ORDER
J. P. BENGRA, J. M. :
These are appeals by four assesseds raising common contention arising out of identical orders of the CIT(A)-XI, New Delhi, pertaining to the asst. yrs. 1983-84 and 1984-85. Since issues involved in all these appeals are common, therefore, for the sake of convenience, these appeals are being disposed of by this consolidated order.
2. The common grievance in all these appeals is that the CIT(A) erred in confirming the action of the ITO imposing additional tax under S. 104 of the IT Act, 1961. While perusing the record of the assesseds, the ITO found that the assessed companies had not distributed dividend as required under the Act. Therefore, he initiated proceedings under S. 104 of the IT Act against all the assesseds. The reply of the assesseds to the show cause notices was that the company had borrowed funds and the payments were made during the year itself which reduced the loan liability. Therefore, the companies could not declare higher dividend. The reply filed by the assessed did not find favor with the ITO. Therefore, he imposed additional tax under S. 104 of the Act observing that the assesseds are investment companies and borrowing funds and repaying it is a business activity. The companies may raise loan to pay off another or increase or decrease its investments are purely business considerations.
3. When the matter came before the CIT(A), it was pointed out that the companies had borrowed funds which were payable at the close of the accounting year as the creditors were pressing hard for repayment of loan. The companies were partners in another firm which had suffered losses in the previous year. Therefore, the companies had passed resolution authorising the Board of Directors to redeem the redeemable preference shares. Therefore, in accordance with the resolution, the companies had to hold back the funds. It was further pleaded that the reasonableness or unreasonableness of the amount distributed as dividend has to be judged from the point of business consideration, such as previous and/or anticipated losses, availability of surplus money, reasonable requirements of future and other similar considerations. Reliance was also placed on various case law cited in the order of the CIT(A). However, the CIT(A) rejected the contention of the assesseds and confirmed the orders of the ITO.
4. Aggrieved by those orders, the assesseds came in appeals before the Appellate Tribunal. When the matter came up for hearing, the assesseds moved application under r. 29 of the ITAT Rules, 1963 for admission of additional evidence in terms of r. 29 of the ITAT Rules, 1963 for the purpose that it would enable the Tribunal to pass order in consonance with justice because it goes to the root of the explanation offered and considered by the authorities below. In the application it was further mentioned that evidence which is crucial could not be placed before the ITO because it was not available on the date when the order under S. 104 of the Act was passed but it was certainly available when the CIT(A) disposed of appeals on 17th Jan., 1989. However, it could not be produced before him due to inadvertence and lack of awareness as to the crucial nature of the aforesaid evidence. In the interest of justice and in the light of decision of Kerala High Court in the case of CIT vs. Amalgamated Tea Estate Co. Ltd. (1970) 77 ITR 454 (Ker) which in turn followed the decision of the Supreme Court in the case of Anglo-American Direct Tea Trading Co., Ltd. vs. Commr. of Agrl. IT (1968) 69 ITR 667 (SC), it was submitted that additional evidence be admitted. The learned counsel for the assesseds at this stage admitted that the decision of the Tribunal in the case of these assesseds for earlier assessment year, i.e., 1982-83 is against the assesseds which was passed by the Single Member Bench. However, it was submitted that due to some difficulties the companies could not counsel for proper representation of their appeals before the Single Member Bench instead companies sent written submissions in the matter which were no doubt duly considered by the learned Single Member in disposing of the appeals but the Bench unfortunately mixed up the facts of the assesseds case in concluding para of its order where it says that the only plea taken is that it had to built-up capital for redemption of loans but no such plea was taken in the written submissions. It was pointed out that in the letter the assessed had pointed out that due to pressure from the preference share-holders for redemption or their redeemable preference shares it was necessary for the company to build up sufficient reserves for the redemption. There was no submission whatsoever with regard to redemption of loans. The Tribunal further mentioned that all the four companies belonged to the same group and the redemption of shares of various persons was in fact within the same groups of companies which is not correct. Inviting our attention to the decision of the jurisdictional High Court in the case of D. K. Oswal Group & Ors. vs. M/s. Akshay Finance & Trading Co. & Ors. passed in Company Petitions No. 21 to 26 of 1986, dt. 12th Aug., 1987. It was pointed out that preference shares redeemed was not the result of any concerted action but was brought about by internal quarrels between two groups of the family members running these companies viz. the D. K. Oswal group and the R. C. Oswal group. The dispute started very much earlier in the early eighties and it had to be finally settled by the judgment of the Hon’ble Delhi High Court vide order dt. 12th Aug., 1987. The learned Single Member considered the redemption of shares as not being a legitimate reason for non-declaration of statutory dividend but this approach is not valid in view of the decision of the Delhi High