ITA 22/2006 BEFORE THE HON’BLE MR. JUSTICE RANJAN GOGOI, THE HON’BLE MR. JUSTICE A. C. UPADHYAY JUDGMENT & ORDER Ranjan Gogoi, J. All the three appeals being directed against identical, though separate, orders each dated 2.8.2006 passed by the Income Tax Appellate Tribunal, Guwahat i Bench, (hereinafter referred to as the Tribunal) were heard together and are b eing decided by the present common judgment and order. 2. A recital of the facts involved in Income Tax Appeal No.21/2006 would ad equately sum up the fact involved in the other two cases. Income Tax Appeal No.21 of 2006 3. For the assessment year 1994-95 the assessment of the appellant was comp leted on 28.3.98. In the appeal filed by the assessee the Commissioner of Income Tax (Appeals), by order dated 19.5.98, set aside the assessment order of the pr imary authority with the direction to re-do the same in accordance with the dire ctions contained in the appellate order dated 19.5.98. Thereafter, the Assessing Officer completed the assessment by order dated 20.9.98 adding a sum of Rs.44,7 5,930/- to the income of the assessee as unexplained investments under Section 6 9 of the Income Tax Act, 1961 (hereinafter referred to as the Act). 4. It will be necessary to take note of the fact that during the financial year in question a sum of Rs.68,53,343/- was deposited in the Savings Account No .2520 of the assessee maintained with the State Bank of India, Abhayapuri Branch . The assessee explained the aforesaid deposits by contending the same to be his accumulated agricultural income from the year 1981 onwards. In support the asse ssee produced all his books of accounts right from the financial year 1978-79 an d had also produced a number of documents and certificates from concerned State Government officers and other authorities in support of his agricultural income. The assessee also filed before the Assessing Officer his year-wise statement of affairs starting from the year 1978-79. The Assessing took the view that as it was the assessee’s case that the books of accounts were under seizure in connect ion with a case registered by the Vigilance and Anti-corruption Department of th e Government of Assam, the books of accounts as well as the vouchers and receipt s produced by the assessee, which was identical to those seized, have been prepa red subsequently. The Assessing Officer furthermore relied on a judgment of the Apex Court in S. N. Namasivayam Chettiar vs. Commissioner of Income Tax, Madras, reported in (1960) 38 I.T.R. 579, to come to the conclusion that the books of a ccounts produced by the assessee should be rejected as the assessee had not main tained any stock register. In this regard, the Assessing Officer held that the s tock register was the core record for verifying the assessee’s accounts by havin g a quantitative tally of the transactions made. Accordingly, after allowing cre dit under different heads to the assessee in the light of the explanations furni shed, the Assessing Officer determined an amount of Rs.44,75,930/- to be the qua ntum of unexplained investments. Consequently, the said amount of Rs.44,75,930/- was added to the taxable income of the assessee. 5. Aggrieved by the aforesaid order the assessee preferred an appeal before the learned Commissioner of Income Tax (Appeals). The Appellate Commissioner on a reading of the judgment of the Apex Court in S. N. Namasivayam Chettiar (supr a) took the view that the law laid down in the said case was not applicable to t he case of the assessee and the rejection of the books of accounts of the assess ee by the Assessing Officer on that basis was wrong. The learned Commissioner, t hereafter, accepted that the assessee had accumulated agricultural income to his credit. The aforesaid conclusion was reached primarily on the basis that no fin ding was recorded by the Assessing Officer that the assessee did not have any ag ricultural income. Furthermore, the learned Commissioner, after holding that the Assessing Officer had also not expressed any disagreement with the quantum of a gricultural income claimed by the assessee, proceeded to quantify the same at Rs .41,83,671/-, as claimed by the assessee. Accordingly, the appeal filed by the a ssessee was allowed with the direction for modification of the order of assessme nt by treating the unexplained investments to be to the extent of Rs.2,92,259/- (Rs.44,75,930/- minus Rs.41,83,671/-). 