1. We would like to notice and bring into close focus the assessee's application dated January 16, 1992, submitted on January 17, 1992, captioned as one under Section 254(2) of the Income-tax Act, 1961 (hereinafter referred as "the Act"), in respect of the Tribunal's order dated September 27, 1990, which was passed in relation to an appeal filed against the order dated November 11, 1987, passed by the Commissioner of Income-tax (Appeals), Ludhiana (hereinafter referred as "the C.I.T. (A.)), who had the jurisdiction over the case in respect of the assessment year 1983-84, in its entirety : A. The applicant submits that the following mistakes of law and facts apparent from records have crept into the captioned order, which, it is prayed, may be rectified : The following evidence which came on the record of the Assessing Officer after the passing of the order of the Commissioner of Income-tax (Appeals)'s on November 11, 1987, being in the nature of additional evidence has been considered in violation of rule 29 of the Appellate Tribunal Rules, 1963 : (i) Statements of Bahadur Singh recorded on April 29, 1988, and November 22, 1989, considered in paragraphs 10 and 11 of the order.
(ii) Statements of Prithvi Raj recorded on April 29, 1988, and November 22, 1989, considered in paragraph 12 of the order.
(iii) Statements of Ved Pal recorded on April 29, 1988, and November 22, 1989, considered in paragraph 12 of the order.
(iv) Evidence relating to savings in 1985 considered as evidence relevant for judging the genuineness of transactions in 1981-82.
Paragraph 10(i) Regarding the crop raised, he had submitted "If there is rain, there is crop, otherwise, there is no crop". This is in direct contrast with what Mr. Varma had submitted that all the lands were very well irrigated'.
2. The correct position, as also borne out from page 13 of the assessment order is that Bahadur Singh had 254 K of Nahriland, i.e., irrigated and 14 K-24 M of Barani land. The statement of this person recorded on December 17, 1985, indicates clearly that the observation 'If there is rain, there is crop, otherwise, there is no crop' refers to the Barani land in village Bhorka only.
(ii) 'He had accepted that there was a saving of Rs. 5,000 to Rs. 10,000 with him at home'. The complete question and answer give a different factual picture : Answer: I have still to receive money from sale of agricultural produce. Savings at home is Rs. 5,000 to Rs. 10,000.
Paragraph 15.(iii) 'The fact is that he himself had taken a loan of Rs. 34,000 from State Bank of India and he could return it only in 1980-81.' Shri Baldev Singh's statement dated February 17, 1986, which forms the basis of the information states as under : 'A loan of Rs. 34,000 was taken in 1975 from the State Bank of India. It was repaid before 1980-81.' Paragraph 19.(iv) 'He had actually taken a loan from one Baldev Singh for the purchase of a tractor'. The statement of Shri Basant Singh dated February 17, 1986, which forms the basis of this information reads as under : '.... a loan was raised through Baldev Singh for the joint family for the purchase of a tractor.' Paragraph 20.(v) 'He had taken a tractor loan as well as a tubewell loan from the State Bank. He was still paying the instalments.' Answer : We had taken tractor loan. I had also taken tubewell loan worth Rs. 5,000 from the State Bank of India about two years ago.
The instalments are still being paid.
It is prayed that these mistakes may kindly be rectified and the effect of such rectifications on the findings may kindly be recorded in accordance with law." 3. In the very nature of things, we would like to analyse the mistakes stated to have crept in the Tribunal's order, as captioned "mistakes of law", because though for the Revenue, the first written submissions were submitted on January 20, 1992, against the abovesaid application, but the factual aspect, as contained in the first portion of the assessee's application, that statements and evidence which had been recorded by the Assessing Officer after the passing of the Commissioner of Income-tax (Appeals)'s order on November 11, 1987, came to be relied upon by the Tribunal has not been said to be wrong. The Revenue's reply of January 20, 1992, in relation to the assessee's averments under the head "Mistakes of law" should also be closely looked into and, therefore, reproduced as follows : 1. It is now sought to point out that there were certain apparent mistakes in the order of the Tribunal passed in I.T.A. No. 51/(ASR) of 1988, dated September 27, 1990.
(i) The first error which is alleged to have crept in is regarding the violation of rule 29 of the Appellate Tribunal Rules, 1963. More particularly, it has been stated that statements of Shri Bahadur Singh recorded on April 29, 1988, and November 22, 1989, taken note of in paragraphs 10 and 11 of the Tribunal's order were in violation of rule 29 of the Income-tax Appellate Tribunal Rules. After perusing the Tribunal's order, it is abundantly clear and it can be stated with authority that there is no mistake apparent from the record in this regard. In fact, both the statements were cited by the assessee in his favour and not by the Revenue. In fact, the assessee wanted to rely on the statements to prove the cash credits.
Therefore, in the circumstances, if at all, the Revenue could have objected to this additional evidence. However, neither side having objected to the user of the said statements during the course of hearing, it cannot be said now in a miscellaneous petition that any rule has been violated.
(ii) Similar is the case regarding the statements of Shri Prithvi Raj, discussed in paragraph 12.
(iii) Again, the same position remains in respect of the statements of Shri Ved Pal considered in paragraph 12.
