Income-tax Act (XI of 1922)--

----Ss. 10(2), 23(3) & 66---New plea on point of fact before Income Tax Appellate Tribunal---Admissibility---Where the assessee during assessment proceedings before Income-tax officer explained cash credits appearing in his books of account as loan from various parties but failed to substantiate his claim and the same plea was raised by him before Appellate Assistant Commissioner which was again found false, he could not, held, raise entirely a new plea before the Tribunal that the amount shown was the result of intangibles as the same was prima facie an afterthought and in utter contradiction of his earlier plea---Income-tax Appellate Tribunal was thus not justified in directing the Income-tax Officer to allow intangibles of earlier years.

C.I.T. v. Banarsilal Dhawan 1993 P T D 28 ref.

Muhammad Ilyas Khan for Applicant.

Nemo for Respondent.

Date of hearing: 11th May, 1992.

JUDGMENT

M. MAHBOOB AHMAD, CJ.---This is a reference by the learned Income-tax Appellate Tribunal, Lahore, whereby on the motion of the Commissioner of Income-tax, A-Zone, Lahore, the following question has been referred to this Court for opinion:--

"Whether on the facts and circumstances of the case, the Tribunal was justified in directing the ITO to allow intangibles of the earlier years when such a plea was not taken by the assessee respondent at the two earlier stages of assessment and appeal?"

2. The facts necessary for the purposes of this reference, briefly stated, are that the assessee was found carrying business in another name also viz. Universal Office Machine Company. The Income-tax Officer clubbed the income of the said Company on the assessee respondent which the assessee accepted to be his business. In the accounts of the said Universal Office Machine Company cash credit amounting to Rs.3,79,764 standing in the various names was detected by the Income-tax Officer and treated as income from undisclosed sources. The Income-tax Officer did not add back the total amount of the aforementioned cash credit but only the account remaining after deduction the total income determined in the case of the assessee as distinct from income of Universal Office Machine Company. The Appellate Assistant Commissioner confirmed the order of the Income-tax Officer. Before the Assistant Appellate Tribunal also no claim was made by the assessee that their cash credit could have come from the intangible additions of the preceding years. This plea was however, raised before the Income-tax Appellate Tribunal that the Income-tax Officer should have allowed all the intangible additions made in the past. This plea prevailed with the learned Income-tax Appellate Tribunal which gave the directions accordingly. The Commissioner of Income tax feeling aggrieved of this finding of the Tribunal made an application to it for referring the question aforestated to this Court.

3. The learned counsel for the petitioner has contended that the assessee having not raised this plea which essentially involves a question of fact before the Income-tax Officer and the Appellate Assistant Commissioner was precluded from raising this plea before the Tribunal and that the Tribunal went beyond the scope of the lis before it in accepting the plea. It was in the same context urged by the learned counsel that in the face of acceptance of the findings of the Income-tax Officer as affirmed by the learned Appellate Assistant Commissioner that the assessee had not disclosed the input of the amount aforementioned the order of the Income-tax Appellate Tribunal was unjustified. The learned counsel has also relied on C.I.T. v. Banarsilal Dhawan 1993 P T D 28. in support of the above contention. No one has appeared on behalf of the respondent assessee who has been proceeded against ex parte. The contentions raised on behalf of the petitioner, therefore, are going unrebutted and otherwise also appear to have force.

4. It is manifest from the record that before the Income-tax Officer as also before the Appellate Assistant Commissioner Income-tax the explanation about the cash credit amount was that it was a loan from various parties, which explanation was also found to be false. It was never the case of the assessee that the amount was the result of intangibles. The plea to the above effect raised before the learned Income-tax Appellate Tribunal, on the face of it, was an afterthought and in utter contradiction of the earlier plea. This plea in the attending circumstances obviously could not be allowed to prevail. The view as a formed by us finds support from the case cited on behalf of the petitioner.

5. In view of the foregoing discussion, the answer to the referred question is in the negative, i.e. that on the facts and circumstances of the case the Tribunal was not justified in directing the Income-tax Officer to allow intangibles of the earlier years when such a plea was not taken by the assessee respondent at the two earlier stages of assessment and appeal. Since the assessee has not appeared to contest the reference, there will be no order as to costs.

M.B.A./C-12/L Question answered in negative.