1. At the instance of the revenue, the High Court directed the Tribunal under s. 66(2) of the Indian I.T. Act, 1922, that the following question should be referred to us for our determination :
'Whether, on the material on record, the Tribunal was justified in holding that the addition of Rs. 25,00 should be deleted ?'
2. At the outset it may be stated before stating the facts that the question had not been properly worded and we reframe the same as under :
'Whether, on the material on record, the finding of the Tribunal for deletion of the sum of Rs. 25,000 from the income of the assessee was based on mere conjectures and surmises or was such that no person judicially acting and properly instructed as to the relevant law could have come to the determination reached ?'
3. This question relates to the assessment year 1954-55, the accounting period being April 1, 1953, to March 31, 1954, Kamini Kaushal, the assessee, is a film artist. On December 7, 1953, her account with the Lloyd's Bank of India showed a credit of Rs. 25,000 and withdrawal of a like of a like amount by cash on December 12, 1953. The ITO wanted the assessee to offer her explanation for the credit and that three letter were written by the assessee's advocate respectively on April 16, 1957, February 28, 1958, and April 29, 1958. By every subsequent letter the version given in the earlier letter is sought to be corrected. After the receipt of these letters, the ITO also took the evidence of Rameshkumar Vyas, Proprietor of Navkala Niketan, Naraindas Lakshmichand, a hundi banker, and the assessee. Besides this evidence, two letters, one dated November 28,1953, from Navkala Niketan to their bankers, Union Bank, to deposit Rs. 25,000 in the assessee's Lloyds Bank account from the proceeds of the draft of Rs. 35,000 drawn on Masuri Films and Finance Ltd., and the other letter dated November 17, 1953, from the assessee to the Union Bank account from the proceeds of the draft drawn on Masuri Films and Finance Ltd., were also produced and treated as part of evidence. On appreciation of this evidence, the ITO came to the conclusion that the bank deposit in the assessee's bank account on December 7, 1953, represented her income from undisclosed sources. The amount was accordingly subjected to tax.
4. In an appeal before the AAC certain letters were produced and evidence was taken also of the assessee as well as Naraindas Lakshmichand, hundi banker. The AAC rejected the contention of the assessee in respect of the sum of Rs. 25,000.
5. In second appeal before the Tribunal, the representative on behalf of the revenue fairly brought to the notice of the Tribunal that there was on record a letter from the Lloyds Bank dated March 19, 1959, according to bank on December 7, 1953, was as per pay slip Union Bank of India Ltd. from Navkala Niketan for Rs. 25,000. As the representative on behalf of the revenue was fair enough to bring this piece of evidence to the notice of the Tribunal, the Tribunal felt that had proper attention been paid to this letter from the bank, it was doubtful whether the departmental officers would have taken the view. According to them, the suspicion arose because of the intervention of the hundi banker whose account books were not available in the chain of the transactions. The Tribunal felt that the credit in respect of the sum of Rs. 25,000 in the assessee's bank account was satisfactorily explained by the assessee by production of the correspondence between the producer and distributor, Masuri Films and Finance Ltd., Delhi. The genuineness of these letters cannot be doubted as all of them have been sent by registered post. The case of the assessee that she received the amount of behalf of Navakala Niketan and she withdrew the amount and paid it to the hundi banker was, therefore, prima facie acceptable to the Tribunal. The Tribunal also found that there was no basic contradiction in the various explanations given successively for the transaction in the letters of her advocate. Under the circumstances, the Tribunal accepted the version of the assessee as regards the transaction and reversed the order passed by the AAC.
6. It is from this order of the Tribunal that the question reframed by us shall have to be considered.
7. Joshi of the revenue urged that on the material on record the findings of the Tribunal are based on conjectures and surmises and they are really perverse. He submitted that if the entire material on record was dispassionately considered by the Tribunal, it could not have come to the conclusion to which it reached. Reliance was placed by him upon the decision of the Supreme Court in CIT v. S. P. Jain : 87ITR370(SC) . His submission was that, in view of the principles laid down by the Supreme Court in this case, it would be permissible for this court to consider whether the finding of the Tribunal is based on conjectures and surmises and is such that no reasonable man acting with a sense of responsibility could have arrived at.
8. So far as the position in law is concerned, there is no controversy. This court in exercise of its jurisdiction under the I.T. Act can go into the validity of the findings of the Tribunal if the Tribunal failed to take into account the relevant material on record in arriving at its finding or acted on inadmissible evidence or misread the evidence or based its conclusion on conjectures and surmises. When such is the position, it is open to this court to ignore the findings of the Tribunal and re-examine the issue arising for decision on the basis of the material on record. As held by the Supreme Court is S. P. Jain's case : 87ITR370(SC) , the High Court and the Supreme Court have always the jurisdiction to interfere with the findings of the Appellate Tribunal 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 to it, or it has acted on material partly relevant and partly irrelevant or where the Tribunal draws its own imagination and imports and circumstances not apparent from the record or bases its conclusion 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. According to the Supreme Court, in all such cases the findings arrived at are vitiated.
9. Applying the test laid down by the Supreme Court in the above case, it is not possible for us to take the view that the findings of the Tribunal in the present case are vitiated. Before the Tribunal, the representative on behalf of the revenue was fair enough to show to the Tribunal the letter received from the Lloyds Bank on March 19, 1959, which showed that the credit entry of Rs. 25,000 in the account of the assessee was made as per pay slip per Union Bank of India Ltd. from Navkala Niketan. The Tribunal pointed out that in the case they were not concerned directly with the loan advanced by hundi banker, Naraindas Lakshmichand, to producer, R. K. Vyas. The amount of Rs. 25,000 was sought to be added by the taxing authorities as the income of the assessee from undisclosed sources on the bias of credit entry in her bank account. That credit entry was satisfactorily explained explained by the assessee by production of the correspondence between the producer and distributor, Masuri Films and Finance Ltd., Delhi. This correspondence was exchanged by registered post and there no possibility of any suspicious about their genuineness. It was on the basis of this material that the Tribunal accepted the version of the assessee that she received the amount of Rs. 25,000 on behalf of Navkala Niketan and withdrew it from her bank account and paid it to the hundi banker. The tribunal has also considered the various circumstances indicated by the AAC in its order merely related to minor discrepancies and the Tribunal felt that basically the assessee's explanation was correct right from the beginning. Really speaking, the entire order of the Tribunal is based upon appreciation of evidence that was on record and upon due consideration of this material, the Tribunal has come to the conclusion that the strongest probabilities were in favour of the assessee's explanation being accepted. It was in view of this finding that the Tribunal is based on conjectures or surmises or is such that no person acting with a sense of responsibility could have arrived at. Appreciation of material is for the Tribunal to consider and unless it is pointed out that the finding is perverse, it would it with a view to consider whether the finding is perverse, it would not be permissible for this court in its advisory jurisdiction to reappreciate it with a view to consider whether the finding that has been arrived at by the Tribunal is one which could have been arrived at by the court upon appreciation of such evidence. As it is not possible for us to come to the conclusion that in the present case the finding of the Tribunal is capricious or perverse or is one which no man acting with the sense of responsibility could have arrived at, the question referred to us shall have to be answered against the revenue.
10. Accordingly, the question reframed by us as aforesaid is answered in the negative and against the revenue. The revenue shall pay the costs of the assessee.