(iv) The said evidence regarding savings in 1985 has been correctly appreciated and it cannot be said that there is any mistake apparent from the record." 4. Thereafter, on January 21, 1992, the assessee submitted another application which was said to be in continuation of submissions dated January 16, 1992 (supra) and from such application, the contents under the head "Mistakes of law" are also noted as follows : The Tribunal in paragraph No. 25 has rejected the additional ground of appeal by observing that the addition had been made under Section 68 by disbelieving the creditors. However, it has escaped the notice of the Tribunal that the Assessing Officer had made the addition on this ground. As per paragraph 8 of the order of the Commissioner of Income-tax (Appeals), the addition had been sustained on the ground that the assessee had introduced 'his own money in the garb of cash credits'. In other words the Commissioner of Income-tax (Appeals) has observed that the assessee was in possession of cash on the relevant dates. Thus, in this light, the additional ground of appeal has not been properly disposed of.
The above mistake of law is also apparent from record and may kindly be rectified. This mistake of law may kindly be taken up for consideration along with other mistakes of law and facts as recorded in our application dated January 16, 1992.
5. On January 21, 1992, Shri Jatinder Singh, Senior Departmental Representative, submitted that there was no apparent mistake in the order of the Tribunal which needed to be rectified and that the mistake was now being mischievously made out by placing an interpretation on the Commissioner of Income-tax (Appeals)'s observations in his order, to mean that the assessee was in possession of cash on the relevant dates.
6. At this stage, it is necessary to refer to the assessee's paper book filed in relation to hearing in I.T.A. No. 51/(ASR) of 1988. from which the present application arises, on July 20, 1990, and the last paragraph of the covering letter stating as follows : "Certified that all the pages included in the paper book are on the record of the Assessing Officer/Commissioner of Income-tax (Appeals).
The pages at serial Nos. 50, 51, 56, 57, 62, 63, 92, 115 are, however, copies of letters and statements recorded by the Assessing Officer after the assessment order and the order of the Commissioner of Income-tax (Appeals)." 7. The pages at serial Nos. 50, 51, 56, 57, 62, 63, 92, 115 were the evidence and statements which, as a fact, have been recorded after the Commissioner of Income-tax (Appeals) had passed his order.
8. Since I was a party to the order of the Tribunal dated September 27, 1990, it can be stated as a fact that the statements recorded after the Commissioner of Income-tax (Appeals)'s order were not even referred to by the assessee or his representative. A short argument was raised towards the close of the hearing that the said papers had been filed by way of abundant caution to show that the Revenue was not sure of its case and was making enquiries even after the first appellate authority's order but since the learned Departmental Representative in reply had not referred to such statements and did not seek to draw any support therefrom, there was no question of the assessee referring to the same in detail.
9. To repeat, since there is no dispute that evidence was being collected and brought on the records even after raising of the assessment and passing of the Commissioner of Income-tax (Appeals)'s order, the Tribunal was factually and legally not correct in supporting the assessment and the learned Commissioner of Income-tax (Appeals)'s order with reference to the same when as per the accepted position and as stated by the Departmental Representative in writing, the Revenue did not refer to such evidence and statements.
10. Before the Bench, Shri Jatinder Singh, Senior Departmental Representative, very strongly and vehemently contended that, on the face of it, it was the assessee who wanted and sought to rely on the said evidence and the statements recorded by the Income-tax Officer in defence and, therefore, if at all the grievance could have been from the Revenue if, by relying on such statements, the assessee had been given relief. Such argument cuts both ways because, as stated above, the assessee did not refer to the said evidence and statements in the opening arguments. As for the Revenue's representative, though he very persistently relied on the Commissioner of Income-tax (Appeals)'s order, he refrained from referring to the evidence collected after the assessment and the Commissioner of Income-tax (Appeals)'s orders.
11. The Tribunal dealt with the three statements referred to in the assessee's application in paragraphs 10, 11, 12 and 13 and we are only reproducing here the said paragraphs to emphasise that it is not that the Tribunal consciously was relying on the evidence collected after the Commissioner of Income-tax (Appeals)'s order but made no reference and did not analyse the implication that the statements had been recorded after the assessment and the first appellate authority's order : "10. We will consider the statements given by various creditors, and find out how they would support the assessee or go against him. The first person to be considered is Shri Bahadur Singh. He gave a statement on December 17, 1985, admitting that he had given a loan of Rs. 1 lakh in four instalments. According to him, he owns 34 acres of land in Chautala and his three sons, Ram Kumar, Dharam Pal and Rajinder also own similar areas of agricultural land. Regarding the crop raised, he had submitted 'If there is rain, there is crop, otherwise, there is no crop'. This is in direct contrast with what Mr. Verma had submitted that all the lands were very well irrigated.
