Commissioner of Income Tax vs Bhagirath and Bros.

A.R. Tiwari, J.—The applicant (Commissioner of income tax, Bhopal) has filed this application u/s 256(2) of the income tax Act, 1961 (''the Act'') seeking direction to the Tribunal to state the case and refer the under-noted questions, categorised as of law, arising out of the order passed by the Tribunal on 5-6-1992 in IT Appeal No. 607 (Indore) of 1989 after rejection of the application, presented u/s 256(1), which was registered as R.A. No. 191 (Indore) of 1992 for the assessment year 1980-81, on 5-3-1993: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the registration to the firm and assessing its income on substantive basis ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in annulling the assessment framed in the status of the AOP?"

Briefly stated, the facts of the case are that the Assessing Officer refused the registration of the four firms, as particularised in the application. The income of these four firms was assessed in the hands of the non-applicant Bhagirath & Bros. Ltd. treating it as an AOP. These firms were assessed on protective basis adopting their status as unregistered firm (URF). The business premises of the above firms and residential premises of their partners were searched on 5-2-1985 and 6- 2-1985 and certain books of account and incriminating documents were seized. Spot enquiries were also made. The revenue had filed the appeals before the Tribunal which also included IT Appeal No. 607 (Indore) of 1989. All the appeals, including this appeal, were dismissed by the Tribunal by common order dated 5-6-1992. Thereafter, the revenue filed the application, registered as R.A. No. 191 (Indore) of 1992 pertaining to the aforesaid appeal and only question No. 1 was proposed. Question No. 2 was proposed for other appeals. The application was rejected by common order on 5-3-1993. Thereafter, the revenue has filed this application u/s 256(2) of the Act.

We have heard Shri A.M. Mathur, the learned senior counsel with Shri Vivek Sharan, for the applicant/revenue and Shri B.K. Joshi, the learned counsel for the non-applicant/assessee.

By common order passed by this Court in CIT v. Barnala Bros. [Misc. Civil Case Nos. 542 to 545 of 1994, dated 19-4-1996] we declined to call upon the Tribunal to state the case and refer the identical questions as noted above. Similar view has also been taken by this Court in CIT v. Bhagirath &Bros. [MCC No. 399 of 1993, dated 4-9-1996].

Nothing substantial is urged to take a different view in the matter.

It may be pointed out that in other Misc. Civil Cases pertaining to the orders passed in other appeals by the Tribunal, we called upon the Tribunal to state the case and refer question No. 2 as the same was proposed for those cases u/s 256(1). Reference may be made to our common order passed in CIT v. Bhagirath & Bros. [Misc. Civil Case Nos. 398,400 to 404,408,418 and 422 of 1993] dated 11-4-1996 and CIT v. Bhagirath & Bros. [Misc Civil Case Nos. 618 to 621 of 1994] wherein the undernoted reshaped question was directed to be referred for consideration :-

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in affirming the order of CIT(Appeals) annulling the assessment framed in the status of the AOP ?"

As regards the instant case, we find that question No. 2 was not proposed before the Tribunal u/s 256(1) and as such the same question does not arise for consideration for want of its projection and presentation before the Tribunal. As regards question No. 1, we find that the same is based on appreciation of facts.

In CIT v. Ashoka Marketing Ltd. [1976] 103 ITR 543 (SC) and CIT v. Kotrika Venkataswamy & Sons [1971] 79 ITR 499 (SC), it is held that the conclusion based on appreciation of facts does not give rise to any question of law.

In view of the conclusion based on appreciation of facts, we are satisfied that question No. 1 is also not the correct question for the purpose of direction as it is based on appreciation of facts. The order does not give rise to this question which is labelled as of law. In our view this question is one of facts.

In the result, we dismiss this application as devoid of merit, but with no orders as to costs. Counsel fee for each side is, however, at Rs. 750, if certified.