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Petitioner: Ms. DEEKSHA SURI and 3 others VS Respondent: INCOME-TAX APPELLATE TRIBUNAL and JUDGMENT
Court Name: Delhi High Court Judge(s): R. C. Lahoti, J. K. Mehra Title:Ms. DEEKSHA SURI and 3 others vs INCOME-TAX APPELLATE TRIBUNAL and
JUDGMENT
Reported As: 2000 PTD 905 Result: Order accordingly Judgment JUDGMENT R. C. LAHOTI, J.---This common order shall govern the disposal of four civil writ petitions, namely, C.W.P. No.2796 of 1997, Ms. Deeksha Suri v. ITAT, CWP No. 2797 of 1997, Ms. Divya Suri v. ITAT, CWP No.2798 of 1997, Sh. Lalit Suri v. ITAT and CWP No. 2799 of 1997, Smt. Jyotsna v. ITAT. The facts of the four cases and the questions arising for decision therein are common, rather the same, except for a minor deviation on the facts in the case of Smt. Jyotsna Suri which would be taken note of at its appropriate place. The facts, in brief, for the sake of convenience, are being stated in the succeeding paragraphs from the record of CWP No. 2796 of 1997, Ms, Deeksha Suri v. ITAT. All the four petitioners are individuals, the status as contemplated by the provisions of the Income Tax Act, 1961, (hereinafter "the Act", for short). They filed their returns of income as under: Name Date of filingIncome declared Shri Lalit Suri 21-8-1992 Rs.89,490--including salary from Bharat Hotels Ltd. (Rs.1,13,400) Mrs. Jyotsna Suri28-8-1992 Rs.1,01,460 including salary from Bharat Hotels Ltd. (Rs.1,15,200)
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Miss Divya Suri28-8-1992 Rs.91,993 including income from other sources (Rs.98,993) Miss Deeksha Suri28-8-1992 Rs.80,778 including income from other sources (Rs.87,777) The assessm ents were framed on March 28, 1995, under section 143(3) of the Act. There were additions made under section 68 of the Act, also keeping in view the provisions of section 69A. In their statements of income attached with the returns, the petitioners by way of note indicated the following amounts received and deposited in their accounts in the Hong Kong and Shanghai Banking Corporation Ltd., on November 22, 1991, under the Remittance of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991, and the scheme framed there under (hereinafter the Scheme, for short) which were not income: Shri Lalit Suri US$ 3,00,000 equivalent to Rs.77,33,952 Mrs. Jyotsna Suri US$ 2,00,000 equivalent to Rs.51,55,968 Miss Divya, Suri US$ 1,50,000 equivalent to Rs:38,66,976 Miss Deeksha Suri US$ 1,50,000 equivalent to Rs.38,66,976 The Assessing Officer issued notices under sections 143(3) and 142(1) and noted that the returns filed by the assessee did not contain any evidence in the form of copy of the declaration to be made before the authorised dealer of foreign exchange as prescribed in the Notification GSR No. 594, dated September 28, 1991 of the Reserve Bank of India and the return only contained a photo copy of the instrument of remittance. He, therefore, called upon the assessee to file a copy of the prescribed declaration. The assessee failed to do so in spite of several adjournments sought for the purpose. The Assessing Officer wrote a letter to the bank, on January 13, 1995, asking for a copy of the declaration. The bank in its reply, dated January 18, 1995, informed the Assessing Officer that no declaration under the scheme, had been filed. In the opinion of the Assessing Officer, the assessee having failed to discharge the burden of proof regarding the source of the remittance, he proceeded to treat the receipts as unexplained cash credit under section 68 of the Act. By letter, dated March 21, 1995, filed before the Assessing Officer, the petitioners had taken the plea that the amount represented personal gifts. However, it appears that a declaration from Jagat Nanda though undated but attested before the Consulate General of India. Dubai, on February 5, 1995, was not filed before the. Conclusion of the assessment proceedings but the same was filed on March 31, 1995, with the Assessing Officer of which the Assessing Officer refused to take notice as the assessm ent had already stood concluded on March 27, 1995, and the assessment framed on March 28, 1995. The assessee went on appeal before the Commissioner of Income--tax (Appeals) contesting the additions made. The submission of the assessee before the Commissioner of Income-tax (Appeals) was that the amount involved did not represent income and the filing of a declaration was a formality, the provision being directory and not mandatory in nature. In appeal, the petitioners also moved an application under rule 46A of the Income-tax Rules, 1962, seeking admission by way of additional evidence of a set of documents mostly originating from the custody of the bank. The Commissioner of Income-tax (Appeals) rejected the application under rule 46A as also the appeals. He also formed an opinion that the requirements- of rule 46A enabling admission of additional evidence in appeal were not satisfied. The petitioners preferred further appeal to the Income-tax Appellate tribunal. One of the grounds taken, inter alia, before the Income-tax Appellate Tribunal was illegal rejection of the application