He had accepted that there was only a saving of Rs. 5,000 to Rs. 10,000 with him at home. Now, if his statement was to be accepted, then he must be having considerably large savings with him. The savings of Rs. 5,000 to Rs. 10,000 does not show that much of savings which first statement would take us to believe. Shri Verma has a very ingenuous explanation for this. He submitted that there was no direct question put by the Income-tax Officer about the savings. The savings referred to by the creditor was perhaps the savings of that year, and did not refer to the total past savings from the income. This explanation though, on the face of it, attractive, has to be rejected. That is because Shri Bahadur Singh had accepted that he does not deposit his money in any bank, post office or with Arhatias. If that is so, then the savings have only to be in his house. In fact, he agrees and admits so. It is in this context that his answer of the total savings being Rs. 5,000 to Rs. 10,000 has to be appreciated. It will show that there were no savings at all, although according to him, the income generated was quite substantial. It may be remembered that Shri Bahadur Singh had not admitted to giving loans to any one else. This appears to be the only one transaction. Yet he does not clearly remember whether these were returned or not. On April 29, 1988, he gives a statement to the Income-tax Officer that these amounts were received two years back in cash. He also submitted that it was used up in agricultural business. He had purchased a second-hand tractor and a thresher, respectively, and he could very clearly say as to who was the person he purchased from. That is how the money was utilised. But this statement was retracted later on November 22, 1989. In this statement, the third one from him, he states otherwise. His reasoning was 'Regarding the receipt of loan in cash about two years back, as mentioned in the letter dated April 29, 1988, I am to state that my brother, Shri Ved Pal, who is the only literate person in our family told me that Ch, Vijay Singh contacted him about 11/2 to 2 years back that they wanted us to purchase shares equal to the amount of loan in a hotel at Jaipur. I am not aware whether the bill regarding the purchase of shares has materialised or not. However, I am under the impression that the loan might have been adjusted against the shares. The information, as per letter dated April 29, 1988, was given collectively by all the three brothers, out of fear and the version that the second-hand tractor and thresher were purchased out of that amount, was not correct.
11. Thus, Shri Bahadur Singh is so very vague about the return of the money, which is a very important limb in the evidence for proving the genuineness of the loan. What credence can be given to the statement of a person, who says categorically that the money was returned and later goes back on it Shri Verma stated that Shri Bahadur Singh is an illiterate person. Even then, surely a return of Rs. 1 lakh is not a thing he would have forgotten. Under these circumstances, we are satisfied that the loan from Bahadur Singh was not genuine.
12. The other two creditors, Prithvi Raj and Ved Pal, are brothers of Bahadur Singh. Their statements were also identical. They had also in a statement dated April 29, 1988, accepted that the loan was returned, but, later on, retracted from that statement. Here also, although Shri Prithvi Raj claimed a net saving of Rs. 30,000 per year, the savings with him were meagre. All the reasonings given in the case of Bahadur Singh would be equally applicable in his case also. In the case of Ved Pal, although he claims a heavy amount as savings, he agrees that he does not deposit the money anywhere and keeps them in his house. Therefore, all past savings must be with him unless they were invested anywhere else. But still he says 'I do not have any cash savings at my house'. Shri Verma's explanation for this is that the current year's crop had not yet been sold and that was clear when he says that they were still to be sold by him. This explanation of Shri Verma would, no doubt, cover the current year, but what about the prior years. According to his own statement, the savings from the prior years must be in the residence, yet he admits that there was none. So in this case also, the Department was justified in treating the loan as bogus.
13. We next take up the case of Dev Pal. He is also from village Chautala and he had given a loan of Rs. 1 lakh in four instalments.
According to him, he has a net saving of Rs. 50,000 per year. But his investments right from 1977 was the purchase of a piece of land for Rs. 70,000 in that year and construction of a house in 1985-86.
He has no deposit in any bank or post office or anywhere. Even the savings with him is only Rs. 15,000 to Rs. 20,000. These facts coupled with all the general factors stated earlier are bound to lead to inference against the assessee." 12. The other creditors were considered and analysed in paragraphs which followed thereafter and it would be absurd to suggest that the decision in relation to three creditors, namely, Bahadur Singh, Prithvi Raj and Ved Pal could not and did not affect the decision in relation to other items.
13. In this case, the assessee has filed a reference application under Section 256(1) of the Act also. This fact is being mentioned because of strong reliance placed by Shri Jatinder Singh, Senior Departmental Representative, on the1 judgment of the Delhi High Court in the case of CIT v. K.L Bhatia [1990] 182 ITR 361, in which it has been very elaborately held that the Income-tax Appellate Tribunal has no inherent powers of reviewing its own order on the merits.
14. In K. L Bhatia's case [1990] 182 ITR 361 (Delhi), the facts were that, in respect of the assessment year 1976-77, the Income-tax Officer framed the assessment. Against that, in respect of property No. E-73, Kalkaji, New Delhi', the assessee filed an appeal to the Commissioner of Income-tax (Appeals), New Delhi. The contention of the assessee was that the said property belonged to his wife and not to him. The Commissioner of Income-tax accepted that contention. The Income-tax Officer then filed a second appeal to the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal, by a speaking order dated June 27, 1985, came to the conclusion that the wife of the assessee was only a banamidar and that the property, in fact, belonged to the respondent.
15. The assessee then filed an application purported to be one under Section 254(2) of the Income-tax Act, 1961, in which it was stated that a mistake had been committed by the Tribunal and that it should recall its earlier order dated June 27, 1985. In the said application, submissions were made on the merits and it was asserted that some material facts were not correctly noted by the Tribunal in its earlier order and that some facts had not been taken into consideration.
