- (1.) This appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee, and is directed against an order dated June 13, 2003 passed by the Income-tax Appellate Tribunal, "B" Bench, Kolkata, in Income-tax (SS) Appeal No.36 (Kol) of 2000 for the Block Period from 1992-93 to 1997-98 and thereby dismissing the appeal preferred by the assessee.
(2.) Being dissatisfied, the assessee has come up with the present appeal. The facts giving rise to filing of this appeal may be summed up thus: a) The appellant is a private limited company within the meaning of the Companies Act, 1956 and is assessed to tax under the Income-tax Act. The present appeal arises out of the appellant's assessment for the block period from 1992-93 to 1997-98. b) The appellant was incorporated with the object of, inter alia, doing real estate business. According to the appellant, the first project undertaken by the appellant was at 'L' Road, Jamshedpur and from time to time, it invested diverse amounts in the said project. The appellant claims that due to paucity of fund, the appellant could not complete the project and in the circumstances, on April 4, 1996 a development agreement was entered into between the appellant and one M/s. Thakkar Constructions, a partnership firm. c) In terms of the said agreement, the said firm agreed to complete the project at its own cost and provide a portion of the constructed area to the appellant by way of consideration. The appellant claimed that the said firm also agreed to pay the appellant a sum of Rs.4 lac towards reimbursement of part of the construction cost and preliminary expenses incurred by the appellant which was referred to in the said agreement as premium. In order to secure the payment of the said sum of Rs.4 lac, according to the appellant, it had obtained from the said firm a promissory note for the said amount. By the said promissory note, the said firm promised to pay the said sum of Rs.4 lac in terms of the said agreement by December 2, 1996 with interest @ 18% per annum. d) According to the appellant, the said firm did not pay the said sum of Rs.4 lac to the appellant within the financial year ending on March 31, 1997 and in the account for the said financial year, the said sum of Rs.4 lac was reduced from the cost of work-in-progress relating to the project and an identical amount together with interest of Rs.18,000/- was shown as receivable from the said fund. e) According to the appellant, the said firm had also shown the said sum of Rs.4 lac together with interest of Rs.18,000/- as payable to the appellant during the financial year ending on March 31, 1997. The appellant further claimed that in the financial year ending on March 31, 1998, on April 9, 1997, the said firm allotted additional constructed area to the appellant in the project and adjusted the said sum of Rs.4 lac against the same. f) On February 18, 1997 a search was conducted against the appellant in course of which the said promissory note in original was seized from the residence of the appellant's director, viz. one Mr. Parikh. The Assessing Officer initiated block assessment proceeding pursuant to the said search against the appellant and in course thereof, required the appellant to explain as to why the said sum of Rs.4 lac should not be treated as the appellant's income for the financial year 1996-97 since the said amount was not shown as received from the said firm during the said financial year. g) By a letter dated January 14, 1999, the appellant duly explained to the Assessing Officer the circumstances relating to the execution of the development agreement and the promissory note and stated that the appellant had not received the amount from the said firm till the date of search. h) The Assessing Officer, however, treated the said sum of Rs.4 lac as the appellant's undisclosed income for the block period on the ground that the promissory note did not indicate that the payment had not been made to the appellant and further that the appellant could not furnish the agreement with the said firm. i) Being dissatisfied the appellant preferred an appeal before the Commissioner of Income-tax (Appeals) and before the said authority the appellant specifically referred to the agreement with the said firm. The appellant also referred to the Commissioner of Income-tax (Appeals) the circumstances and consequently by an order dated September 6, 2000 the Commissioner of Income-tax (Appeals) allowed the appeal of the appellant and held that the sum of Rs.4 lac could not be considered in the appellant's block assessment and the matter was required to be examined in the subsequent year. j) Being dissatisfied with the aforesaid order passed by the Commissioner of Income-tax (Appeals), the Assessing Officer preferred an appeal before the Income-tax Appellate Tribunal. k) The Tribunal by an order dated June 13, 2003 allowed the Revenue's appeal on the ground that the appellant could not produce the agreement entered into with the said firm and that the said promissory note did not indicate that no money was paid against the same to the appellant. Against such order of the Tribunal, the appellant has come up with the present appeal.
(3.) A Division Bench of this Court on May 16, 2005 formulated the following substantial question of law for decisions in this appeal: "i) Whether the Tribunal was justified in law in withdrawing the relief granted by the Commissioner of Income Tax (Appeals) merely because the Development Agreement was not produced before the Assessing Officer when the said agreement was duly submitted before the considered by the Commissioner of Income Tax (Appeals) and no objection in that regard was raised by the Department either in the ground of appeal or in course of argument nor the Tribunal require production of the agreement? "ii) Whether the purported findings of the Tribunal upholding the presumptive addition of Rs.4,00,000/- made by the Assessing Officer on the basis of an uncancelled promissory note found with the appellant in original ignoring the accounts of the parties, certificate of Chartered Account etc. are arbitrary, unreasonable and perverse?";