Commissioner of Income Tax vs Jethmal Boob

Munishwar Nath Bhandari, J.—Revenue has preferred this reference application under the provisions of Section 256(2) of the IT Act, 1961 (hereinafter referred to as ''the Act of 1961''). The Income- tax Appellate Tribunal (hereinafter referred to as ''the Tribunal'') refused to make reference under the order dt. 17th Feb., 1999.

A reference application was earlier filed before the Tribunal under the provisions of Section 256(1) of the IT Act, for reference of certain questions to this Court. It was arising out of the order dt. 25th Aug., 1998 in relation to the block period of 1986-87 to 1996-97. Following questions were sought for reference:

(1) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs. 2,51,056 made as undisclosed income for asst. yr. 1991-92 on account of unexplained investment in gold ornaments etc.?

(2) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the audition of Rs. 8,45,525 made as undisclosed income for asst. yr. 1991-92 on account of unexplained investment in silver articles?

(3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that, statement of the assessee regarding surrender on account of stock recorded at the time of search is to be ignored?

(4) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs. 5.59 lakhs made on account of unexplained stock, on the basis of misconceived fact that surrender by assessee also refers to ''other miscellaneous documents'' and that the differences were too meagre and deserved to be ignored?

(5) Whether on the facts and in the circumstances of the case the finding of the Tribunal that the land sold by the assessee was agricultural land and that it was situated at distance of more than 8 kms. from the local limits of the municipality, etc. was not perverse being based on unproved facts?

(6) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the transaction of sale of land at Doli was not in the nature of trade and thereby deleting the addition of Rs. 10,91,780?

(7) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in altogether ignoring the circumstantial evidence and deleting the addition of Rs. 26.051 lakhs made on account of undeclared payments made for the purchase of various immovable properties?

(8) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the statement of the assessee regarding surrender on account of unexplained investment in construction of house at 115- Central School Scheme, Jodhpur, recorded at the time of search is to be ignored?

(9) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs. 4,57,330 out of the addition of Rs. 5 lakhs made on account of unexplained investment in construction of house at 115-Central School Scheme, Jodhpur?

(10) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs. 58,57,400 made on account of unexplained investment in purchase of land at Pali road?

(11) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the benefit of telescoping to the assessee in respect of consideration of agricultural land sold in the past with reference to purchase of land at Pali road even though the assessee had failed to establish the nexus between the two?

(12) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that while making block assessment under Chapter XIV-B of the IT Act, 1961, estimated addition on account of unrecorded household expenses was not permissible to make?

The learned Tribunal, vide its order dt. 17th Feb., 1999, dismissed the application, so moved by the Revenue, after dealing with all the twelve questions. According to the Tribunal, none of the questions is having a referable question as it was based on finding of fact and that too recorded after appreciation of evidence on a question.

Learned Counsel appearing for the Revenue submitted that the Tribunal failed to consider that all the questions were essentially raised to decide the principle of laws. It was urged that in view of the judgment of the apex Court in the case of Commissioner of Income Tax, Punjab Vs. Indian Woollen Textile Mills, held that if the Tribunal does not consider the evidence covering all essential matters, rather findings are recorded, ignoring even available material, then such findings would give rise to the question liable to be referred. Reference of another judgment of the Hon''ble apex Court (sic-Rajasthan High Court) has been made, where in the matter of Commissioner of Income Tax Vs. Smt. Satnam Malik, it was held that if a finding is arrived at without proper consideration of the entire material, a question of law arises. After placing reliance on these two judgments, learned Counsel for the Revenue urged that all the questions raised for reference were required to be referred to by the Tribunal, because order passed by the Tribunal was without proper appreciation of material available on record.

On the other hand, learned Counsel appearing for the assessee, submitted that none of the questions raised for reference involves a question of law, rather it is not even a case, where Tribunal has failed to consider evidence available on record or even ignored any material before drawing its conclusion. The perusal of the order passed by the Tribunal reveals that the said order was passed, after proper appreciation of facts available on record. Thus, essentially, the matter was decided by proper appreciation of material available on record to answer the question of facts. If any conclusion was drawn by the Tribunal, based on those facts, then Revenue cannot ask for reference for the purpose of reappreciation of material. Learned Counsel further urged that the judgments cited by the Revenue have no application to the present matter as those judgments were given by the Hon''ble apex Court on its own facts, where Tribunal either failed to consider material available on record of the findings were arrived at without due and proper consideration of entire material. According to the assessee, it is not a case where either of the conditions is satisfied for seeking reference.