16. On January 30, 1986, the Tribunal accepted this application. The Tribunal noted that this was an application under Section 254(2) of the Act and, after dealing with the merits of the application, it came to the conclusion that there was a mistake in the Tribunal's order and, as such, it required to be recalled.
17. Being aggrieved, the assessee filed an application under Section 256(1) of the Act requiring the Tribunal to state the case and refer certain questions of law to the Delhi High Court.
18. By order dated September 17, 1986, the Tribunal came to the conclusion that no question of law arose from its order because the said questions were only questions of fact.
19. Thereafter, the Commissioner of Income-tax submitted a petition under Section 256(2) of the Act before the High Court. For the assessee, the petition was resisted and it was submitted that the miscellaneous order dated January 30, 1986, of the Tribunal in relation to which the reference application had been submitted was not an order passed under the provisions of the Act and, therefore, an application under Section 256(2) of the Act was not maintainable. The contention was that the said order was not passed under Section 254 of the Act but in exercise of the Tribunal's inherent powers. The argument raised was that the Tribunal can, de hors the Act, recall its earlier order if there are sufficient grounds for doing so.
20. The Delhi High Court observed that the assessee's contention could not be accepted because the very fact of the Tribunal having passed an order under Section 256(1) of the Act in respect of the order dated January 30, 1986, projected that it had passed an order under Section 254 of the Act. The Bench, in the ultimate analysis, held that the Tribunal had no power for reviewing its own order on the merits and it is considered expedient to reproduce two paragraphs at pages 367 and 368 (of 182 ITR) as follows : "As we have already observed, the Tribunal is a creation of the statute. It is an admitted case, and it is now well-settled, that though the Tribunal has no inherent power of reviewing its order on the merits, the Tribunal has incidental or ancillary powers which can be exercised by it. But such power cannot be invoked to rehear a case on merits. The Tribunal can, after disposing of the appeal under Section 254(1), rehear the matter on merits only within the purview of Section 254(2). The Supreme Court has held in Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, AIR 1970 SC 1273, that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. It does not stand to reason that, if the power of review is not present with the Tribunal, it, nevertheless, can exercise such power indirectly when it cannot do so directly. If the contention of learned counsel for the respondent is correct, then it could mean that, even on the merits, the Tribunal can recall its earlier order and then hear the case afresh and pass a different order. If this is so, it would amount to the Tribunal exercising power of review when it does not have any such power. To give an example, under the provisions of the Code of Civil Procedure, Order 47 provides the circumstances in which a judgment may be reviewed. If the contention of learned counsel for the respondent is correct, then, applying the same analogy to a civil case, it would be open to a court to recall its judgment in a case where the provisions of Order 47 are not applicable, and then to rehear the case. With respect, we see no warrant for this in legal jurisprudence. The appellate court can hear a case and decide it on the merits, once for all, and cannot keep on rehearing the same appeal over and over again. Full effect has to be given to the provisions of Section 254(4) which specifically provides that a decision of the Tribunal passed in appeal is final. This decision is final not only for the assessee but also final as far as the Tribunal itself is concerned.
We have, therefore, no hesitation in coming to the conclusion that the Tribunal can only exercise its jurisdiction under Section 254 of the Act in the manner indicated above and, de hors the provisions in the Act, it has no jurisdiction to recall its order on merits." 21. In the present case, we are with the Senior Departmental Representative, that the Tribunal cannot upset its own order and give relief on various grounds sought by the assessee, but it is a case where, on the accepted facts, it must be held that the Tribunal, by oversight, relied on the evidence and statements which had been brought on the department records after the assessment and the Commissioner of Income-tax (Appeals)'s orders and since the Revenue had not even referred to such statements, much less there being any possibility of the statements having been made the basis of framing the assessment and passing of the Commissioner of Income-tax (Appeals)'s order, that the Tribunal Bench could not rely on the same without clearly stating and giving reasons that it was basing its order on fresh evidence, i.e., the evidence collected after the Commissioner of Income-tax (Appeals)'s order. Since the analysis of such statements and conclusion arrived at can be conveniently argued by the Revenue to be based on the facts as noted by the Tribunal, it would perpetuate injustice if we do not resort to remedial measures.
22. The Revenue's reliance on the case of K.L Bhatia [1990] 182 ITR 361 (Delhi) is misplaced, inasmuch as the High Court observed therein that there were no facts which had not been taken into consideration. In that case, the question of relying on unprocessed evidence by the income-tax authority was simply missing.
23. Against the judgment cited by the Senior Departmental Representative, we can refer to a direct authority of the Calcutta High Court in the case of CIT v. Nopany Education Trust [1986] 159 ITR 367, where it came to be held that, when the Tribunal decided a point of law on the basis of wrong facts, when its findings on facts would be wrong, it has the inherent powers to rehear the appeal. In that case, the Tribunal had held that the two donor-trusts were family trusts, whose incomes were not exempt under Section 11 of the Act and hence these were trusts to which the provisions of Section 11 did not apply and consequently they did not fall within the purview of Section 12(2) of the Act. However, the Tribunal held that the observations of the Appellate Assistant Commissioner that "the family trusts were assessed on the entire income as Section 11 had been applied" was obviously a mistake. The Tribunal Bench, therefore, held that the Income-tax Officer was not correct in invoking Section 12(2) of the Act.