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under rule 46A by the Commissioner of Income-tax (Appeals). The petitioners also moved applications, dated March 6, 1996 and May 10, 1996, both under rule 29 of the Income-tax (Appellate Tribunal Rules, 1963, seeking admission by way of additional evidence before the Income-tax Appellate Tribunal of the very same set of documents which formed the subject- matter of application under rules 46A before the Commissioner of Income-tax (Appeals). The appeals came up for hearing on October 23, 1996, before Bench-B of the Tribunal consisting of two members. On that day, the Bench passed the following order: "Application under rule 29 of the Income-tax (Appellate Tribunal) Rules is to be disposed of first." Thereafter, the matter was adjourned. The appeals again came up for hearing on December 2, 1996. However, the constitution of the Bench was different in the sense that the two members sitting on the Bench on December 2, 1996, were not the same as were sitting on October 23, 1996. The appeals were argued on the merits. By a common order, dated January 3, 1997, the appeals were dismissed. . It is pertinent to note that the order, dated January 3, 1997, does not dispose of the petitioners' applications under rule 29 abovesaid. A bare reading of the order reveals that it does not take note of the said applications or of the order, dated October 23, 1996. It is also clear that learned counsel appearing for the petitioners before the Tribunal did not also invite the attention of the Tribunal to the order, dated October 23, 1996, or to the pendency on record of the applications under rule 29 abovesaid. These facts form the foundation for the controversy arising for decision before this Court in these petitions. On February 5, 1997, the respective petitioners moved an application before the Tribunal in each of the four appeals. The applications do not mention the provision of law whereunder they were being filed. In the application, the petitioners have pointed out to a grievous mistake having occurred in the order of the Tribunal, dated January 3, 1997, "(i) by discussing the merits of section 68 when no submissions were required to be made by either side, as announced in the open Court, (ii) by ignoring the law laid down by the Supreme Court of India". The petitioners referred to the decision of the Supreme Court in CIT v. Kannan Kunhi (1973) 87 ITR 395 and made the following prayer: "It is, therefore, respectfully prayed that this Tribunal may be pleased to delete the passage in para. 10 of the order, dated January 3, 1997, of this Tribunal, as extracted hereinabove, and after deleting the same, adjudicate the propriety of inclusion of the Oft in the total income of the appellant by rehearing the matter and render justice to the applicant. Amongst the four assessee, one is a lady and the other two are minor daughters and they cannot possibly have any source of income even on suspicion and so is the position of the male person who is carrying on his activities only in India." (emphasis supplied) As already stated, in the above-said application, dated February 4, 1997, filed on February 5, 1997, the petitioners do not specifically refer to the provision of law under which the application was made and the jurisdiction of the Tribunal which was sought to be invoked by moving, this application. However, on April 2, 1997, the petitioners. Moved yet another application wherein they have referred to the application filed on February 5, 1997, having been made under section 254(2) of the Act. It was further stated that the earlier application was got drafted by the appellant without seeking any legal guidance and hence yet another application accompanying the application, dated April 2, 1997, may be brought on record treating it as amending/modifying/substituting the previous application. The application accompanying is titled as one under section 254(2) of the act read with section 151 of the Civil Procedure Code. In this application, a grievance is raised that the order, dated January 3, 1997, having been passed by over-looking the earlier order, dated October 23, 1996, of. The Tribunal, the order, dated January 3, 1997, deserves to be recalled. A grievance as to the applicability of sections 68 and 69A of the Act was also raised. These were stated to be "very serious errors or mistakes" having crept into the application order of the Tribunal
