Commissioner of Income Tax vs Saroj Kumar Das

Baruah, J.—By this reference u/s 256(1) of the income tax Act, 1961 (''the Act''), the following two questions have been referred at the instance of the revenue for opinion of this Court:

1 Whether, on the facts and circumstances of the case, the finding of the Tribunal that payments have not been doubted for the year under consideration is based on proper appreciation or evaluation of the material facts obtained in this case ?

Whether the Tribunal did not err in law as well as in facts in deleting the sum of Rs. 20,000 ?

The Assessing Officer sent a requisition u/s 133(6) addressed to Bimal Iron & Hardware Stores. The ITO held that the liability in question that is, Rs. 20,000 to the creditor was not genuine and a fictitious credit was shown in the name of that creditor in the assets disclosed in the balance sheet. According to him assuming that the payments were made to the said creditor it ought to have been made by crossed cheque or crossed draft on a bank as required in section 40A(3) and that apart the said creditor was also not traceable as will appear from the record.

Being aggrieved, an appeal was filed before the AAC. The appeal was disposed of the holding, inter alia, that the ITO was justified in summoning the party but the party was not traceable. The assessee could not produce the creditor before the ITO to prove the payment. Accordingly, he found no merit in the stand taken by the assessee and dismissed the appeal.

Being aggrieved, second appeal was preferred before the Tribunal. The Tribunal after hearing the parties concerned and after going through the records gave opinion that since the payments have not been doubted for the year under consideration the existence of liability by itself is not a valid ground for making the addition of Rs. 20,000 and the appeal by the assessee was allowed.

Thus, the revenue requested the Tribunal to refer the aforesaid questions for opinion of this Court.

We have heard Mr. G.K. Joshi, the learned Senior Standing Counsel on behalf of the revenue assisted by the Junior Standing Counsel Mr. U. Bhuyan. Also heard Mr. N.M. Lahiri, the learned Senior Counsel assisted by the Junior Counsel Mr. N. Choudhury and Mr. H.S. Thangkhiew for the assessee-respondent.

Mr. Lahiri submits that both the questions are questions of fact and no opinion can be given on the question of fact. Mr. Joshi very fairly submits before us that it is true that on the first reading the matter appears to be a question of fact; but considering the entire facts and circumstances of the case this Court may come to a finding that the conclusion arrived at by the Tribunal was on the basis of conjectures and surmises. Therefore, this Court can give opinion. In this connection Mr. Joshi has drawn our attention to a decision in The Commissioner of Income Tax, Bihar and Orissa, Patna Vs. S.P. Jain, . Mr. Joshi has drawn our attention to a portion of the judgment where the Apex Court held thus :

In our view, the High Court and this Court have always the jurisdiction to intervene if it appears that either the Tribunal has misunderstood the statutory language, because the proper construction of the statutory language is a matter of law, or it has arrived at a finding based on no evidence or where the finding is inconsistent with the evidence or contradictory of it, or it has acted on material partly relevant and partly irrelevant or where the Tribunal draws upon its own imagination, imports facts and circumstances not apparent from the record, or bases its conclusions on mere conjectures or surmises, or where no person judicially acting and properly instructed as to the relevant law could have come to the determination reached. In all such cases the findings arrived at are vitiated. (p. 381)

Mr. Joshi has strenuously argued that this is a case where the Tribunal concluded finding on misreading or non-reading of certain evidence or on the basis of conjectures or surmises. Mr. N.M. Lahiri, the learned counsel for the assessee submits before us that this Court being an Advisory Court cannot treat the matter like that of an Appellate Court. The Court has jurisdiction only when the questions are referred.

It is well-settled law that the High Court can answer only those questions which are actually referred to it; it cannot raise and answer new questions which have not been so referred Sir Rajendra Narayan Bhanja Deo v. CIT [1940] 8 ITR 495 (PC). Therefore, this Court has jurisdiction to give opinion on the basis of the questions so referred.

The Supreme Court in Dhirajlal Girdharilal Vs. Commissioner of Income Tax, Bombay, observed as follows :

... It is well established that when a Court of fact acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the Court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises. (p. 740)

The said decision is reiterated in S.P. Jain''s case (supra). But at the same time we should not lose sight of the established principles of law that the Tribunal is the only authority for the finding of fact under the Act. In this connection Mr. Lahiri has drawn our attention to a decision in India Cements Ltd. Vs. Commissioner of Income Tax, Madras, . In the said decision, the Apex Court observed thus:

... we must deal with the point raised by Mr. Sastri that the High Court erred in law in preferring the findings of the income tax Officer to that of the Appellate Tribunal. It is not necessary to decide this question but it seems to us that, in a reference, the High Court must accept the findings of fact made by the Appellate Tribunal and it is for the person who has applied for a reference to challenge those findings first by an application u/s 66(1). If he has failed to file an application u/s 66(1) expressly raising the question about the validity of the findings of fact, he is not entitled to urge before the High Court that the findings are vitiated for one reason or the other. (p. 64)

Mr. Lahiri has further drawn our attention to a decision in Hooghly Trust (Private) Ltd. Vs. Commissioner of Income Tax, West Bengal and Andaman and Nicobar Islands, . In the said case, the Apex Court held thus:

... in the absence of a proper question about the validity of the findings of facts arrived at by the Tribunal, it was not open to the High Court to accept the findings of the Appellate Assistant Commissioner or to come to any independent conclusion itself on facts. (p. 690)

Mr. Joshi has not been able to show any decision that without raising the question before the authority the revenue can raise the point before this Court for opinion.

From the paper book it does not appear that the Tribunal referred any question regarding perversity of the decision. There is nothing on record to show that any question was raised before the Tribunal that the conclusion arrived at by the Tribunal is vitiated by perverse finding.

In view of the decision of the Apex Court we hold that no opinion can be given on the questions referred. The reference is returned unanswered.