24. The Income-tax Department filed a miscellaneous application and submitted that the finding of the Tribunal that the two donors-trusts were family trusts whose incomes were not exempt under Section 11 of the Act, is not based on facts. From the assessment orders on the two donor-trusts, it would be evident that both the donor-trusts were exempt from assessment to the extent permissible under Section 11 of the Act. Since the income of the two donor-trusts was exempt under Section 11, Section 12(2) of the Act was to apply to the assessment of the assessee-trust. Accordingly, the Revenue pressing the said miscellaneous application prayed that the order of the Tribunal be cancelled or suitably modified in the light of the facts gathered from the assessment orders of the donor-trusts. At the time of hearing of the miscellaneous application before the Tribunal, it was argued in the said case that the Appellate Assistant Commissioner had decided the issue on an erroneous assumption of facts which the Tribunal confirmed.
Since the correct facts had been brought on record, the Tribunal should rehear the appeal. The Tribunal, however, dismissed the said miscellaneous application. The High Court held on the facts that it was an inherent duty of the Tribunal to rehear the matter accepting the Revenue's miscellaneous application. The said case is a converse of the present one and, therefore, we see no justification for the Revenue's contention that the assessee is not entitled to any relief.
25. After giving our thoughtful moments, therefore, we refrain from reviewing our own order but consider it absolutely necessary that the impugned order be recalled and a fresh hearing be given to enable the parties to make their respective stands clear, i.e., whether the assessee was relying on such statements in any fashion and how the Revenue had brought on record such evidence and what was its nature and character and what was to be its nature and character when the Tribunal heard and decided the case.
26. We also must briefly refer to the judgment of the Punjab and Haryana High Court in the case of CIT v. Suresh Kumar [1990] 186 ITR 114, in which case it has been held that, under Section 256(1) of the Act concerning matter of references, the power of reviewing is not conferred on the High Court. There can certainly be no dispute with such proposition which, respectfully, is accepted.
27. We would like to observe that, when the miscellaneous application was taken up, Shri Yash Pal, partner in the applicant-firm, sought adjournment and requested that the miscellaneous application be fixed after March 5, 1992. Such request was strongly opposed by the senior departmental representative on the ground that having filed the miscellaneous application, the assessee was trying to linger on the matter and delaying disposal of the miscellaneous application which was totally frivolous. Because of the vehemence with which the adjournment request was opposed and submissions made, we have disposed of the application after perusing the records and considering the arguments and submissions of the departmental representative.
28. Since as against the assessee's request for reviewing the matter and giving relief, we have recalled the order (sic). For the purpose of statistics, the assessee's miscellaneous application is treated as partly allowed.
29. Before parting, we would like to observe that the course which we have adopted cannot prejudice the interests of the Revenue in any fashion and the assessee cannot be said to be gaining anything in the process.
30. I have gone through the proposed order dated February 26, 1992, passed by my learned brother in M. A. No. 4/(ASR) of 1992 arising out of I. T. A. No. 51/(ASR) of 1988, but I have not been able to persuade myself to agree with his decision for recalling of the order passed by the Tribunal in I.T.A. No. 51/(ASR) of 1988, wherein the Tribunal confirmed the addition of Rs. 9,49,000 representing the cash credits introduced by the assessee in the names of 12 different persons.
31. The application under Section 254(2) filed by the assessee alleging certain mistakes of facts and law, on the basis of which the Tribunal's order is proposed to be recalled, have been reproduced in the order of my learned brother, Judicial Member, and 1 do not propose to repeat them here.
32. The factual position in a nutshell is that the addition of Rs. 9,49,000 came to be confirmed by the Tribunal representing the cash credits in the names of 12 persons by relying on their statements recorded during the course of assessment proceedings and also statements of 3 out of 12 creditors which were once again recorded after the passing of the order by the Commissioner of Income-tax (Appeals) presumably in connection with the penalty proceedings under Section 271(1)(c), which were submitted before the Tribunal in the form of a paper book by the assessee and this fact has been noted in paragraphs 5 and 6 of the order of my learned brother in M.A. No.4/(ASR) of 1992. My learned brother is of the opinion that, since the Tribunal has relied on the additional statements of the three creditors out of 12, which were, admittedly, recorded after the passing of the order by the Commissioner of Income-tax (Appeals), the whole order of the Tribunal is influenced by consideration of these additional statements relating to three creditors, namely, S/Sh. Bahadur Singh, Prithvi Raj and Ved Pal.
33. In my considered opinion, the above decision of my learned brother is incorrect in view of the settled position of law as laid down by the Supreme Court in the case of Omar Salay Mohamed Salt v. CIT [1959] 37 ITR 151, wherein it was held that the Appellate Tribunal had improperly rejected evidence gathered by the Income-tax Officer after the passing of the assessment order but pending an appeal from the assessment order to the Appellate Assistant Commissioner. Applying the ratio of the above Supreme Court decision to the facts of the present case, I am of the opinion that the Tribunal was perfectly justified in considering and relying on the additional statements of the three creditors which formed a part of the record before the Tribunal (having been filed by the assessee in the form of a paper book) even though these statements were recorded by the Income-tax Officer after the passing of the order by the Commissioner of Income-tax (Appeals).