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resulting in manifest injustice. Para. 10 of the application deserves to be reproduced which is as under: "10. The appellant being not a person well-versed in legal exercises had moved by herself an application under section 254 of the Act, dated .February, 1997. Now she has been advised by counsel to substitute this application for the one already filed. Therefore, this may kindly be treated as a proper application made under section 254(2) of the Act and be posted for hearing as early as possible and the application; dated February 5, 1997, submitted earlier be treated as withdrawn and this application may be taken up for hearing and passing necessary orders on Mad 2, 1997, a date fixed for hearing the previous application filed---now withdrawn. To sum up, the following prayers are made: A. The order of the Tribunal be recalled/rectified/modified for the reasons stated in the foregoing paras. That it suffers from errors which are apparent and vitally affect the decision of the Tribunal in ITR No. 475 (Del) 1996, dated January 3, 1997. B. The finding that the appellant did not discharge the burden that lay upon her under the provisions. Of section 68; 69A and the Tribunals finding on the applicability of section 68 may be recalled. C. This application be treated as the proper application made under section 254(2) of the Act. Applicant Place: New Delhi Dated : 2nd April, 1997. " The abovesaid applications seeking to invoke the jurisdiction of the Tribunal under section 254 of the Act were vehemently opposed on behalf of the Department. By order, dated June 27, 1997, both the applications filed on February 5, 1997, and April 4, 1997, on behalf of the petitioners have been rejected. This is the order, dated June 27, 1997, which is impugned in these petitions. It would be useful to extract and reproduce a few excerpts from the order of the Tribunal which is done as under: " 13. We have very carefully considered the arguments addressed by both learned counsel for the parties. A very careful and detailed perusal of our log books, which lave been compared inter se, indicates that at the time of hearing of the appeals, counsel for the assessee had not addressed any arguments on the application under rule 29. All his arguments were related to admission of additional evidence under rule 46A before the Commissioner of Income-tax (Appeals). There was not a whisper about application under rule 29. This is now an admitted position. All the same, we did make an offer to learned counsel for the assessee for perusing our log books and satisfy himself of this position. This was declined. On the contrary, the argument now is that because at an earlier hearing before a different combination of the Bench, it was pressed and an order, made that the same be taken up first and even though the said application was not argued but because of the noting of the earlier combination, it was to be disposed of first, its pendency gives rise to a mistake apparent from record, as is canvassed by the applicants. The fact that no arguments were addressed is also admitted in the resume of arguments filed on May 21, 1997, after the conclusion of hearing under the signature of Shri Anoop Sharma, Advocate. 13.1 Here we consider it appropriate to mention in brief the procedure for hearing before the Tribunal. In the Tribunal traditionally every week Benches are constituted with an accountant member and a judicial member who in combination hear, the appeal listed for hearing. Since the combination is changed almost every week, different Benches hear the appeal in different combination. The appeals which are heard but hearing remains inconclusive are marked 'part- heard' for the sake of continuity by the" same combination. Thus, every time an appeal is fixed for hearing and is adjourned there is no continuity. Each time the appeal hearing is treated as fresh
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and not a continuation of the earlier hearing. The hearing, therefore, is on the case pleaded before a particular combination and it is on those pleadings that the case is to be founded by the Bench. 13.2 Application under rule 29 is undoubtedly on record. The issue of its being disposed of first would have arisen only if the matter was pleaded. As already emphasised not a word was uttered by Darned counsel for the applicants during the course of hearing of the appeals inviting our attention to the application under rule 29 as pending disposal. Rather as noted in paragraph 8 of the order of the Tribunal, counsel for the applicants only argued on the following counts: (i) Whether the filing of declaration under the Amnesty Scheme was mandatory or declaratory to enable the appellants becoming entitled to the benefit available under the said Act/Scheme: (ii) If the benefit as in (i) above cannot be availed of by the appellants, whether the learned Commissioner of Income-tax (Appeals) was justified in not admitting the evidence adduced after the framing of the assessm ent in support of appellant's claim that the amounts represent non- taxable gifts from abroad, and finally, (iii) If the answer to issue No. (ii) is in the affirmative, then whether on the basis of the material on record the order of the assessm ent as also of the learned Commissioner. Of Income-tax (Appeals) are acceptable. 