RAM PRASAD SHARMA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee, as individual, used to carry on contract business. For the assessment year 1970-71, he did not file his return of income voluntarily under Section 139(1) of the I.T. Act, 1961. He, however, filed it under Section 139(4) after receipt of notice under Section 139(2), disclosing an income of Rs. 4,273. Daring the course of the assessment proceeding the assessee did not put in appearance nor did he furnish evidence as required and hence the assessment was made under Section 144 of the Act. THE ITO computed the income from contract business at Rs. 15,000. He had found from the copy of the account filed by the assessee that the assessee had taken two loans during the relevant previous year from Sri Ram Swarup Bhalla and Sri A. N. Nayyar of Rs. 20,000 and Rs. 8,000, respectively. Since the assessee did not produce any evidence whatsoever to prove the genuineness of those loans, the ITO treated the same as the assessee's income from undisclosed sources.

(2.) THE assessee filed an application under Section 146 of the Act which was rejected by the ITO and against the order there was no further appeal. THE assessee, however, preferred an appeal against the best judgment assessment order. THE AAC reduced the income from business and sustained an addition of Rs. 5,000 to the disclosed income. In regard to the addition for the cash credits, the assessee, at the time of hearing of the appeal, sought permission to produce the certificate of the depositors. THE AAC did not admit that fresh evidence and observed that " I am afraid these evidences filed only now at the appellate stage cannot be admitted as the Income-tax Officer had given adequate opportunities to the appellant at the time of hearing of assessment to prove the genuine character of the cash credits in question ". Accordingly, he confirmed the addition of the aforesaid amount of Rs. 28,000.

(3.) IT would be seen that according to this rule the appellant shall not be entitled to produce before the AAC any evidence, whether oral or documentary, which was not produced in the course of the proceedings before the ITO except in specified circumstances. Thus, the appellant has a right to produce additional evidence only in the circumstances specified in the rule and the appellant may be permitted to produce additional evidence in a fit case which falls outside the specified circumstances. The present case does not fall within the first category and the appellant has no right to produce additional evidence before the AAC. He may have been permitted to produce additional evidence but that was a matter of discretion with the AAC. In the present case repeated opportunities were given by the ITO to produce evidence to prove the genuineness of the disputed deposits but no evidence whatsoever was given. IT cannot be said that in these circumstances the AAC exercised his discretion arbitrarily or capriciously while refusing to admit fresh evidence at the appellate stage.