Visalakshi Gandhi vs Commissioner of Income Tax

N.V. Balasubramanian, J.—The Income Tax Appellate Tribunal, in pursuance of the directions of this court has stated a case and referred

the following questions of law in relation to the assessment of the assessee for the assessment year 1985-86.

Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in holding that there is no error apparent on the

face of the records?

Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in declining to remand the matter to the assessing

authority affording an opportunity to the applicant to prove the source of income?

The brief facts necessary for the disposal of the tax case reference are as under : The assessee is the wife of a senior advocate practising in this

court. There were three assessments made, one on the assessee''s husband in his individual capacity, another in the name of the assessee''s

husband as karta of the joint family and the third on the assessee. The assessments were made consequent to a search in the residential premises of

the assessee and her husband in the year 1986 and the question that arose in all assessment proceedings was regarding the assessability of a sum

of Rs. 85,000 which represents the money advanced on a promissory note standing in the name of the assessee, Mrs. Visalakshi Gandhi, and in

whose hands the same has to be assessed. The assessment on the assessee''s husband was made on regular basis including the said sum in his

assessment and other two assessments, one on the husband of the assessee as karta of the Hindu undivided family and the other on the assessee,

were made including the same amount on a protective basis. All the three assessees preferred separate appeals before the appellate authority, viz.,

Deputy Commissioner (Appeals), and the Commissioner of Income Tax, respectively. In the appeal preferred by the Hindu undivided family, the

case of the Hindu undivided family was that the said sum had come out of agricultural income of the Hindu undivided family and it was accepted by

the Deputy Commissioner (Appeals). Accordingly, the other two appeals were decided in the light of the order passed by the Deputy

Commissioner (Appeals) in the case of the Hindu undivided family.

The Department carried all the three matters in appeal before the Income Tax Appellate Tribunal and the Appellate Tribunal found that at the

time of the search, the assessee''s husband has given a statement to the effect that the money was advanced by his wife and the assessee''s husband

disowned the same in his individual capacity as well as the karta of the Hindu undivided family. The Appellate Tribunal also found that after nearly

one month from the date of the search, the assessee gave a sworn statement accepting that she advanced the money out of her own money. The

assessee also explained the sources for the amount ; (i) out of her savings, and (ii) out of the money received from a firm in which she was a

partner. The Appellate Tribunal considered all the three appeals together and took note of the fact that the extent of income shown by the joint

family against the extent of the lands appeared to be disproportionate, and observed that the assessee did not give any details regarding the nature

of crops that were raised. The Appellate Tribunal therefore held that in the absence of details, the appellate authority, viz., the Deputy

Commissioner (Appeals) was not justified in taking the view that the assessee, viz., the Hindu undivided family, had sufficient income and sufficient

funds at its disposal to advance money to third parties. The Appellate Tribunal, taking note of the statements made by the assessee''s husband and

by the assessee and also the fact that revised returns were filed declaring that the amount advanced came out of the agricultural income after a long

delay, came to the conclusion that it was an afterthought to cover up the situation. The Appellate Tribunal therefore set aside the order of the

Deputy Commissioner (Appeals) wherein it was held that the income belonged to the Hindu undivided family. The Appellate Tribunal, however, on

the basis of the statement made by the assessee as well as by her husband, came to the conclusion that the money was rightly assessed in the hands

of the assessee. The Appellate Tribunal also took note of the fact that the revised returns were filed on behalf of the Hindu undivided family

declaring huge agricultural income not only for the assessment year 1985-86, but also for the assessment years 1983-84 and 1984-85, unrelated

to the extent of the lands owned, and held that the amount advanced belonged to the assessee. In this view of the matter, the Appellate Tribunal

directed that the amount should be computed in the hands of the assessee, and deleted the additions made in the assessments of the assessee''s

husband both in his individual capacity as well as the karta of the Hindu undivided family. Accordingly, the Appellate Tribunal disposed of all the

appeals.

The assessee thereafter filed a petition u/s 254(2) of the Income Tax Act, 1961, for rectification of ""the mistake apparent from the record"" in the

order of the Appellate Tribunal and to cancel the order passed by the Appellate Tribunal and to remand the matter back to the assessing authority

for giving the petitioner an opportunity to show cause against the assessment of the amount as the undisclosed income of the petitioner or in the

alternative, the petitioner should be given a sufficient opportunity before the Appellate Tribunal itself in that regard. The Appellate Tribunal held that

though the assessee filed the petition for rectification seeking an opportunity of being heard either by the Appellate Tribunal or by the lower

authority, yet, a reading of the affidavit filed by the assessee did not show what was the mistake apparent from the record. The Appellate Tribunal

also found that the assessee never claimed before the Appellate Tribunal any opportunity to be given for the production of materials in support of

her case. The Appellate Tribunal held that the matter was disposed of on available materials on record and hence, the prayer sought for in the

miscellaneous petition cannot be granted as there was no error apparent from the record. It is, against the order rejecting the petition for

rectification, the present reference has been made, at the instance of the assessee, on the basis of the directions of this court.