34. In this view of the matter, I am of the opinion that the order passed by the Tribunal in I.T.A. No. 511/(ASR) of 1988, dated September 27, 1990, did not suffer from any mistake, much less a mistake apparent from the record and there is no need to recall the order as proposed by my learned brother, the Judicial Member.
35. Accordingly the miscellaneous application filed by the assessee is dismissed.
36. As there is a difference of opinion between us on the following point, we refer the case to the President, as provided in Section 255(4) of the Income-tax Act, 1961 ; "Whether, on the facts and in the circumstances of the case, the proposed order of the Judicial Member recalling the Tribunal's order dated September 27, 1990, is justified or the opinion of the Accountant Member that in view of the Supreme Court's decision in the case of Omar Salay Mohamed Salt v. CIT [1959] 37 ITR 151, the miscellaneous application should be dismissed, is correct ?" 37. This is a case that has come before me as Third Member in the circumstances stated as under : The assessee, a registered firm engaged in the manufacture and sale of cotton ginning machines, filed its return for the assessment year 1983-84 declaring an income of Rs. 78,460. In the course of examination of the accounts, the Income-tax Officer found certain credits in the accounts of the following persons : 38. These credits appeared on different dates in their accounts. The dates were given in the assessment order. These parties also were produced before the Income-tax Officer. They were all examined by him.
They all admitted having given the money to the assessee. They all said that they had income from agricultural sources, but the Income-tax Officer did not accept their explanation, mostly on the ground that their agricultural holdings were not large enough to provide enough of income to enable them to save so much of money to advance to the assessee. Furthermore, the amounts were not returned to them by the time they were examined by the Income-tax Officer, namely, December, 1985. Certain discrepancies also were noticed by the Income-tax Officer in the course of the examination. I am deliberately not referring to them because I thought they are not necessary for my present purpose. I may also state at this juncture that all these creditors appear to have filed affidavits before the Income-tax Officer, corroborating their statements that they advanced the moneys to the assessee. The creditors were cross-examined by the Income-tax Officer on their affidavits but yet the Income-tax Officer came to the conclusion as I mentioned earlier that the creditors were not wealthy enough to advance the moneys and these moneys represented the assessee's own money introduce'd in their names taking advantage of their agricultural holdings. All that the Income-tax Officer said was that the identity of the creditors was established but not their creditworthiness. He was also of the opinion that they were all relatives of one of the partners and, therefore, they could have obliged the assessee by admitting the advance of loans and also supporting it by affidavits.
39. After reappraising the evidence again, the Commissioner of Income-tax (Appeals) upheld the addition made by the Income-tax Officer holding that the assessee had actually introduced his own money in the books of account and that the Income-tax Officer had rightly come to the conclusion on the basis of the evidence available on record that this money was not genuine borrowals from the alleged creditors.
40. There was then an appeal filed before the Income-tax Appellate Tribunal raising, inter alia, the ground that when the assessee had established the identity of the creditors and the genuineness of the transaction and when the creditors had admitted of having advanced the moneys and corroborated those statements by filing affidavits and they were cross-examined on affidavits, the Income-tax Officer should not have come to a different conclusion other than accepting the assessee's version. It was also pointed out that the assessee could not be expected to know the source of the income of the creditor and also the nature of the source. The Tribunal,, by its order dated September 27, 1990, dismissed the assessee's appeal and confirmed the addition.
41. Thereafter, the assessee filed a miscellaneous application under Section 254(2) seeking rectification of certain mistakes, said to have crept into the order of the Tribunal. In effect, it says that certain evidence collected after the disposal of the order, both by the Assessing Officer and the Commissioner of Income-tax, was considered by the Tribunal in arriving at its conclusion without giving proper opportunity to the assessee and, therefore, the conclusion reached by the Tribunal was vitiated. To quote: A. The applicant submits that the following mistakes of law and facts apparent from the records have crept into the captioned order which, it is prayed', may be rectified : The following evidence which came on record of the Assessing Officer after the passing of the order of the Commissioner of Income-tax (Appeals) on November 11, 1987, being in the nature of additional evidence has been considered in violation of rule 29 of the Appellate Tribunal Rules-, 1963 : (i) Statements of Bahadur Singh recorded on April 29, 1988, and November 22, 1989, considered in paragraphs 10 and 11 of the order.
(ii) Statements of Prithvi Raj recorded on April 29, 1988, and November 22, 1989, considered in paragraph 12 of the order.
(iii) Statements of Ved Pal recorded on April 29, 1988, and November 22, 1989, considered in paragraph 12 of the order.
