B.S. Dhillon, J.
1. The assessee, late Dr. Stirmukh Singh; was originally assessed to tax for the assessment year 1946-47, relevant to the accounting period ending March 31, 1946, on a total income of Rs. 31,444. Later on, proceedings under Section 34 of the Indian I.T. Act, 1922 (herein-after referred to as the 'old Act,'), were taken by the ITO and a notice under the said section was served on the assessee on March 14, .1955, and the assessment was completed ex parte under Section 23(4) of the old Act, on a total income of Rs. 3,84,21 3 in the status of 'resident but not ordinarily resident'. The assessee filed an application under Section 27 of the old. Act which was accepted on May 18, 1957, and the proceedings were commenced de novo from the return stage. , In the course of the reassessment proceedings, the ITO required the assessee to explain and prove the nature and source of various deposits. The assessee explained that deposits in banks, Jubilee bonds and in the firm, M/s, Hindustan Rayon and Woollen Textile Mills in the name of the assessee in the relevant accounting year when the assessee was out of, India, were made by the father, S. Narain Singh, who had gifted these amounts to the assessee. It was also explained that the assessee did not make investment in the name of his son, Bhupal Singh, and had not made any deposit in the accounts of M/s. B.H. Singh and Company with the Punjab National Bank, Amritsar. In support of his case, the assessee placed various documents before the ITO and also made an application requesting the ITO to summon Sardar Narain Singh Uppal and the account books of the various firms for the period from April 1, 1945, to March 31, 1946, under Section 37 of the old Act at the expense of the assessee, but this application was rejected by the ITO. The ITO accepted the explanation of the assessee qua some of the items and qua others, the explanation was held to be not plausible. Thus, the ITO completed the assessment on a total income of Rs. 4,17,464 by his order dated March 28, 1980.
2. The assessee pleaded in the first appeal that the provisions of Section 34(1)(a) of the old Act were not applicable to the present case and that the assessment could not be reopened after the lapse of more than 4 years. The AAC negatived the contention of the assessee and held that the ITO had rightly invoked the provisions of Section 34(1)(a) of the old Act, since the assessee failed to disclose a sum of Rs. 70,000 which was deposited in the name of M/s. B.H. Singh and Company. As regards the addition of Rs. 3,58,314, representing various deposits in the banks and other investments it the name of the assessee, the AAC deleted the entire addition except for the following items :
(i) Deposits in the name of the assessee with M/s.Hindustan Rayon & Woollen Textile Mills Ltd. on 1-9-1945.
(ii) Out of deposits of Rs. 70,000 in the PunjabNational Bank Ltd., Hall Bazar, Amritsar, in November and December, 1945, in the name of M/s. B. H.Singhand Company
3. Thus, out of the total addition of Rs. 3,58,314 made by the ITO towards the total income of the assessee as income from undisclosed sources, only a sum of Rs. 1,10,860 was sustained by the AAC.
4. In second appeal, the Tribunal negatived the plea of the assesseethat the provisions of Section 34(1)(a) of the old Act were not applicable. TheTribunal was of the opinion that the assessee did not disclose at thetime of original assessment that he had made considerable investmentsin the banks and had purchased other assets. On merits, the Tribunalupheld the addition of Rs. 47,000 made to the income of the assessee onaccount of the deposit in the books of M/s. Hindustan Rayon & WoollenTextile Mills Ltd. on September 1, 1945. The Tribunal further upheldthe addition to the extent of Rs. 35,860 out of Rs. 63,860 sustained by theAAC in the account of M/s. B.H. Singh and Company in the PunjabNational Bank, Amritsar.
5. The assessee filed an application with the prayer that the followingquestions, which according to the. assessee arc questions of law, be referred for the opinion of this court, but the Income-tax Appellate. Tribunal,Amritsar Bench, Amritsar (hereinafter referred to as 'the Tribunal')dismissed the application, holding that the questions sought to be raisedare questions of fact:
'(i) Whether, in view, of the facts and under the circumstances of the case, the Tribunal was justified in law to hold that the assessee hadnot 'fully' and 'truly' disclosed the material facts which were necessary for the assessment ?
(ii) Whether, in view of the facts and circumstances of the case, the Tribunal was legally justified in holding that Section 34(1)(a) was applicable and not Section 34(1)(b) and proceedings started under Section 34 after the expiry of four years were not barred by time ?
(iii) Whether, in view of the facts and under the circumstances of the case, the Tribunal was legally right in holding that Rs. 47,000 credited in the name of the assessee in the books of M/s. Hindustan Rayon & Woollen Textile Mills Ltd, and Rs. 35,860 out of deposits in the name of M/s. B.H. Singh & Co. in the Punjab National Bank, Amritsar, as income of the assessee liable to tax under the Indian Income-tax Act, 1922 ?
(iv) Whether, by reason of the omission to summon and examine the evidence offered by the assessee by his application dated August 3, 1960, the finding of the Tribunal with regard to the nature and source of Rs. 47,000 and Rs. 35,860 is not legally vitiated ?'
6. The assessee has thus approached this court with the prayer that the Tribunal be directed to refer the above-mentioned questions of law to this court for its opinion.