6. The facts involved in Income Tax Appeal No.22/2006 (assessment year 1994 -945) and Income Tax Appeal No.20/2006 (assessment year 1995-96) are largely sim ilar to those involved in Income Tax Appeal No.21/2006. The appellant assessee i n the aforesaid two cases is the wife of the appellant in Income Tax Appeal No.2 1/2006. The additional facts that will be required to be noticed is that the une xplained investments added by the Assessing Officer to the taxable income of the assessee consisted of bank deposits as well as investments in land and vehicles . While for the assessment year 1994-95 the assessee had tried to explain the af oresaid unexplained investments on the basis of accumulated agricultural income of her own, in Income Tax Appeal No.20/2006, pertaining to the assessment year 1 995-96, a part of the unexplained deposits i.e. to the extent of Rs.8,50,000/- w as sought to be explained by the assessee by means of a cash loan obtained by he r from her husband i.e. the appellant-assessee in Income Tax Appeal No.21/2006. In both the aforesaid two cases the primary as well as the first appellate autho rity proceeded on a similar reasoning as in Income Tax Appeal No.21/2006. 7. Aggrieved, the Revenue had filed Income Tax Appeal No.164(Gauhati)/2000 (out of which Income Tax Appeal No.21/2006 has arisen) as well as Income Tax App eal Nos. 162(Gauhati)/2000 and 163(Gauhati)/2000 (out of which Income Tax Appeal Nos.20/2006 and 22/2006 have arisen) before the learned Tribunal. 8. The learned Tribunal, by two separate but identical orders dated 2.8.200 6, disposed of the appeals in question in favour of the Revenue by reversing the orders of the Commissioner of Income Tax (Appeals) challenged before it. While deciding the appeals in the above manner the learned Tribunal after taking note of the detailed facts of the case including the claim of the assessees and the d ocuments and certificates in support of the claims made came to the conclusion t hat the attempt on the part of the assessees to explain the investments by proje cting a case of accumulated agricultural income is an afterthought which is not worthy of credence and hence of acceptance. In doing so, the learned Tribunal la id emphasis on the fact that though the assessees claimed to have earned the agr icultural income in the previous years leading to accumulation of a huge amount, the assessees had not filed any return(s) of agricultural income for the years in question. Such non-disclosure on the part of the assessees of the purported a gricultural income was considered by the learned Tribunal to be a significant an d relevant fact to hold the claim of the assessees to be an afterthought. Aggrie ved by the aforesaid conclusion of the learned Tribunal, the assessees have inst ituted the present appeals before this Court. 9. The substantial question of law framed by this Court while admitting the appeals centers around the question as to whether the learned Tribunal was righ t in coming to the aforesaid conclusion merely on the ground that the assessees had not filed any return of agricultural income under the provisions of the Assa m Agricultural Income Tax Act, 1939? 10. We have heard Dr. A. K. Saraf, learned counsel appearing for the appella nts and Sri U. Bhuyan, learned Standing Counsel, Income Tax Department. 11. Dr. Saraf, in the course of a long and elaborate argument, has contended that the assessees had placed before the Assessing Officer several documents in support of the claims made that the bank deposits and other investments were re latable to the accumulated agricultural income of the assessees. Such documents and certificates were issued by authorized officers of the State Government. Dr. Saraf has contended that the Assessing Officer had wrongly placed reliance on t he judgment of the Apex Court in S. N. Namasivayam Chettiar (supra) in rejecting the books of accounts of the assessees and further that the Assessing Officer h ad accepted the agricultural income of the assessee in Income Tax Appeal No.21/2 006 to the extent of Rs.5,25,848/- which were reflected in the very same books o f accounts. Similarly, in the case of the assessee in Income Tax Appeal No.22/20 06 the Assessing Officer had accepted the agricultural income to the extent of R s.3,69,960/- reflected in the books of accounts of the assessee. The agricultura l incomes of the assessees accepted by the Assessing Officer pertains to the ver y same year involved in assessment proceedings under the Income Tax Act. Dr. Sar af has, therefore, argued that the acceptance of agricultural income of the asse ssees for a particular year and rejection of accumulated agricultural income for the previous years is wholly incorrect. It is the further contention of Dr. Sar af that the Assessing Officer did not disbelieve that the assessees had agricult ural income nor any dispute was raised with regard to the quantum thereof, as cl aimed by the assessees. In such a situation, once the learned Commissioner of In come Tax (Appeals) found the rejection of the books of accounts of the assessees to have been wrongly made was perfectly justified in determining the agricultur al income of the assessees at the amounts so quantified and to direct for modifi cation of the assessment orders in that light. 