Nirmaldas Jassumal vs Commissioner of Income Tax

A.R. Tiwari, J.—In compliance with the directions issued by this Court on 30-6-1987 in MCC No. 157 of 1985, presented by the applicant-assessee, u/s 256(2) of the income tax Act, 1961 (''the Act''), the Tribunal has stated the case and referred the undernoted question of law for our opinion :

Whether, on the facts and in the circumstances of the case, there was material before the income tax Appellate Tribunal for holding that the sum of Rs. 35,000 credited in the account of Smt. Shilabai represented the income of the assessee, for the assessment year 1978-79 from undisclosed sources ?

Briefly stated, the facts of the case are that the assessee was treated as registered firm u/s 185 of the Act. It filed return for the assessment year 1978-79 for the accounting period ending Diwali 1977 on 27-6-1978 declaring income at Rs. 7,385. On scrutiny of accounts, the ITO found cash credit of Rs. 35,000 in the name of Smt. Shilabai, partner of the firm. The ITO did not feel satisfied by the explanation offered and thus, made addition of Rs. 35,000 in the hands of the assessee. On appeal, the AAC accepted the contention of the assessee and deleted the addition. The revenue, then filed the appeal before the Tribunal. The Tribunal allowed the appeal and held that the amount of Rs. 35,000 was rightly taxed as assessee''s income u/s 68 of the Act. The appeal registered as IT Appeal No. 14 (Ind.) of 1982 for the assessment year 1978-79 was allowed (Annexure-E). The applicant-assessee filed an application u/s 256(1) for reference which was rejected. The assessee then filed MCC No. 157 of 1985 u/s 256(2) of the Act. In that MCC, this Court passed the order on 30-6-1987. The Tribunal, therefore, stated the case and referred the question as noted above.

None appeared for the assessee. We have heard Shri DD Vyas, the learned counsel for the non-applicant-Department.

Shri Vyas submitted that the order of the Tribunal is based on proper appreciation of facts and correct application of law. He invited our attention to Shankar Industries Vs. Commissioner of Income Tax, Central, It is held as under:

We would like to observe that the law on this point is now well-settled. It is necessary for the assessee to prove prima facie the transaction which results in a cash credit in his books of account. Such proof includes proof of the identity of his creditor, the capacity of such creditor to advance the money and, lastly, the genuineness of the transaction. These things must be proved prima facie by the assessee only after he has adduced evidence to establish prima facie the aforesaid, the onus shifts on the department.... (p. 698)

The reference is in compliance with the direction of this Court on an application filed by the assessee. The reference, thus, can be deemed to be at the instance of the assessee. As the assessee has not elected to appear and has not enabled us to hear the reference, we feel, we have no obligation to answer the reference.

Although the Tribunal eventually referred the questions in compliance with the direction issued by this Court, we feel that we have no obligation to answer the reference because the assessee on whose instance the reference is made has not appeared to press this reference further. In Jamunadas Khanchand Vs. Commissioner of Sales Tax, it is held that if the party at whose instance the reference is made, fails to appear then this Court is not bound to answer the reference. The same view was reiterated by us in B.R. Phosphate v. CST [MCC No. 303 of 1986], B.R. Phosphate v. CST [MCC No. 304 of 1986], Kabra Agro Industries Ltd. v. CST [MCC No. 471 of 1991], Atmaram Manalal v. CST [MCC No. 416 of 1986] and Smt. Shakuntala Sethi v. CIT [MCC No. 41 of 1989].

In the circumstances, we are not called upon to consider and answer the question. Accordingly, we decline to answer the question and close the case with no order as to costs. Counsel fee, however, is fixed at Rs. 750, if certified.