7. It may be observed that it is not disputed that when the assessee filed the original return, he filed the same in the capacity of a 'nonresident'. When the matter was reopened, the ITO came to the conclusion that the assessee was 'resident but not ordinarily resident'. It has been contended by the learned counsel for the assessee that the addition of a sum Rs. 47,000 and a sum of Rs. 35,860 related to the amount, which could not be included in the income of the assessee as this money was already shown in the accounts of the assessee before the assessment year in question and further that the assessee had shown interest of this amount as income in the return originally filed by the assessee as 'non-resident'. It may be observed that the question whether the ITO was justified in holding that the assessee was a 'resident but not ordinarily resident' has been held to be a question of law by the Tribunal and this question along with the other two questions of law has been referred by the Tribunal in I.T. Ref. No. 1 of 1976 (Dr. Surmukh Singh Uppul v. CIT--see p. 191 (infra)) to this court for its opinion. The learned counsel for the assessee contends that if this court answers the said question in favour of the assessee and it is held that the assessee was 'non-resident', in that case the assessee cannot be held to be guilty, having not disclosed the facts 'fully and truly' in his return which was originally filed by the assessee. As regards the addition of two items which have been referred to above, the learned counsel for the assessee contends that the Tribunal itself came to the conclusion that the ITO had violated the principles of natural justice in refusing the prayer of the assessee for summoning of the evidence and thus the assessee had been prejudiced. Paragraph 6 of the order of the Tribunal may conveniently be reproduced:
'6. After hearing the learned representatives of the parties and going through the records, the Tribunal came to the conclusion that the assessee did not disclose at the time of original assessment that he had made huge investments in banks and in the purchase of other assets. It was held by the Tribunal that the assessee had not disclosed all material facts 'fully and truly' (which were necessary for his assessment within the meaning of Section 34(1)(a) of the Income-tax Act, 1961, and hence the Income-tax Officer was competent to reopen the assessment under the aforesaid provisions of law. In coming to the above conclusion, the Tribunal relied on the decision of the Supreme Court in : 41ITR191(SC) (Calcutta Discount Co. Ltd. v. ITO) and the decision of the Calcutta High Court in : 84ITR649(Cal) (Lakhmani Mewal Das v. ITO)......'
8. It would thus be seen that the assessee had summoned the records of the account books of M/s. Gurdial Singh and Inder Singh and that of M/s. Hindustan Rayon & Woollen Textile Mills Ltd. to show that a sum of Rs. 47,000, was already shown in the accounts prior to the assessment year in question. As per the finding of the Tribunal itself, the ITO fell in error in refusing the prayer of the assessee to summon the evidence to prove his case. If this finding of the Tribunal is correct, in that case to hold that the addition of Rs. 47,000 by the Tribunal is a question of fact, would be wholly unsustainable. The principle that relevant considerations were ignored and irrelevant considerations came in would entitle us to hold that question No. (iii) sought to be referred is not a question of fact, but a question of law. To similar effect are our observations as regards the addition of Rs. 35,860. The case of the assessee was that his father, Narain Singh, had been giving gifts in the form of money to him at various stages and to prove this, the assessee had requested the ITO to summon Shri Narain Singh to prove his case, which prayer was refused and in the view of the Tribunal, this prayer was wrongly refused by the ITO. . Therefore, on the same analogy, as already observed, in connection with the addition of a sum of Rs. 47,000, questions Nos. (iii) and (iv) which concern the addition of the above-mentioned amounts, are certainly questions of law and not questions of fact.
9. As regards questions Nos. (i) and (ii), if the finding on the question of law, which has been referred to this court in Income-tax Reference No. 1 of 1976 (Dr. Surmukh Singh Uppal v. CIT - -See p. 191 (infra)) is answered in favour of the assessee, that he ought to have been assessed as 'nonresident', and questions Nos. (iii) and (iv), which have been ordered to be referred to this court are answered in favour of the assessee, then the questions Nos. (i) and (ii) would certainly be questions of law and not of fact, because, in that case it will be difficult to sustain a finding that the assessee was guilty of not 'fully or truly' disclosing the material facts which were necessary for the assessment. As already observed, the assessee had disclosed the income of interest on the added amounts in the return filed by him as 'non-resident'. However, we find that questions Nos. (i) and (ii) can be consolidated in the following form :
'Whether, in view of the facts and under the circumstances of the case, the Tribunal was justified in law to hold that the assessee had not 'fully and truly' disclosed the material facts which were necessary for his assessment and further whether in view of the facts and circumstances of the case, the Tribunal was legally justified in invoking the provisions of Section 34(1)(a) and the proceedings started under Section 34 after the expiry of four years were not barred by time ?'
10. We accordingly allow this petition and direct the Tribunal to referthe three questions of law, i.e., question No. (i) as refrained and questionsNos. (iii) and (iv) as prayed by the assessee, to this court for its opinionwithin a period of three months. This reference along with Income-taxRef. No. 1 of 1976 (Dr. Surmukh Singh Uppal v. CIT--see p. 191 infra)may then be put up for hearing on or before December 8, 1980. Nocosts.