GUNWANTIBAI RATILAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this reference under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as "the Act") the following question of law has been referred to this court for its opinion by the Income-tax Appellate Tribunal, Indore Bench, Indore :

(2.) THE material facts giving rise to this reference briefly are as follows :

(3.) THE question for consideration is whether the Tribunal could arrive at the finding that interest amounting to Rs. 45,836 had accrued to the assessee in spite of the fact that the assessee and the partners of the firm had filed affidavits stating that no interest was received by or payable to the assessee. Now, an affidavit is a piece of evidence, which, along with other material on record, has to be taken into consideration by the Tribunal before arriving at a finding. THE decisions relied on by the assessee are distinguishable on facts. THEse decisions lay down that when there is no material on record to disprove the veracity of a statement made in an affidavit, a finding arrived at ignoring 'that statement, would be a finding based on no evidence or a finding which no person acting judicially could have arrived at. In Mehta Parikh & Co. v. CIT [1956] 30 ITR 181, the Supreme Court found that the finding of the Tribunal was a pure surmise and had no basis on the evidence. THE Supreme Court found that the cash book of the assessee was accepted, that the entries therein were not challenged and no further documents or vouchers in relation to these entries were called for nor was the presence of the deponents of affidavits considered necessary by either party. THE Supreme Court, therefore, held that there was no material whatsoever to justify the finding of the Tribunal. THE decision in [1956] 30 ITR 181, cannot be construed to lay down the proposition that unless the deponents are cross-examined, the affidavits cannot be rejected. That decision lays down that if there is no material whatsoever on record for doubting the veracity of the statements made in the affidavits and if the deponents have also not been subjected to cross-examination for bringing out the falsity of their statements, then the Tribunal would not be justified in doubting the correctness of the statements made by the deponents in the affidavits. THE finding arrived at in such a case would, according to the Supreme Court, be a finding based on pure surmise, having no basis in evidence. In the instant, case, however, there was material on record which was considered by the Tribunal along with the affidavits and the Tribunal found that no reliance could be placed on the affidavits. A statement by a deponent can be held to be unreliable by the Tribunal either on the basis of cross-examination of the deponent or by reference to other material on record leading to the inference that the statement made in the affidavit, cannot be held to be true.