D.V. Sehgal, J.
1. An application under Section 256(1) of the Income-tax Act, 1961 (hereinafter called 'the Act'), of M/s. Lal Chand Des Raj Singh Hukam Chand (hereinafter called 'the firm') made to the Income-tax Appellate Tribunal, Chandigarh Bench (hereinafter called 'the Tribunal'), to draw up a statement of the case and refer to this court questions which, according to the firm, were questions of law, having been rejected by the Tribunal, vide its order dated March 13, 1978, the firm preferred the present petition to this court under Section 256(2) of the Act.
2. The facts in brief are that Lal Chand Jaiswal is a partner of the firm, M/s. Lal Chand Jaiswal & Co., country liquor contractors, Gurgaon (hereinafter called 'the main firm'), holding 33% share in the profit and loss of the said firm. In respect of his aforesaid share, a Sub-partnership deed was allegedly executed on April 1, 1972, amongst Lal Chand Jaiswal, Des Raj Singh and Hukam Chand to have 14/33, 15/33 and 14/33 (sic) share respectively in respect of the aforesaid share of Lal Chand Jaiswal in the main firm. The Sub-partnership deed was for a period of one year with effect from April 1, 1972, to March 31, 1973. The partners of the Sub-partner ship applied for registration under the Act in the prescribed Form No. 11 on March 31, 1973. So as to prove the genuineness of the firm, it filed affidavits of Des Raj Singh dated August 27, 1976, and Hukam Chand dated August 23, 1976. The Income-tax Officer did not require the presence of Des Raj Singh. He, however, examined Hukam Chand on October 12, 1976. He noticed that Hukam Chand had gifted a sum of Rs. 50,000 to Amrish Kumar, son of Lal Chand Jaiswal, and that though Hukam Chand had 3 children of his own, namely, Mamta aged 13 years, Neeraj aged 11 years and Rajesh aged 7 years, he had not given any such gift to his children. From the statement of Hukam Chand, the Income-tax Officer inferred that Hukam Chand was only a benamidar of Lal Chand Jaiswal, partner. He, therefore, held that the firm was not a genuine one and refused registration. The firm being aggrieved from this order filed an appeal before the Appellate Assistant Commissioner, who while allowing the appeal observed that the only reason for holding that the firm was not a genuine one was that Hukam Chand was held to be the benamidar of Lal Chand Jaiswal. It was found, however, that the gift of Rs. 50,000 made by Hukam Chand to Amrish Kumar, son of Lal Chand Jaiswal, had been accepted by the Revenue and from that fact alone an inference could not be drawn that Hukam Chand was a benamidar of Lal Chand Jaiswal. It was further noted that each one of the three partners had contributed separate capital and the profit accruing to the firm had been credited to each of the partners.
3. The Revenue, being aggrieved by the order of the Appellate Assistant Commissioner, filed an appeal before the Appellate Tribunal. At the time of hearing of the appeal, the representative of the Revenue filed a copy of the statement dated January 6, 1977, of Des Raj Singh recorded by the Income-tax Officer wherein he had stated that he was the benamidar of Lal Chand Jaiswal in as many as 16 firms and that this firm was one of those. The statement of Des Raj Singh further mentioned that he used to get only Rs. 1,000 every year from Lal Chand Jaiswal for being his benamidar. A photostat copy of the guarantee bond executed by Lal Chand Jaiswal on December 23, 1974, according to which he had agreed to pay whatever liability on account of income-tax would fall on Des Raj Singh was also filed by the Revenue. A prayer made by the representative of the Revenue seeking permission to admit these documents was allowed by the Tribunal by making reference to Rule 29 of the Income-tax Appellate Tribunal Rules, 1963 (hereinafter called 'the Rules'). The Tribunal was of the view that these documents were relevant for the purposes of the appeal before it. Alter admitting the aforesaid two documents, the Tribunal remitted the matter back to the Income-tax Officer to pass a fresh order in accordance with law.
4. The learned counsel for the firm has asserted that the registration of the firm had been declined by the Income-tax Officer on the ground that Hukam Chand was a benamidar of Lal Chand Jaiswal, which finding on appeal had been reversed by the Appellate Assistant Commissioner. In the appeal preferred by the Revenue before the Tribunal, the direction for the registration of the firm was again contested on the sole ground that Hukam Chand was a benamidar of Lal Chand Jaiswal. That being so, the documents which were sought to be produced before the Tribunal so as to show that Des Raj Singh was a benamidar of Lal Chand Jaiswal were not such documents which could be said to be required by the Tribunal to enable it to adjudicate upon and decide the appeal before it. According to the learned counsel, Rule 29 of the Rules, relied upon by the Tribunal, makes it clear that the parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any documents to be produced or any witness to be examined, or any affidavit to be filed to enable it to pass orders, or for any other substantial cause, the Tribunal may allow such documents to be produced or witness to be examined or affidavit to be filed. He further asserted that an affidavit of Des Raj Singh dated August 27, 1976, filed along with the application in Form No. 11 for registration of the firm to prove the genuineness of the firm had not been questioned by the Revenue at any stage till the matter was argued before the Tribunal He also submitted that the statement of Des Raj Singh, which was allowed to be admitted in evidence by the Tribunal, was allegedly recorded by the Income-tax Officer on January 6, 1977, when the matter was pending in appeal before the Appellate Assistant Commissioner but the Income-tax Officer did not choose to rely on this statement or to produce the same before the Appellate Assistant Commissioner. He contends that the documents admitted in evidence by the Tribunal were not germane to the question whether Hukam Chand was a genuine partner or a benamidar of Lal Chand Jaiswal, which question alone was all along in issue before the Income-tax Officer, the Appellate Assistant Commissioner as also before the Tribunal.
5. The learned counsel for the Revenue, on the other hand, has raised two contentions. Firstly, he submits that the documents aforesaid have been rightly admitted in evidence by the Tribunal and the case falls within the confines of Rule 29 of the Rules. His second submission is that Rule 29 of the Rules is merely procedural in character ; it is not exhaustive of the powers of the Tribunal and does not in any way circumscribe or control the power of the Tribunal under Section 254(1) of the Act. The Tribunal had sufficient powers under Section 254(1) of the Act to admit these documents in evidence and remit the matter to the Income-tax Officer for further action in accordance with law.
6. Taking into account the facts noted above as also the rival contentions of the learned counsel, we are of the view that the Tribunal was wrong in holding that the admission of the aforesaid documents as additional evidence was a pure question of fact. In our view, the matter does raise the following questions of law :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal while deciding an appeal under Section 254(1) of the Income-tax Act, 1961, had jurisdiction to permit the Revenue to make out a new case to the effect that Des Raj Singh was not a genuine partner of the firm ?
(2) Whether the Tribunal erred in law or failed to act in proper exercise of its jurisdiction under Rule 29 of the Income-tax Appellate Tribunal Rules, 1963, in permitting the Revenue to tender fresh evidence in question with a view to allowing it to raise a new plea and make out a new case ?'
7. We accordingly allow this application and issue a mandamus directing the Tribunal to state the case and refer the questions of law set out above for the opinion of this court.
8. There shall be no order as to costs.