Commissioner of Income Tax vs Raj Vikas Quarries (P.) Ltd.

M.K. Sharma, J.—In this petition u/s 256(2) of the income tax Act, 1961 (''the Act'') the revenue seeks for a direction to the Tribunal to refer the following questions of law for the opinion of this Court:

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in deleting the addition of Rs. 5,25,000 on account of cash credit?

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in deleting the addition of Rs. 4,45,000 in respect of 18 creditors who were not produced for examination?

Mr. B. Gupta, the learned counsel appearing for the revenue submitted before us that the question as proposed by the revenue are questions of law and are liable to be referred to this Court. The learned counsel relied upon a decision of this Court in support of the submission, in the case of Commissioner of Income Tax Vs. Smt. Usha Jain, and stated that a similar question of unexplained cash credits was held to the question of law.

We have also heard the learned counsel appearing for the assessee.

The scope for exercising jurisdiction by the High Court in calling for a reference of a question of law has been succinctly laid down in the decision of the Supreme Court in the case of Commissioner of Income Tax, Calcutta Vs. Biju Patnaik, . According to the said decision, the position that could be deduced in respect of the same is as follows:

(i) When the point for determination was a pure question of law, such as construction of a statute or document of title, the decision of the Tribunal was open to reference to the Court.

(ii) When the point for determination was a mixed question of law and fact, while the finding of the Tribunal on the facts found was final, its decision as to the legal effect of those findings was a question of law which could be reviewed by the Court.

(iii) A finding on a question of fact was open to attack under reference under the relevant Act as erroneous in law when there was no evidence to support it or if it was perverse.

(iv) When the finding was one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact.

Being conscious of the aforesaid position we proceed to decide in the present case as to whether the questions proposed by the revenue can be said to be pure questions of fact or otherwise and whether the said questions could be directed to be referred to this Court for its opinion. On perusal of the questions proposed before us we find that the said two questions involve determination about the genuineness of the cash credits and the advances made by the creditors.

We have gone through the order passed by the Tribunal against which the present reference is being sought. The important aspects to be considered are as to whether there was any material to show that the assessee had collected these amounts from various persons, and if so, who were those persons, and whether they were capable of making these contributions. On going through the findings recorded by the Tribunal we find that there is no discussion of the evidence as to whether the persons who were alleged to have advanced the money were genuine or not or how the said money was invested. We, however, make it clear that it is not necessary at this stage for this Court to express any opinion whether on these facts, what conclusions should properly be drawn.

On perusal of the impugned order passed by the Tribunal against which the reference is being sought by the revenue we find that the assessee had disclosed the names of some of the persons who allegedly had advanced the donations/advances and/or given the cash credits. But it appears that their particulars were not supplied nor could they be examined by the ITO in spite of his best efforts since they could not be made available nor were they produced to prove the genuineness of their donations and their capacity to make donations. In our opinion, ignoring such facts is vital and requires consideration. Besides, the questions proposed before us involve proper interpretation of section 68 of the Act. We may also refer to the decision of this Court in Smt. Usha Jain''s case (supra) wherein this Court has held a question of unexplained cash credit to be a question of law.

On consideration of the impugned order passed by the Tribunal from which the reference is sought for by the revenue on the aforesaid questions and also the principles laid down in the aforesaid decisions of the Supreme Court and of this Court, we are satisfied that the two questions proposed by the revenue in this case are questions of law. In the result, we direct the Tribunal to state the case and to refer the aforesaid two questions of law to this Court for our opinion. This petition is accordingly allowed, but without any order as to costs.