(iv) Evidence relating to savings in 1985 considered as evidence relevant for judging the genuineness of transactions in 1981-82." 42. Certain mistakes of facts also Were mentioned which I am deliberately omitting to reproduce here. The Department filed its reply to this miscellaneous petition as under : 1. It is now sought to point out that there were certain apparent mistakes in the order of the Tribunal passed in I. T. A. No. 5l/(ASR) of 1988, dated September 27, 1990 : (i) The first error which is alleged to have crept in is regarding the violation of rule 29 of the Appellate Tribunal Rules, 1963. More particularly, it has been stated that the statements of Shri Bahadur Singh recorded on April 29, 1988, and November 22, 1989, taken note of in paragraphs 10 and 11 of the Tribunal's order were in violation of rule 29 of the Income-tax Appellate Tribunal Rules. After perusing the Tribunal's order, it is abundantly clear and it can be stated with authority that there is no mistake apparent from the record in this regard. In fact, both the statements were cited by the assessee in his favour and not by the Revenue. In fact, the assessee wanted to rely on the statements to prove the cash credits.
Therefore, in the circumstances, if at all, the Revenue could have objected to this additional evidence. However, neither side having objected to the user of the said statements during the course of hearing, it cannot be said now in a miscellaneous petition that any rule has been violated.
(ii) Similar is the case regarding the statements of Shri Prithvi Raj, discussed in paragraph 12.
(iii) Again, the same position remains in respect of the statements of Shri Ved Pal considered in paragraph 12.
(iv) The said evidence regarding savings in 1985 has been correctly appreciated and it cannot be said that there is any mistake apparent from the record." 43. Thereafter,, the assessee filed another miscellaneous petition on January 16, 1992, raising another point as under : The Tribunal in paragraph No. 25 has rejected the additional ground of appeal by observing that the addition had been made under Section 68 by disbelieving the creditors. However, it has escaped the notice of the Tribunal that the Assessing Officer had made the addition on this ground. As per paragraph 8 of the order of the Commissioner of Income-tax (Appeals), the addition had been sustained on the ground that the assessee had introduced 'his own money in the garb of cash credits'. In other words, the Commissioner of Income-tax (Appeals) has observed that the assessee was in possession of cash on the relevant dates. Thus, in this light, the additional ground of appeal has not been properly disposed of.
The above mistake of law is also apparent from the record and may kindly be rectified. This mistake of law may kindly be taken up for consideration along with other mistakes of law and facts as recorded in our application dated January 16, 1992.
44. The departmental representative opposed the rectification of mistakes and recalling of the orders of the Tribunal, relying upon the replies filed which were quoted earlier.
45. When this miscellaneous application came up for hearing, the assessee made a request for adjournment but the adjournment was rejected and the matter was disposed of on the merits by considering the evidence on record. The learned Judicial Member, in a very exhaustive order, held in a manner which would indicate that he was vague, that he being a party to the original order of the Tribunal, was sure that additional evidence was considered and that the order of the Tribunal should be recalled with the following observations : "24. After giving our thoughtful moments, therefore, we refrain from reviewing our own order but consider it absolutely necessary that the impugned order be recalled and fresh hearing be given to enable the parties to make their stands clear, i.e., whether the assessee was relying on such statements in any fashion and how the Revenue had brought on record such evidence and what was its nature and character and what was to be its nature and character when the Tribunal heard and decided the case." 46. The learned Accountant Member disagreed with this view. He relied on the decision of the Supreme Court in the case of Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151. According to him, the Tribunal was perfectly justified in considering and relying on the additional statements of the three creditors which formed a part of the record before the Tribunal, having been filed by the assessee even though these statements were recorded by the Income-tax Officer after the passing of the order by the Commissioner of Income-tax.
47. On account of the difference of opinion between the Members, the matter was referred to me. The difference of opinion was concluded in the following language : "Whether, on the facts and in the circumstances of the case, the proposed order of the Judicial Member recalling the Tribunal's order dated September 27, 1990, is justified or the opinion of the Accountant Member that in view of the Supreme Court's decision in the case of Omar Salay Mohamed Salt v. CIT [1959] 37 ITR 151, the miscellaneous application should be dismissed, is correct ?" 48. After hearing the parties at length and after considering their long arguments, the case law relied upon and perusing the records, I am of the opinion that the opinion expressed by the learned Accountant Member deserves to be agreed with. There is an agreement between both the Members that the Tribunal had taken into consideration the statements which were recorded by the Income-tax Officer after the passing of the order by the Commissioner of Income-tax (Appeals). The order of the Commissioner of Income-tax (Appeals) was passed on November 11, 1987. the statements from these three creditors were recorded subsequently on two dates, i.e., April 29, 1988, and November 22, 1989. There is no reference to this particular aspect in the order passed by the Tribunal originally dismissing the assessee's appeal on September 27, 1990. But the tenor of the order shows that these statements were referred to, more by way of support to the conclusion already reached by the Tribunal adverse to the assessee. Out of the 9 creditors, statements in regard to only three creditors were recorded subsequent to the passing of the order by the Commissioner of Income-tax. If at all there is any grievance caused to the assessee, it could be only with regard to these three creditors. When, out of 9 creditors, evidence in respect of only three creditors was said to have been collected subsequent to the passing of the order of the Commissioner of Income-tax, I find in the first place no justification for the recall of the entire order including those credits in respect of which no such discrepancy was alleged as if it vitiated the conclusion of the Tribunal by the lack of proper opportunity and violation of the principles of natural justice. Even in regard to these three creditors, evidence was produced by the assessee in the form of a paper book. The purpose with which the assessee produced this evidence in the form of a paper book was to show that the Department was still making enquiries. But this shows that the assessee was aware of these statements. There was both admission and retraction by the creditors in these statements. Thus, when the assessee produced the statements to prove a particular point in the course of the hearing of the appeal by making them a substantive part of the paper book, the assessee cannot be said to be deprived of an opportunity of hearing upon those statements when it was its own evidence, nor can it complain that additional evidence was considered. If at all there is any grievance, it can only be of the Revenue and the Revenue had not objected to its consideration. This was the point made by the Revenue in its reply to the miscellaneous application filed by the assessee. Further, when this evidence was produced by the assessee before the Tribunal and when the Revenue has not objected to its consideration, and when the Tribunal considered it, it became evidence filed before and admitted by the Tribunal in a proper form and was considered by the Tribunal duly.