Court in the case of CIT vs. Kabir Das Investment Co. (1990) 185 ITR 505 (Del) and specially when the Hon’ble Delhi High Court in assesseds own case has observed that there was infighting among the various groups of the assesseds and they had entered into litigation. This aspect of the matter required reconsideration of the decision of earlier Single Member Bench where the case has gone unrepresented by the assesseds. It was admitted that the order of the Tribunal had been accepted by the assesseds as the assesseds had not filed any Reference Application but in view of the situation where there is a decision of Hon’ble Delhi High Court throwing light about various aspects of the matter not considered by that Bench pertaining to dispute, requires reconsideration of the matter afresh. This in itself is a sufficient reason to admit additional evidence, i.e., order of the Hon’ble Delhi High Court dt. 12th Aug., 1987 in the Company Petition Nos. 21 to 26 of 1986 in the matter of D. K. Oswal & Ors. vs. M/s. Akshay Finance & Trading Co. & Ors. (supra). Since the assessed had moved application under r. 29 for admission of additional evidence, the arguments were heard on this preliminary ground. The learned Departmental Representative Shri A. K. Bhardwaj very vehemently opposed admission of additional evidence at this stage. Our attention was invited to r. 29 of the ITAT Rules, 1963 and it was pointed out that the assesseds are not entitled to produce additional evidence either oral or documentary before the Tribunal unless the evidence produced is required by the Tribunal to enable it to pass order or for any other substantial cause. It was pointed out that the order of the Hon’ble Delhi High Court was available to the assessed when the matter was being agitated before the CIT(A). But no efforts were made by the assesseds to produce the same. Therefore, mere inadvertences or lack of awareness will not be a sufficient reason to admit this evidence in view of clear provision of law. Our attention was invited to the Commentary of Chaturvedi & Pithisaria, Fourth Edition Volume 5 at page 5316 that the assesseds who are guilty of remissness and gross negligence are not entitled to indulgence being shown to adduce additional evidence in second appeal. Additional evidence in appeal before the Tribunal can be admitted by the Tribunal itself for the purpose of pronouncing its judgment or for the purpose of curing some inherent lacuna which it has itself discovered. But it does not enable an assessed or the Department to tender fresh evidence to fill up lacuna or omission. Reliance was placed on the decision of Bombay High Court in the case of Velji Deoraj & Co. vs. CIT (1968) 68 ITR 708 (Bom) and on the decision of Supreme Court in the case of Keshav Mills Co. Ltd. vs. CIT (1965) 56 ITR 365 (SC).
5. We have considered the rival submissions on the point of admission of additional evidence under r. 29 of the ITAT Rules, 1963. In this case, it is an admitted position that in earlier years, i.e., 1982-83 the matter was decided by the Single Member Bench against the assessed and the order of the Tribunal had been accepted by the assesseds as they have not filed any Reference Application against that order. But it is also a fact that the matter was not represented by the assesseds or by counsel/Chartered Accountant or their behalf. Therefore, that matter went unrepresented and it was decided on the basis of some written submissions given on 11th March, 1986. Now when in subsequent assessment years, i.e., 1983-84 and 1984-85 similar additional tax was imposed against the assesseds under S. 104 of the IT Act, the assesseds want to adduce additional evidence in terms of r. 29 of the ITAT Rules, 1963 for the purpose of highlighting certain facts such as the matter of redemption of preference shares was whether within the same group of companies or otherwise and whether the redemption of preference share was a result of any concerted action but was brought about by internal conflict between the two groups of family. The repayment of loan was a regular activity of the investment company and whether the companies could raise loan for paying previous loans is part of their business activity. The learned counsel for the assessed Dr. S. Narayanan took us through various observations of the Hon’ble Delhi High Court in the order dt. 12th Aug., 1987 and it was pointed out that due to infighting among the various groups of assesseds, they had entered into litigation and the preference shares redeemed was not the result of any concerted action but was brought about by internal conflicts between two groups of the family members running these companies viz., the D. K. Oswal group and the R. C. Oswal group. Obviously, this aspect of the matter was not brought to the notice of the Single Member Bench for the asst. yr. 1982-83. In view of the decision of the Hon’ble High Court which refers to various disputes amongst themselves, the matter requires reconsideration afresh and for that matter the decision of Delhi High Court in the case of the assessed pronounced on 12th Aug., 1987 though was available to the assessed but could not be filed, would certainly throw a light. Therefore, this decision would enable any Court to render substantial justice. This in itself is a substantial cause for admission of this evidence at this stage. We, therefore, admitting the additional evidence under r. 29 of the ITAT Rules, 1963, think it proper that the matter should go back to the file of the CIT(A) to pass an order afresh keeping in view the decision of jurisdictional High Court. We, therefore, set aside the orders of the CIT(A) and remand the matters back to him for disposal afresh in accordance with law.
6. In the result, all the appeals are allowed for statistical purposes.
