Case: Esthuri Aswanthiah Vs. Commissioner Of Income-Tax, Mysore

jaggery, and from assets received on partition of the joint family of which the assessee was a member.In estimating Rs. 50,000 as the income from undisclosed sources, the Tribunal merely relied upon the offer made by counsel for the assessee. This was an unsatisfactory way of disposing of the appeal.The function of the Tribunal in hearing an appeal is purely judicial. It is under a duty to decide all questions of fact and law raised in the appeal before it, for that purpose it must consider whether on the materials relied upon by the assessee his plea is made out. Conclusive proof of the claim is not predicated; the Tribunal may act upon probabilities, and presumptions may supply gaps in the evidence which may not on account of delay or the nature of the transactions or for other reasons be supplied from independent sources. But the Tribunal cannot make arbitrary decisions; it cannot found its judgment on conjectures, surmises or speculation. Between the claims of the public revenue and of the tax-payers, the Tribunal must maintain a judicial balance. The order passed by the Tribunal without recording any reasons in support of the estimate of unaccounted income cannot, therefore, be sustained. 7. But counsel for the assessee said that the case of the assessee had not been fairly tried. He said that there was on the record evidence that in a partition suit between the assessee and his brother the assessee received on June 30, 1949 an amount of Rs. 48,500/- and Rs. 14, 647/- and Rs. 13,118/representing "money bonds". He also said that the assessee had made a profit of Rs. 70,000/- in his business in jaggery, that between November 18, 1946 and December 16, 1948, the assessee had drawn cheques "to self on the Mysore Bank for Rs. 1,67,800/-, and between January 18, 1947 and November 25, 1947 the assessee had drawn cheques "to self" for Rs. 52,255/-, and that on October 22, 1946 the assessee had in his Bank Account a balance of Rs. 1,39,946/-. Counsel contended that the assessee had at the material time large funds which could have been brought into the books of account on July 1, 1949, but the Tribunal failed to consider the evidence and had merely accepted the offer made by counsel for the assessee that he should be assessed in the sum of Rs. 50,000. 8. For the reasons already recorded, we agree with the answers recorded by the High Court on the two questions. 9. But it is necessary to give certain effective directions, lest a bald order of dismissal of the appeal may result in injustice, especially when the assessee had not a fair trial of his case before the Tribunal.Section 66(5) of the Indian Income-tax Act, 1922, requires the Tribunal on receiving a copy of the judgment of the High Court to pass such orders as are necessary to dispose of the case conformably to such judgment. This clearly imposes an obligation upon the Tribunal to dispose of the appeal in the light of and conformably with the judgment of the High Court. Before the Tribunal passes an order disposing of the appeal, there would normally be a hearing. The scope of the hearing must of course depend upon the nature of the order passed by the High Court. If the High Court has agreed with the view of the Tribunal, the appeal may be disposed of by a formal order; if the High Court disagrees with the Tribunal on a question of law, the Tribunal must modify its order in the light of the order of the High Court, if the High Court has held that the judgment of the Tribunal is vitiated, because it is based on no evidence or that it proceeds upon conjectures, speculation or suspicion, or has been delivered after a trial contrary to rules of natural justice, the Tribunal would be under a duty to dispose of the case conformably with the opinion of the High Court and on the merits of the dispute. In all cases, however, opportunity must be afforded to the parties of being heard. 10. In Income-tax Appellate Tribunal, Bombay v. S. C. Cambatta and co. Ltd., 1956-29 ITR 118 = (AIR 1956 - Bom 509), the Bombay High Court explained the procedure to be followed in the disposal of an appeal conformably to the judgment of the High Court. Chagla, C. J., in delivering the judgment of the Court observed :"*** when a reference is made to the High Court either under Sec. 66(1) or Section 66(2) the decision of the Appellate Tribunal cannot be looked upon as final; in other words, the appeal is not finally disposed of. It is only when the High Court decides the case, exercises its advisory jurisdiction, and gives directions to the Tribunal on the questions of law and the Tribunal reconsiders the matter and decides it, that the appeal is finally disposed of * * * it is clear that what the Appellate Tribunal is doing after the High Court has heard the case is to exercise its appellate powers under Section 33.** The shape that the appeal would ultimately take and the decision that the Appellate Tribunal would ultimately give would entirely depend upon the view taken by the High Court". 11. A similar view was expressed by the Bombay High Court in Rajkumar Mills Ltd. v. Income-tax Appellate Tribunal, 1958-33 ITR 750 = (AIR 1958 Bom 177 ). 12. The High Court has held, and we agree with the High Court, that the judgment of the Tribunal is based on no reasoning and is on that account speculative. But by recording that answer, it is not to be implied that the order of the Appellate Assistant Commissioner is confirmed. It will be the duty of the Tribunal conformably with the Judgment of the High Court, to dispose of the case after hearing the assessee and the Commissioner in the light of the evidence and according to law.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]6. The judgment recorded by the Tribunal has not the merit of clarity or of consistency.The Tribunal commenced by disbelieving the explanation of the assessee relating to the source of the credit entry. After some inconclusive statements it proceeded to record that it was not unlikely that the assessee had some cash on hand from profits earned in the trade from jaggery, and from assets received on partition of the joint family of which the assessee was a member.In estimating Rs. 50,000 as the income from undisclosed sources, the Tribunal merely relied upon the offer made by counsel for the assessee. This was an unsatisfactory way of disposing of the appeal.The function of the Tribunal in hearing an appeal is purely judicial. It is under a duty to decide all questions of fact and law raised in the appeal before it, for that purpose it must consider whether on the materials relied upon by the assessee his plea is made out. Conclusive proof of the claim is not predicated; the Tribunal may act upon probabilities, and presumptions may supply gaps in the evidence which may not on account of delay or the nature of the transactions or for other reasons be supplied from independent sources. But the Tribunal cannot make arbitrary decisions; it cannot found its judgment on conjectures, surmises or speculation. Between the claims of the public revenue and of the tax-payers, the Tribunal must maintain a judicial balance. The order passed by the Tribunal without recording any reasons in support of the estimate of unaccounted income cannot, therefore, be sustained8. For the reasons already recorded, we agree with the answers recorded by the High Court on the two questions9. But it is necessary to give certain effective directions, lest a bald order of dismissal of the appeal may result in injustice, especially when the assessee had not a fair trial of his case before the Tribunal12. The High Court has held, and we agree with the High Court, that the judgment of the Tribunal is based on no reasoning and is on that account speculative. But by recording that answer, it is not to be implied that the order of the Appellate Assistant Commissioner is confirmed. It will be the duty of the Tribunal conformably with the Judgment of the High Court, to dispose of the case after hearing the assessee and the Commissioner in the light of the evidence and according to law.