Therefore, it cannot be said that any injustice was caused to any party by the Tribunal by the consideration of this evidence. Nor am I able to say that there was miscarriage of justice by considering these statements. When the statement was particularly referred to by the assessee in the course of arguments, the Tribunal has to give its opinion thereon when the admission and consideration of this evidence was not objected to by the Revenue and the Revenue also sought to rely upon the very same evidence. I am, therefore, unable to find any ground to hold that the order of the Tribunal was vitiated by the consideration of this evidence. The assessee is not, in my opinion, justified in making a grievance of the consideration by the Tribunal of the evidence it sought to produce before the Tribunal. Having led the Tribunal to admit this evidence and when the conclusion drawn by the Tribunal on the appreciation of that evidence was adverse to it, the assessee cannot complain that the Tribunal was not justified in considering that evidence and, therefore, its conclusion was vitiated.
49. In the case of Omar Salay Mohamed Salt v. CIT [1959] 37 ITR 151 (SC) referred to by the learned Accountant Member in his differing order and also in the difference of opinion, the Supreme Court held (headnote): "The Income-tax Appellate Tribunal is a fact-finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it, the court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it. The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which require to be explained by the assessee, the assessee should be given an opportunity of doing so." 50. In this case, the Income-tax Officer, after making the assessment, collected some further evidence by way of affidavits and desired them to be considered at the appellate stage. The Appellate Assistant Commissioner considered the evidence collected by the Income-tax Officer after the assessment was made and, relying upon it, deleted the addition. The Department filed an appeal before the Tribunal. The Tribunal allowed the Departmental appeal, vacated the order passed by the Appellate Assistant Commissioner to the extent of the deletion of the addition and finding fault with it for considering the evidence collected by the Income-tax Officer, after the assessment was made. The Tribunal observed that "if the Appellate Assistant Commissioner felt that the case was not investigated properly, he could have remanded it for such further and fuller opinion which he considered necessary...." It is improper to look at the evidence partially and arrive at a conclusion. Although it was agreed by the parties before the Appellate Assistant Commissioner that the material which had been collected by the Income-tax Officer be treated as evidence in the assessment proceedings, it was not considered by the Tribunal. It was on these facts that the Supreme Court set aside the order of the Tribunal, remanded the matter for reconsideration to it in accordance with law observing that the Appellate Tribunal had improperly rejected the evidence gathered by the Income-tax Officer after the passing of the assessment order but pending an appeal from the assessment order to the Appellate Assistant Commissioner. This decision is, therefore, an authority for the proposition that, if the Income-tax Officer gathers evidence after the assessment was over, it is necessary for the appellate authorities to consider that evidence also in accordance with the principles of natural justice, i.e., by affording an opportunity to the other side for explaining it and then arrive at the conclusion, but a conclusion arrived at without considering that kind of evidence collected afterwards would not be a proper conclusion in law. Applying the principle laid down by the Supreme Court in this decision, it cannot be said that the evidence collected by the Income-tax Officer, namely, the statements recorded subsequent to the order of the Commissioner of Income-tax (Appeals), cannot be said to be irrelevant and when the assessee itself made use of that evidence in support of a particular stand it took before the Tribunal, it can have no grievance if that evidence was considered and an adverse decision to it was arrived at.
51. I am, therefore, in agreement with the view expressed by the learned Accountant Member and I am not able to support the view taken by the learned Judicial Member.
52. It is strange that, when the phrase "rectifying any mistake apparent from the record" appearing in Section 254(2) of the Income-tax Act, 1961, has been authoritatively explained by the Supreme Court in the famous case of T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 to mean that such mistakes which would be apparent from the record without any debate or long-drawn process of reasoning could alone said to be the "mistakes apparent from the record" amenable to rectification under section 254(2). There was in this case not only a long-drawn process involved, but there was also a difference of opinion between the Members requiring reference to a Third Member for his opinion as to whether there is a mistake apparent from the record or not. If there is no mistake apparent from the record, as I see in this case, this appears to be a case for review for which we have no power. Of course, this is beside the point.
53. For these reasons, I am of the opinion that the miscellaneous applications filed by the assessee deserve to be dismissed.
54. The matter will now go before the regular Bench for disposal of the petition in accordance with the opinion of the majority.