We heard Mr. P.P.S. Janarthana Raja, learned counsel for the assessee, and Mr. T. Ravikumar, learned junior standing counsel for the

Revenue. The submission of Mr. P.P.S. Janarthana Raja, learned counsel, was that the observation of the Appellate Tribunal that the extent of

income shown against the extent of the lands appeared to be disproportionate is not correct as the assessee had produced all the materials and the

materials do show the extent of the lands owned by the Hindu undivided family and the nature of the crops, namely, sugarcane, and, hence, all the

materials were available on record, but the Appellate Tribunal failed to consider the materials at the time of disposal of the appeal. He also

submitted that the assessee''s husband is a leading senior advocate of this court and the Appellate Tribunal should have considered that it would

have been fairly easy for him to give periodically a portion of his income to the assessee and, hence, the Appellate Tribunal should be directed to

consider the petition on the merits.

We are unable to accept the submission of learned counsel for the assessee. It must be remembered here that there were three assessments, one

in the hands of the assessee, another in the hands of the assessee''s husband in his individual capacity and the third in the hands of the Hindu

undivided family. The Appellate Tribunal considered the question whether the Hindu undivided family would have sufficient resources to advance

the money covered in the promissory note in the appeal filed in the case of the Hindu undivided family and held that the Hindu undivided family had

no sufficient funds at its disposal to advance loans to third parties. Therefore it is not open to the assessee to challenge the finding rendered in the

appeal relating to the Hindu undivided family in the petition for rectification filed in her individual case. We are of the view that by the miscellaneous

petition preferred to rectify the mistake in the order passed in the assessee''s appeal, it is not open to her to contend to set aside the finding

rendered in another assessee''s case, namely, the Hindu undivided family, though she might be a member of the joint family and all the appeals were

heard together. Secondly, the Appellate Tribunal observed that the Hindu undivided family did not give any details regarding the nature of crops

that were raised and the extent of income shown against the extent of the lands appeared to be disproportionate. These are all pure factual findings

and it cannot be stated that there is a mistake apparent from the record in the finding of the Appellate Tribunal. Moreover, the statement given by

the assessee after a period of nearly one month from the date of search accepting that the money was advanced by her was never retracted, nor

the assessee''s husband retracted his statement given earlier during the course of search. Moreover, the plea that the assessee''s husband was

periodically giving a portion of his income to the assessee was not advanced either before the Appellate Tribunal, nor any material was produced.

The expression, ""mistake apparent from the record"" has been the subject matter of several decisions of the Supreme Court and it is well settled

that for a ""mistake apparent from the record"" it must not involve a detailed inquiry and where more than one plausible view is possible, it cannot be

regarded as a mistake apparent from the record. We are of the view that the finding of the Appellate Tribunal that the Hindu undivided family did

not give details regarding the details or the nature of crops or the fact that the extent of income shown against the extent of the lands appeared to

be disproportionate does not give rise to a ""mistake apparent from the record"" as more than one view is possible. It is true that we are not

concerned with the correctness of the earlier order of the Appellate Tribunal, nor are we concerned with the reasoning given by the Appellate

Tribunal for the conclusion it arrived at earlier as we are not sitting either in appeal or considering a reference against the earlier order of the

Appellate Tribunal,

Further, the assessee in her petition has also not stated that there were certain glaring mistakes in the order of the Appellate Tribunal calling for

rectification. As a matter of fact, it was found that the assessee had not pointed out any mistake in the order of the Appellate Tribunal. The petition

filed by her clearly shows that the assessee sought for the remand of the matter back to the appellate authority or the Assessing Officer to show

cause against the assessment of the amount as her undisclosed income. In the alternative, she pleaded that the assessee should be given an

opportunity in the Appellate Tribunal itself. The prayer sought for implies that the assessee has not produced materials either at the time of appeal

and she wanted an opportunity to place fresh materials before the Assessing Officer or the appellate authority or the Appellate Tribunal, as the

case may be, and, hence, that would not constitute a mistake apparent from the record. The assessee could have asked for more time at the time

of hearing of the appeal to assemble all available evidence and to produce the same, if the time was needed. The assessee had not done that, and it

is not open to the assessee to complain in the rectification proceedings that the matter should be remitted. We therefore hold that the Appellate

Tribunal was justified in holding that seeking an opportunity to be heard either by the Appellate Tribunal or to remit the matter to the lower

authorities does not give rise to a mistake apparent from the record. It is not the case of the assessee that she sought an opportunity before the

Appellate Tribunal at the time of hearing of the appeal to produce certain materials which was denied by the Appellate Tribunal. In the

circumstances, we are of the view that the Appellate Tribunal was correct in holding that there was no error apparent from the record which called

for rectification of its order.

Accordingly, we answer the questions of law referred to us as under :

First question :

We answer the question in the affirmative, against the assessee and in favour of the Revenue.

Second question :

We also answer the question in the affirmative, against the assessee and in favour of the Revenue as the Appellate Tribunal was right in declining

the request of the assessee to remand the matter while considering the petition for rectification. The prayer for remand should have been made at

the time of passing of the original order in the appeal and the assessee has not taken any further step against that order by filing a reference

application and in the rectification petition, it is not open to the assessee to claim that the Appellate Tribunal should remit the matter back to the

assessing authority or the appellate authority or a further opportunity should be given to the assessee in the Appellate Tribunal.

In the result, both the questions of law referred to us are answered against the assessee, in favour of the Revenue. However, in the

circumstances of the case, there will be no order as to costs.