13.3 Since the disposal of application under rule 29 in the reply to this M. A. Has been linked to the arguments and decision on merits, plain reading of the order, our notes, submissions of counsel clearly indicate that the then learned counsel has argued the case on merits. He not only argued but even replied to the counter of Shri Syali, learned Advocate for the Revenue on merits by trying to distinguish the case of D. C. Rastogi as cited. To contend that no arguments were addressed is factually incorrect in view of the various recording of facts, arguments, replies and conclusion, as highlighted by Shri Syali and amounts to an unsuccessful effort on the part of the petitioner to find some issues to salvage their case. But for the bland statement signed by the assessee themselves who were not present in the Court at the time of hearing of the appeals, there is no basis for the submission that arguments were not adduced on merits. In view of the above facts, the non- disposal of the application under rule 29 would indeed not be a mistake much less one apparent from the record. Our notes indicate beyond doubt that learned counsel was asked to and actually addressed us on the merits of the case para.5.6, he was replied to (paras. 6.5/6.5) and in rejoinder merits were again referred to (para.7) and dealt with by the Bench (paragraphs 10-10.2). , 13.5 The events from the filing of the first miscellaneous petition in February, 1997, and substitution thereof by miscellaneous application, dated April 2, 1997 (the subject-matter of this order), and to the filing of the written submissions on May 21, 1997, after conclusion of the hearing indicate a shift of stand on the part of the assessee. Originally, the assessee submitted that no submissions on merits were made as it was announced, in the open Court. The stand later was that counsel was not allowed to address on merits (implying that he wanted to do so). Shri Sharma, learned counsel it rejoinder, on instruction took a stand that since evidence was not to be relied upon the impression was that no arguments on merits are called for and hence rule 29 application was not argued and now, in the written resume, dated May 21, 1997, it is submitted that since an order of an earlier Bench existed directing disposal of application under rule 29 first (emphasis supplied), therefore, no arguments were addressed. All this and yet not a word in support from counsel who represented the regular appeal. 13.6 Be that as it may, the rule 29 petition was neither highlighted nor argued. Having opted not to highlight or argue the said petition it cannot be now said that its non-disposal suo motu gives rise to a mistake apparent from record. Disposal of a petition under rule 29 before the present combination of the Bench, even if no order existed was a precondition to disposal of appeal provided it was pressed and a request made. It was not so. To understand as to why the earlier combination of the Bench made the order and what was the necessity to do so, a question was
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raised by the Bench. Shri Syali explained that even on the earlier occasion an endeavour was made to leave the rule 29 application as a last resort. Since the then combination of the Bench objected to the modus operandi sought to be adopted, an order was passed. It was, thus, plausible that on the subsequent occasion, before the present combination of the Bench, the rule 29 application was not thought worthy of argument as the prime argument was that the same evidence rejected by the Commissioner of Income-tax (Appeals) should have been admitted. No reply was forthcoming to this statement of Shri Syali. In the face of the order of the earlier combination of the Bench it was indeed the duty of counsel to address this Bench first on the rule 29 application if at all the same was desired to be pressed or argued. Admittedly not having done so it cannot now be attributed as a mistake apparent from record to the Tribunal. " The Tribunal formed an opinion that the non-disposal of the application under rule 29 would indeed not be a mistake much less one apparent from the record. Vide para. 14.7 the Tribunal concluded as under: " 14.7 In the circumstances, the appellants having argued on merits, not having highlighted/argued petition under rule 29 and the Tribunal in its order having dealt with in extenso the letter February 21, 1995, there is no mistake apparent from record calling for rectification under section 254(2) of the act and restricting the appellant to the material on record sans additional evidence was in order and not a mistake apparent from record. We, therefore, find no merit in these applications and dismiss the same." Learned counsel for the petitioners has submitted that by order, dated October 23, 1996, the Tribunal had categorically expressed its opinion that the application under rule 29 would be disposed of first. That order regulated the subsequent course of hearing even jurisdiction of the Tribunal hearing the appeals It was obligatory on the part of the Tribunal to have " taken note of the said application and decided it judicially which having not been done the order, dated January 3, 