Decided on March 18,1993

P.P. KHADER HAJI Respondents


K.S. Paripoornan, J. - (1.)THE Revenue is the petitioner herein. THE respondent is an assessee to income-tax. We are concerned with the assessment year 1982-83, for which the accounting period ended on March 31, 1982. In this original petition, the Revenue prays for a direction to the Income-tax Appellate Tribunal, Cochin Bench, to refer the following two questions of law for the decision of this court :
"1. Whether, on the facts and in the circumstances of the case,

(a) the Tribunal is justified in cancelling the assessment ?

(b) the Tribunal is right in deleting the addition without further enquiry ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal should not have remitted the case to the officer for a de novo consideration ?"

(2.)FOR the assessment year 1982-83, the assessee did not file a return. Notice under Section 148 was issued on April 20, 1983, and served on the assessee on May 4, 1983. There was no appearance on behalf of the assessee. Further notices were also served on him proposing to complete the assessment estimating his income at Rs. 6,00,000. Even for this, there was no response. The assessment was completed under Section 144 of the Act. The Income-tax Officer found that by two documents (Documents Nos. 1599 of 1982 and 2085 of 1981) dated May 14, 1981, the assessee purchased certain immovable properties on the side of M. G. Road for a consideration of Rs. 4,76,000. In spite of notices, the assessee did not explain the source of the investment. The Income-tax Officer also held that the assessee had to meet his personal and household expenses and taking into account these facts, the total income of the assessee was estimated at Rs. 6,00,000. The assessment was confirmed in appeal by the Commissioner of Income-tax (Appeals), by order dated November 28, 1986. In second appeal by the assessee, the Appellate Tribunal, by order dated October 6, 1987, stated thus :
"On a consideration of the rival submissions, we are of the opinion that the assessment is clearly arbitrary and cannot be sustained. There is no material on record to connect the investments with any unexplained sources of funds of the assessee. In the face of the fact that the assessee has been assessed to wealth-tax, the assessment lacks any material with reference to the undisclosed personal expenditure for which any income would be sustained. In the circumstances, we have no hesitation in annulling the assessment."

We heard counsel.

The order of the Appellate Tribunal is laconic. We are not in a position to fully understand the implications of the said order. Be that as it may, admittedly, the assessee has purchased properties for a sum of Rs. 4,76,000 during the accounting period. It is for him to explain the source of his investments. He did not respond to the various notices sent by the Income-tax Officer. Placing reliance on such circumstances, the Income-tax Officer inferred that the source of the investment is unexplained income. As to whether he was justified in doing so need not be considered at this stage. But, suffice it to say, there was material before the Income-tax Officer to alert him. In spite of notice, the assessee did not appear before the Income-tax Officer nor did he file any reply to the notices sent to him. In such circumstances, the Income-tax Officer as well as the first appellate authority concluded that, since the assesses has failed to prove the source of the investment, it could be out of the undisclosed income of the assessee. These salient aspects were not properly focussed upon nor adverted to by the Appellate Tribunal while disposing of the appeal by order dated October 6, 1987. Thai apart, the order of the Appellate Tribunal does not show as to why it held that the assessment is arbitrary. The relevant facts have been stated in the appellate order. What are the details that are lacking therein and what further aspects are to be adverted to by the Income-tax Officer before making the best judgment assessment under Section 144, are not adverted to nor stated by the Appellate Tribunal. On the whole, the order of the Appellate Tribunal does not, prima facie, appear to be in accordance with law. We are satisfied that the questions of law, formulated in paragraph 7 of the petition, do arise out of the appellate order of the Tribunal.

(3.)WE, therefore, direct the Income-tax Appellate Tribunal, Cochin Bench, to refer the said questions for the decision of this court within three months from the date of receipt of a copy of this judgment.
A copy of this judgment, under the seal of this court and the signature of the Registrar, shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench, forthwith.


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