebut the additional evidence produced by the revenue on which reliance was placed by the Tribunal in confirming the order of the AAC. Mr. Kaji submitted that had such opportunity been given, the assessee might have been able to meet or explain the additional evidence by leading further evidence. There is considerable force in Mr. Kaji's submission. Admittedly, the additional evidence on which reliance was placed by the Tribunal Was not produced in the course of the assessment proceedings. As pointed out above, the Tribunal overruled the objection raised by the assessee on the ground that the assessee was aware of the additional evidence since it was produced before the IAC in the penalty proceedings. The approach of the Tribunal is neither legal nor correct. The question was not whether or not the assessee was aware of the additional evidence when the matter came up for hearing before the Tribunal. What was important was whether the assessee had an opportunity to explain or rebut the additional evidence in the assessment proceedings. Admittedly, the assessee had no such opportunity. Interests of justice demanded that the assessee was given such opportunity. In our opinion, the Tribunal ought not to have taken into consideration the additional evidence in the shape of bank and co -operative society's certificates/statements without giving such an opportunity to the assessee. Mr Kaji is, therefore, justified in making a grievance that the Tribunal did not give any opportunity to the assessee to rebut the additional evidence produced by the revenue. It may be made clear that Mr. Kaji did not raise any objection against the production of the additional evidence before us. Under the circumstances, the only course open to use is to remit the matter to the Tribunal for giving an adequate opportunity to the assessee to explain or rebut the additional evidence produced before it by the revenue and on which reliance was placed by it in confirming the order of the AAC.

(3.) THERE would be no order as to costs of this reference.