V.V Kamat, J.:— Although the questions that are referred by the Income-Tax Appellate Tribunal, Cochin Bench, are purely of factual character, with anxiety we have considered even that aspect on going through the material on record. The said questions are as follows:
“1. On the facts and circumstances of the case was the Tribunal correct in holding that the appellate authority was justified in not considering the additional evidence?
2. Was the Appellate Tribunal justified in not following the decision in K. Mohammed v. ITO, [1977] 107 ITR 808 (Ker)?”
2. The assessment year is 1980-81. The assessee did not file any return of income. Notice under section 148 of the Act was issued and thereafter the assessee filed a nil return on October 20, 1983. Therefore, the Income-Tax Officer took resort to section 143(2) of the Act and section 142(1) of the Act as well as issuance of summons under section 131 of the Act. The Assessing Officer finding no response, had to proceed to complete the assessment under section 144 of the Act on the basis of best judgment assessment. It is also pertinent to note that even thereafter no action was taken by the assessee, under section 146 of the Act to reopen the assessment. The said assessment order was passed on January 29, 1985 (annexure “A”). Reading the assessment order passed by resort to section 144 of the Act it would be found that it was on the basis of the survey report. The order states that during the assessment year in question the assessee was running a hotel in the name and style of “Sea Queen” at the Hotel Neels building owned by one Mr. N. Velappan. The survey report also, as is recorded in the assessment order, brings on record that the assessee is known to be a contractor for the Housing Board at Ollor and Neyyat-tinkara. The assessment order particularly emphasizes that this hotel “Sea Queen” is situated at the well known tourist resort, Kovalam. Resorting to best judgment assessment the net income from hotel business was estimated at Rs. 60,000 and the net income from the contract business in regard to which the assessee was acting for the Housing Board at Ollor and Neyyattinkara an amount of Rs. 15,000 was estimated. Accordingly, the order was passed.
3. There was an appeal before the Appellate Assistant Commissioner of Income-Tax, Trivandrum. Paragraph 2 of the said order records an admission as taken from the statement of facts in the petition of appeal that the fact that the assessee was running the hotel in the name and style of hotel “Sea Queen” and that too at Kovalam is an admitted position. What the assessee contended before the Commissioner in appeal was that the notice under sections 143(2) and 142(1) as well as summons under section 131 of the Income-Tax Act, 1961, were not properly served. At that stage, the Commissioner considered the fact that the appellant accepted the service of demand notice as well as the assessment order which were served on him on April 12, 1985. This was taken into consideration by the Commissioner as a situation of probability to consider the contention of the assessee that earlier notices were not properly served on the appellant. It is pertinent to note that the contention of the assessee before the Commissioner was not that there was no service, but it was that there was no proper service.
4. Obviously, the Commissioner proceeded on the general law of presumption that if the address is correct and additionally if the demand notice and the assessment order are admitted to have been received by the assessee at the same address it will have to be presumed that earlier notices under sections 143(2), 142(1) along with the summons under section 131 of the Income-Tax Act, 1961, which were served at the same address should be presumed to have been received, there being no evidence in rebuttal in regard thereto.
5. Additionally, the Commissioner did not fail to see the importance that the Income-Tax Officer did not act in the air, but on the basis of a survey report in regard to the activities' of the assessee. On probabilities also it will have to be appreciated that the fact that the assessee was known as a contractor for the Housing Board at Ollur and Neyyattinkara would not have been within the knowledge of the Income-Tax Officer, which renders his acting on the survey report probable and acceptable. This is apart from the admission of the assessee as found by the Commissioner that he was running the hotel in the name and style of hotel “Sea Queen” at Kovalam during the assessment year.
6. It must be emphasised pointedly that the order of the Commissioner does not mention anything with reference to any attempt by the assessee to place any material at that stage. There is no whisper with regard to the attempt of the assessee in the direction of making efforts to place additional material on record before the Commissioner at least from the point of view of reading the contents of the order of the first appellate authority.
7. It appears that in the further travel of the proceedings before the Income-Tax Appellate Tribunal on behalf of the Revenue in fact acknowledgment cards evidencing the service of the notices on July 20, 1984, and November 9, 1984, were produced for the perusal of the Tribunal and this resulted in the outright rejection of the argument of the assessee that there was no opportunity for him to defend the matter. This led the assessee to what is described by the Tribunal as the next leg of the argument. It is to the effect that the assessee had produced the evidence in the nature of sales tax assessment order to the effect that the assessee was not running a hotel but it was someone else on his behalf and this evidence was not considered by the first appellate authority which has resulted in prejudice. In support of the said contention relating to the resulting of the prejudices, reliance is placed on the decision of this court in K. Mohammed v. ITO, [1977] 107 ITR 808, before the Tribunal to contend that the authority is under legal duty to consider the evidence produced before it, in order to determine the tax liability of a person.
8. We have already stated that from the order of the first appellate authority, there is not even an inkling that additional material was produced before the appellate authority. We also asked learned counsel appearing before us for the assessee as to whether there is any material with him to show such production before the first appellate authority. Being in a position left with a bare assertion from the order of the Tribunal there being no whisper in regard thereto even in the statement of case, we are afraid that we cannot proceed on the assumption that such evidence was produced before the first appellate authority. It is right and elementary that the reference court has to act on the basis of the contents of the statement of case. The reference court is not permitted to travel beyond the statement of case and we are unable to know as to whether in fact there was any attempt to place additional material before the first appellate authority. This is more so because the order of the first appellate authority is wholly silent in regard thereto.
9. The aspect can yet be considered from another angle. Even the submission that is made before the Tribunal shows its half-heartedness. What is submitted is that the assessee was not running the hotel, but it was someone else who acted on his behalf. Even before the Tribunal it was this someone else has also been withheld leaving everyone concerned to speculate in regard thereto. There is no doubt that if the evidence is produced it would be the legal duty of the authority concerned. There is no material or production of such evidence and this is in addition to the half-heartedness of the submission in regard thereto as pointed out above.
10. Apart therefrom rule 46A of the Income-Tax Rules relates to the appellate proceedings before the Commissioner, in the matter of production of additional evidence before the Deputy Commissioner of Appeals and the Commissioner (Appeals). Reference to the contents of the said rule would show that such production is conditioned by certain situations. The assessee has to show that the Assessing Officer has refused to admit the evidence. The assessee also has to show alternatively that he was prevented by sufficient cause from producing the evidence before the Assessing Officer. Alternatively further the assessee also has to show its relevance to the grounds of appeal sought to be urged. Lastly, the assessee also has to establish that the Assessing Officer did not afford him sufficient opportunity in regard thereto.
11. The material on record is abundantly clear that no attempt was made by the assessee before the Assessing Officer. In addition thereto, the contention raised before the Appellate Tribunal shows no regard to follow the requirements of the above rules. Taking into consideration the above situation, even if we are left to ourselves we would not be able to come to any other conclusion than the one reached both by the Commissioner as well as by the Tribunal. For the above reasons reference stands disposed of as above.
12. A copy of the judgment under the seal of this court and the signature of the Registrar shall be forwarded to the Income-Tax Appellate Tribunal, Cochin Bench, as required by law.