M.Y.EQBAL, J. - (1.) BY the reference application under Section 256(1) of the Income Tax Act 1961, the following questions have been referred for answer by this Court: (1) Whether on the facts and in the circumstances of the case the Honble Tribunal is correct in upholding the addition of Rs. 10,69,200/ -? (2) Whether the finding of the Honble Tribunal regarding opportunity of being heard production of Pawan Kr. Jain and refusal to admit additional/new evidence are correct? (3) Whether the findings as aforesaid are based on any material on record as according to the appellant the same are contrary to the record and thus are incorrect?
(2.) THE facts of the case lie in a narrow compass: The assessee was dealing in a wholesale business. He filed return of income tax showing total income of Rs. 21,150/ -. In course of assessment proceeding he had purchased bank drafts to the tune of Rs. 12,35,030/ - from S.B.I. Tenughat on different dates and Rs. 3,78,000/ - from S.B.I. Gomia on different dates. The Assessing Officer directed the assessee to explain source of investment. By letter -dated 17.1.92, the assessee explained that the drafts did not relate to him rather the same were purchased for and on behalf of his brother Pawan Kumar Jain who dealt in food -grain business. The Assessing Officer, therefore, asked the assessee to produce Shri Pawan Kumar Jain but the assessee failed to do so and simply by letter -dated 26.3.92 it was said that the alleged drafts did not relate to the business of the assessee. After giving sufficient opportunity to the assessee to produce Shri Pawan Kumar Jain and also to produce evidence in support of the fact that the drafts were purchased for his brothers business and not for the assessee, the Assessing Authority treated the said investment unexplained. Consequently, the entire draft amount was added and assessment was made. Aggrieved by the said order of assessment, the assessee preferred appeal before the Commissioner of Income Tax(Appeal) who confirmed the addition made by the Assessing Authority. The assessee, thereafter, moved the Income Tax Appellate Tribunal, Before the Tribunal, the assessee got affidavit filed by Shri Pawan Kuman Jain stating that those drafts are purchased for his business. The tribunal after considering the entire records and assessment proceeding found that the adequate opportunity is given to the assessee and, therefore, did not consider the affidavit filed by the assessee and confirmed the order passed by the Assessing Authority and the Appellate Authority. Mr. S.B. Gadodia, learned senior counsel appearing for the assessee submitted that the Appellate Tribunal has committed serious error of law in holding that a new plea was taken by the assessee that the demand drafts were purchased in the name of his brother Shri Pawan Kumar Jain. As a matter of fact, the assessee since very inception took the plea that the drafts were purchased by his brother Shri Pawan Kumar Jain. According to the learned Counsel, therefore, the Tribunal ought to have accepted the affidavit filed by Shri Pawan Kumar Jain and considered the same.
(3.) FROM perusal of the assessment order it reveal that the Assessing Authority has dealt with the matter in detail and recorded a finding after giving full opportunity of hearing to the assessee. The relevant portion of the assessment order is reproduced herein below: On 8.1.92 the assessee was served with a list of unaccounted draft purchased by him to explain the source of investment. The date was fixed on 17.1.92. ON 17.1.92 itself the assessee had filed a written explanation stating that "the other drafts mentioned in the letter of the S.B.I. does not relate to him". Shri M.P. Jain further want to add " the draft have been purchased on behalf of my brother Shri Pawan Kumar Jain who deals in food grain. In one word the assessee has accepted the purchase of all the drafts. On 17.1.92 the assessee was also asked to produce Sri Pawan Kr. Jain (his brothers) on 28.1.92 no compliance was made on 28.1.92. On 18.2.92 an ex parte notice was given to the assessee for compliance on 27.2.92. On 27.2.92 Sri Mahabir Pd. Jain appeared and prayed for adjournment and the case was adjourned to 4.3.92. No body appeared on 4.3.92. On 26.3.92 Sri S.C. Arya, advocate for the assessee filed a written explanation and in para 8 of that explanation he has mentioned that " the alleged drafts do not relate to the business of the petitioner". Here also the assessee did not deny purchase of drafts detailed above. To further authenticate and investigate the matter photo copy of all the drafts applications were obtained from the respective banks. All those applications bears the signatures of Sri Mahabir Prasad Jain and those facts was also brought to the notice of the assessee for his comments. The assessee chose to keep silence on this point. I am, therefore, laid to the inescapable conclusion that the assessee had no explanation for the investigation made in the purchase of draft nor he could produce any evidence that those drafts were purchased by him on behalf of his brother and the money spent by him in the purchase of drafts were reimbursed to him by his brother Sri Pawan Kr. Jain. Thus it is proved beyond doubt that these drafts were purchased by Sri Mahabir Prasad Jain out of his income not disclosed to the department. I, therefore, tax this amount in the hands of the. assessee, as income from undisclosed source 12,35,030/ - Add Rs. 12,35,030/ - (857030 + 378000).;