12. Continuing, Dr. Saraf has argued that the sole ground on which the learn ed Tribunal had reversed the order of the Commissioner of Income Tax (Appeals) i s the absence of any return(s) under the Assam Agricultural Income Tax Act for t he years in which accumulated income was claimed to have accrued. In this regard , Dr. Saraf has argued that the absence of return(s) was not one of the grounds urged before the learned Tribunal. In any case, according to Dr. Saraf, the said ground could not have been the sole basis for reversing the order of the learne d Commissioner of Income Tax (Appeals) and it was the bounden duty of the learne d Tribunal to consider the documents and certificates placed before the Assessin g Officer and the Commissioner of Income Tax in this regard by the assessees. Dr . Saraf has pointed out that the non-filing of return of agricultural income, at best, could be a suspicious circumstance which circumstance had to be weighed a nd considered along with the details submitted by the assessees including the do cuments and certificates filed. Such a course of action not having been adopted by the learned Tribunal, according to Dr. Saraf, the learned Tribunal had commit ted a manifest error of law in coming to the impugned conclusion. 13. Controverting the submissions advanced on behalf of the appellants-asses sees, Sri Bhuyan, learned Standing Counsel, Income Tax Department, has submitted that the details and materials placed on record by the assessees including the documents and certificates issued by different authorities were duly considered by the learned Tribunal as indicated by the orders under challenge. The credibil ity of the assessees’ version in the light of the documents brought on record we re weighed by the learned Tribunal along with the fact that the assessees had no t filed any return(s) of the agricultural income at any earlier point of time, n otwithstanding which accumulated agricultural income over the years was claimed. In this regard, Sri Bhuyan has pointed out that for the assessment year 1994-95 the assessees had filed copies of the assessment orders under the Assam Agricul tural Income Tax Act which was duly accepted by the Assessing Officer and income from agriculture as assessed by the authorities under the local Act were exclud ed while making the additions to the taxable income of the assessees. In this re gard, Sri Bhuyan has also referred to the provisions contained in Sections 6 and 19 of the Assam Agricultural Income Tax Act under which there is a duty and obl igation on the part of an assessee earning agricultural income to file returns t o enable the authority under the Assam Agricultural Income Tax Act to make asses sments of agricultural income. It is further contended by Sri Bhuyan that the af oresaid provisions of the Assam Act were not followed by the assessees though th ey claim to have income from agriculture to explain the unexplained investments found by the Assessing Officer under the Income Tax Act. 14. We have considered the rival submissions advanced on behalf of the parti es; the orders passed by the primary as well as the learned first appellate auth ority; the documents and certificates brought on record before the said authorit ies by the assesses and all other relevant facts and circumstances of the case. 15. We have noticed that the Assessing Officer after rejecting the books of accounts, on the grounds recorded, did not feel the necessity of any further dis cussion or consideration of the documents and certificates submitted by the asse sses. The learned first appellate authority found such rejection to be wrong and the reliance placed on the judgment of the Apex Court in S. N. Namasivayam Chet tiar (supra) to be somewhat misplaced. Thereafter, the first appellate authority proceeded to determine the question as to whether the assessees had agricultura l income or not. Such consideration of the first appellate authority, however, r evolved around the fact that the Assessing Officer did not hold that the assesse es did not have any agricultural income. Thereafter, the first appellate authori ty proceeded to determine the quantum of such agricultural income and accepted w hat was claimed by the assessees on the ground that the figures so claimed were not disputed by the department. 