We have considered counter arguments of the parties and perused the record. Learned Tribunal, by its impugned order, refused to refer question No. 1, after considering the facts available on record. The first question was regarding deletion of addition of Rs. 2,51,056 which relates to unexplained investment in gold ornaments. The addition was deleted on the ground that gold ornaments in question already declared in WT return. Thus, considering the fact, said issue was decided by the Tribunal in the appeal, so preferred by the assessee and it being a issue purely based on appreciation of facts, hence no question of law arises on that count.

5.1. The second question was regarding addition of Rs. 8,45,525 regarding unexplained investment in silver articles. Again, the said amount was deleted on the basis of WT return and the issue was decided by the Tribunal in appeal after considering the entire material available on record. Thus, a reference cannot be asked for appreciation of facts.

5.2. Question Nos. 3 and 4 relate to surrender of stock found during the course of survey and not during the course of search. According to the Revenue, the appellate authority failed to take into consideration the statement recorded at the time of search, however, the said fact was properly noticed and decided by appreciating the material available on record. In fact, both the parties had not acted on the statements and thus, having not accepted the statement either by the assessee or by the Revenue, then, none was held to be entitled to take benefit of portion of the statement. The issue was determined after even considering all the documents available on record. Thus, it cannot be said that the Tribunal failed to consider either the material available on record of the finding was recorded in ignorance of the facts available.

5.3. The fifth question was pertaining to location of the agricultural land, i.e., as to whether it is situated at a distance of more than 8 kms. A reference was also made to the judgment of the Hon''ble apex Court in the case of Smt. Sarifabibi Mohmed Ibrahim and others Vs. Commissioner of Income Tax, Gujarat, in which the apex Court held that whether piece of land is agricultural land or not is essentially a question of fact, therefore, even the said question was not found proper for the reference.

5.4. The sixth question was also not found referable as it was also in regard to transaction of sale of land situated at Doli and whether this transaction is in the nature of trade. The Tribunal has considered this issue and finding that it again needs appreciation of evidence, thus refused to refer the same.

5.5. Question No. 7 was regarding deletion of addition of Rs. 26.05 lacs on account of undeclared payment for purchase of immovable properties. This addition was made by the Revenue, purely on circumstantial evidence and not based on a document or material seized at the time of the search. Therefore, the Tribunal deleted the same, referring to the decision of the Nagpur High Court in 29 ITR 1008.

5.6 Question Nos. 8 and 9 are regarding addition on account of unexplained investment in construction of house, essentially, this was a question based on facts and the Tribunal decided the same, after considering the entire material, because the said difference was assessed by the Revenue on account of difference between the valuation report of DVO. The Tribunal, therefore, finds no issue of law for its reference.

5.7. Question No. 10 was pertaining to deletion of addition of Rs. 56,57,400 on the ground that the assessee actually paid only Rs. 18 lacs, details of which were noted in the documents. Thus, it being question of fact, was not found to be referable.

5.8. The eleventh question was pertaining to benefit of telescoping of the assessment in respect of the sale of the agricultural land. It is settled law that telescoping should be allowed, hence no illegality was found in the order of the Tribunal.

The last question was pertaining to decision of the Tribunal that under Chapter XIV-B of the IT Act, estimated addition on account of unrecorded household expenses is not permissible. We are of the opinion that while completing the assessment under Chapter XIV-B, additions can be made only on the basis of incriminating document/material collected, seized during the course of search. The various Benches of the Tribunal are following this principle. This being a settled principle of law, no reference is recommended on this account also. Thus, the matter was not referable. Taking note of all the facts, the Tribunal passed the order, therefore again, it being a settled law, it was not found to be issue for reference to the scope.

We have considered each of the issues asked for reference, however, taking note of the fact that all the issues are based on facts and essentially, require reappreciation which is not permissible for reference to this Court. It is not a case where either material available on record was ignored or the Tribunal recorded its finding without considering the material, rather perusal of the order reveals that each and every material was properly considered to arrive at the finding.

In view of the facts discussed above, we are not in agreement with the Revenue to accept this reference application, so as to call for reference for its answer under the provisions of Section 256(2) of the IT Act. Hence, this reference application preferred by the Revenue is not. accepted; the same is hereby dismissed.