1997, cannot be said to have judicially and effectively disposed of the appeals. This has occasioned grave injustice to the petitioners. The appeals must be deemed to be pending from the failure of the Tribunal to dispose of the application under rule 29. The order, dated January 3, 1997, deserved to be recalled followed by a hearing afresh and then decision in the appeals. The prayer made on behalf of the petitioners has been vehemently opposed on behalf of the respondent. It is to be noted that Mr. G. C. Sharama--- learned senior counsel appearing for the petitioners and Mr. M S. Syali, learned counsel appearing for the respondents, before this Court are the very same counsel who had appeared before the Tribunal and argued for the parties leading to the decision, dated June 27, 1997. Mr. M. S. Syali was counsel appearing for the Department before the Tribunal during all the proceedings including those leading to the passing of the order, dated January 3, 1997. It is stated in the counter and highlighted with emphasis by Mr. Syali, learned counsel for the respondent, that the order, dated October 23, 1996, is being interpreted with a twist by the petitioners and it must be appreciated and interpreted in the light of the factual background of the cases at hand. It was submitted by Mr. Syali that before the Tribunal, the petitioners were taking time, again and again proposing to argue-the appeals first on merits and reserving arguments on the application under rule 29 to be made only if they did not succeed in the appeals on the pleas raised otherwise. In the background the Tribunal had directed the application under 29 being taken up first. The date on which the appeals carne up for hearing on merits, it was for the appellants and/or their counsel to invite the attention of the Tribunal to the order, dated October 23, 1996, as also, the pendency of the application under rule 29 and press the application for hearing and decision thereon, The very fact that the appellants and their counsel did not even invite the attention of the Tribunal to the application, much less press the same for decision, it must be assumed that the application was either not pressed or was abandoned; it was no longer obligatory on the part of the Tribunal to have suo motu noticed the pendency of the
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application and then rendered decision there on. This is without regard to the fact whether the constitution of the Bench hearing the appeals on December 2, 1996, was the same or not as on October 23, 1996. On February 5, 1997, the petitioners moved an application under section 256(1) of the Act seeking reference to the High Court on several questions of law accompanied by a statement of case arising out of the order of the Tribunal, dated January 3, 1997. On April 4, yet another application was filed on behalf of the petitioners wherein they have sought for leave of the Tribunal to amend, the application, dated February 5, 1997 , so as to amend/modify/substitute proper question of law on the basis of which reference was being sought to the High Court. A perusal of the questions which are suggested on behalf of the petitioners before the Tribunal goes to show that the merits of the plea raised by the petitioners touching the placing of the onus, acceptance of the explanation given by the assessee and the assessability as income under section 68/69A of the impugned sum which was received as gift according to the assessee, all form the subject-matter of the question suggested by the petitioners themselves. The following questions are also sought to be referred which are pertinently relevant for the purpose of the present petitions and hence are reproduced verbatim: "(1)(a) Whether the order of the Tribunal, dated January 3, 1997, is in violation of the principles of natural justice and consequently null and void in law? (1)(b) Whether the Tribunal did not err in law in not considering the evidence filed before the Commissioner of Income-tax (Appeals) specified below before proceeding to adjudicate on grounds of appeal, and thus, committing a breach in the realm of natural justice. (description of documents not reproduced) (3). Whether the Tribunal was justified in holding that the Commissioner of Income-tax (Appeals) did not err in law in declining to allow the appellants to produce the additional evidence mentioned in her letters, dated July 28, 1995, September 22, 1995, October 26, 1995 and October 27, 1995, which by themselves justified production of the additional evidence? (4) Whether the Tribunal was justified in law in deciding the appeal on merits without first disposing of the applications made under rule 29 of the Income-tax (Appellate Tribunal) Rules? (6) Whether the Income-tax Appellate Tribunal exceeded its jurisdiction in deciding the appeal on merits when the sole question was whether the Commissioner of Income-tax (Appeals) should or should not have allowed the assessee to produce the evidence in…
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