16. We have considered the judgment of the Apex Court in S.N. Namasivayam C hettiar (supra). In the aforesaid case the issue before the Apex Court was as to whether the rejection of the claim of profits of the assessee by the Income Tax Appellate Tribunal was correct. The appellate Tribunal had held that such profi ts could not be deduced from the books of accounts produced by the assessee in s upport of which conclusion several reasons were cited. It is in that context tha t the Apex Court had held that keeping of a stock register was of great importa nce because that was a means of verifying the assessees’ accounts by having a q uantitative tally . The Apex Court in S. N. Namasivayam Chettiar (supra) furthe r held that If after taking into account all the materials including the want o f a stock register, it was found that from the method of accounting the correct profits of the business were not deducible, the operation of the proviso to Sect ion 13 of the Income Tax Act would be attracted. No law was laid down by the A pex Court that if in a given case the stock register is not maintained the only consequence thereof should be rejection of the books of accounts of the assessee . We are, therefore, of the view that the Assessing Officer was wrong in rejecti ng the books of accounts of the assessee. The case projected by the assessee, th erefore, ought to have been considered on its own merits. However, the Assessing Officer had no occasion to do so. In appeal, the learned Commissioner proceeded on the basis that no adverse concl usion regarding agricultural income of the assessee or the quantum thereof was r ecorded by the Assessing Officer and therefore it could be taken to have been es tablished that the assesses had agricultural income the quantum of which was as claimed by them. 17. We do not think that the manner in which the learned Commissioner had pr oceeded is correct. The absence of any adverse finding of the Assessing Officer either with regard to availability of agricultural income or the quantum thereo f was but natural in a situation where the Assessing Officer, after rejecting th e books of the assessees did not proceed any further in the matter. It is our c onsidered opinion that the correct approach that should have been adopted by the learned Commissioner was to consider the acceptability or otherwise of the asse ssees’ claim in the light of all relevant facts and circumstances as evidenced b y the materials brought on record. In this regard, the fact that the assessee, t hough had claimed accumulated agricultural income from the year 1981 onwards, an d yet, had not filed any return as required by the Assam Act was certainly a fac t that should have received consideration of the first appellate authority. In f act, it has been admitted by the learned counsel for the appellants that the fac t that no returns were filed could give rise a suspicious circumstance. If that be so, the said suspicious circumstance had to be viewed in its proper perspecti ve i.e. in the light of other relevant facts and the proper conclusion ought to have been reached after such consideration. The learned Commissioner of Income T ax (Appeals) did not so proceed and so act. 18. In the further appeal by the Revenue the learned Tribunal took due notic e of the documents and certificates on which the claims of the assessees were fo unded and the extent of accumulated agricultural income that was claimed by the assessees. Along with the aforesaid facts the non-filing of return(s) by the ass essees under the Assam Agricultural Income Tax Act was also taken note of. To th is extent the learned Tribunal proceeded correctly. However, the learned Tribuna l failed to consider the issue on the basis of the books of accounts of the asse ssees and the documents and certificates filed by the assessees. No finding was recorded by the learned Tribunal on such consideration. Rather, the fact that no returns were filed was the only basis for the eventual conclusion recorded by t he learned Tribunal that the explanation offered by the assesses i.e. availabili ty of accumulated agricultural income was an afterthought. What was required to be done was a judicious determination of the issue on a balanced consideration o f the two aspects of the case. Instead one set of material facts was overlooked/ ignored and reliance was placed exclusively on the other. In doing so, the learn ed Tribunal can very well be understood to have held that since no returns were filed the assessees could not have had any agricultural income. Such a propositi on will not be supported by any sound principle of law. The learned Tribunal, th erefore, clearly acted with material irregularity in the exercise of its jurisdi ction vested by law. Consequently and in fitness of things the exercise will be required to be performed by the learned Tribunal once again. 19. In the result, all the appeals filed by the assessees will have to be al lowed. Accordingly, the impugned orders dated 2.8.2006 passed by the Income Tax Appellate Tribunal are set aside and the matters are remitted to the learned Tri bunal for a fresh decision in accordance with the directions contained in the pr esent order.