Law: Income Tax Act, 1922

Section: 33(4)

Section 254 of the Income-tax Act, 1961 [Corresponding to section 33(4) of the Indian Income-tax Act, 1922] - Appellate Tribunal - Order of - Assessment years 1947-48 to 1951-52 - Whether where Tribunal's finding is based on suspicion and largely influenced by extraneous materials not on record of case, same would be vitiated and cannot be sustained - Held, yes FACTS The returns made by the assessee for the relevant years were rejected by the ITO, who also did not believe the accounts produced by the assessee. The ITO was of the opinion that the income credited to the accounts of seven persons were really the income earned by the assessee. He added those profits to the profits earned by the assessee and assessed the assessee accordingly on the ground that the assessee had done business transactions in these benami names, whenever he could earn huge profit. The AAC substantially allowed the appeal of the assessee. The Tribunal, however, restored the order of the ITO relying upon various facts which were not available from the records before it. On reference: HELD Some of the facts stated by the Tribunal did not appear to be correct. It was strange how the Tribunal got held of the assessment records for the years 1940-41 to 1946-47. These records were not marked as exhibits in the case. In the reference made by the Tribunal it was mentioned that those documents had been referred to by the representative of the department at the hearing. It was not known why he was permitted to make reference to those records when they were not parts of the records of the case. Further, from the reference in question it did not appear that the records of the Tribunal show that any reference was made to those documents at the time of the hearing. By the time the Tribunal was called upon to make a reference under section 66(2) of 1922 Act, its composition had been changed. Only one Member of the Tribunal continued to hold office, the other being a new Member. It was said that the facts in question were gathered from the notes maintained by the Member who continued to hold office. This was hardly a satisfactory way of doing things. The Tribunal in reaching its conclusions appeared to…

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