M. C DESAI C.J. - The question that this court is called upon to answer in this reference is as follows :
'Whether in the circumstances and on the facts stated above the sum of Rs. 28,000 was liable to assessment under the Excess Prof its Tax Act ?'
The facts that emerge from the statement are these : The assessee is a firm carrying on business and the question is of assessing it to the excess profits tax for the assessment year 1946-47. The chargeable accounting period is October 17, 1944, to November 4, 1945. During assessment proceedings under the Income-tax Act the Income-tax Officer discovered an entry of Rs. 28,000 credited in the business accounts of the assessee in the name of Narain Das. The Income-tax Officer treated it as the assessees income 'from undisclosed source' and included it in its assessable income. It was included in its income also for the purpose of excess profits tax. The only question raised by it during the assessment pro ceedings was whether it was its income or not. It took the stand on its being money deposited by Narain Das with it; it never contended that it was not its income from business. The order of the assessing authority assessing it on the amount was upheld by the Appellate Assistant Commissioner before whom also no question whether it was income from its business or not was raised. Then it field a second appeal which was dismissed by the Tribunal. In the grounds of appeal it only raised the contention that the amount was not its income; it did not contend that it was not its business income or that unless it was found to be its business income it could not be assessed to excess profits tax on it. On the date fixed for the hearing before the Tribunal it applied for leave of the Tribunal to urge before it that it could not be assessed to excess profits tax without a finding that the income was its business income. Rule 12 of the Appellate Tribunal Rules lay down that except by leave of the Tribunal no appellant can urge or be heard in support of any ground not taken in the memo randum of appeal and, therefore, the assessee had to seek the Tribunals leave. Though it sought the leave through an applica tion in writing no order granting or refusing leave was passed by the Tribunal. The application does not bear any order nor any order passed by the Tribunal on the record of the appeal has been brought to our notice. The assessee did not bring the application to the notice of the Tribunal at the hearing of the argument, did not press it and did not urge the plea that without a finding that the income was from its business excess profits tax could not be charged on it. The only ground urged by it before the Tribunal was that it was not proved to be its income. The Tribu nal rejected this plea and dismissed the appeal. In its order it did not at all go into the question whether it was business income or not or the question whether without a finding that it was its business income it could be included in its income for purposes of the Excess Profits Tax Act. On the dismissal of the appeal by the Tribunal the assessee applied to it under section 66(1) for stating the case to this court and calling upon it to answer whether the amount of Rs. 28,000 was liable to be assessed to excess profits tax merely on its being found to be its income from undisclosed source. The Tribunal refused to state the case holding that the question raised by the assessee did not arise out of the order passed by it. The Members of the Tribunal who dismissed the application under section 66(1) were the same Members who had dismissed the appeal. Then at the assessees instance this court directed the Tribunal to state the case.
There is a preliminary objection raised by Sri Gopal Behari on the ground that the question referred by the Tribunal does not arise out of the order passed by it. We heard Sri Gulati and Sri Gopal Behari at length and uphold the preliminary objection.
It has been held by the Supreme Court in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. 1 that a question cannot be said to arise out of an order passed by the Tribunal unless it was raised before it, in other words, that every question of law applicable to the relevant facts proved or admitted before the Tribunal is not a question of law arising out of the order passed by it. It is not enough that it is a question of law that may be applied to the relevant facts found or proved before the Tribunal; it must have been raised before it. The Supreme Court has not explained in the decision what amounts to raising a question or how a question can be raised. The facts that have been men tioned by the Tribunal show, however, clearly that the question that has been referred to us by the Tribunal was not raised before it. The question that the assessee raised before the Tribunal, the Appellate Assistant Commissioner and the Income-tax Officer was simply whether the amount of Rs. 20,000 was its income or not. The question whether it was its business income or income from some other source was an entirely different question which it never raised before them. It is true that under the Excess Profits Tax Act only business income is chargeable with the tax and that the assessee could not be assessed to excess profits tax on any income unless it was found to be an income from business. The assessee ought to have contended before the Income-tax Offi cer not only that the income was not its income but also that even if it were its income it was not its business income. It should have contended before the Appellate Assistant Commissioner and the Tribunal not only that it was not its income but also that even if it were its income without its being found to be its business income it could not be assessed on it. Neither is the second question included in the former question nor are the two questions merely two aspects of one question. The question wheth er an assessee is liable to be assessed or not is a question that arises in every case but the specific question that was raised by the assessee was simply whether the amount was its income or not. When it raised one specific question it meant that it did not raise the other specific question. When it raised one specific question it was liable to be assessed on the question being decided against it. To escape liability it had to raise the other specific question but it failed to do so. Even if it be said that it raised the question of its liability it denied this liability only on the ground that the amount was not its income and the ground being found to be without substance it became liable to be assessed.
The assessees making an application was merely an attempt to raise the question which did not fructify. It was not granted and does not even appear to have been pressed for an order. The assessee itself made no attempt to urge the point before the Tribunal during the oral argument. So even if it had any inten tion of urging the point it seems to have given it up. Even if it had taken a plea in the memorandum of appeal it could give it up by not urging it during the oral argument. If it gave it up in this manner it could not raise it again in an application under section 66(1) or under section 66(2). Its position now is still worse; not only did it not take the plea in the memorandum but also it never got the right to urge it and did not urge it. It must, therefore, be held that it did not raise the question before the Tribunal.
Whether the question was raised before the Tribunal or not was essentially a matter of fact and this court when answering a reference has to take all the facts from the statement of the case. It cannot itself decide any question of fact. The statement contains the recital that the question was not raised before the Tribunal.
We are referred to Padampat Singhania v. Commissioner of Income-tax in which it was held that if there was no material on which it could be said that the income was from business no excess profits tax could be charged. The court did not decide that it could answer a question even if it was not raised before the Tribunal. It seems to have proceeded on the basis that every question of law applicable to the relevant facts found or proved is a question arising from the Tribunals order but that view has been held to be wrong by the Supreme Court in the case of Scindia Steam Navigation Company. It is not enough that a decision on a question of law is involved in the order passed by the Tribunal; it must also have been raised and decided expressly or impliedly. Mere implied decision will not do; the question must have been raised also. A question cannot be said to have been raised merely because without deciding it the order would not have been passed by the Tribunal. It is open to the Tribunal to pass an order after deciding only such questions as have been raised before it; it is not bound to decide other questions, even if of law, if not raised before it. The Supreme Court has made it clear that these other questions of law not raised before it and not decided by it cannot be said to arise out of its order. The decision in Padam pat Singhanias case cannot be said to be good law after the decision by the Supreme Court.
As we find that the question referred by the Tribunal does not arise out of the order passed by it, we return the reference unanswered. The Commissioner will get his costs of this reference which we assess at Rs. 200. Counsels fee is assessed at Rs. 200.