D.K. Kapur, J.
1. This reference application under section 256(2) of the Income-tax Act, 1961, relates to the assessment year 1964-65. A reference is sought by the Department regarding the following question :
'Whether, on the facts and in the circumstances of the case, the Hon'ble Tribunal is justified in law in holding that the assessment proceeding under section 147(a) of the Income-tax Act, 1961, was invalid and illegal in law and thereby cancelling the assessment ?'
2. The Tribunal has refused to make a reference on the ground that no question of law arose.
3. The real point in issue now is whether this controversy regarding the application of section 147(a) of the Act was decided as a question of fact. The circumstances of the case have been narrated in full by the Tribunal. The assessed had certain deposits received from hundi bankers whose addresses and names were disclosed at the time of the original assessment and also confirmatory letters were furnished. The assessment was made accepting the deposits as genuine. The controversy now is : Are there grounds for reopening the assessment in accordance with law This type of a case has often been referred to the court as a question of law, but the principles regarding the application of section 147 are so well-settled that we feel that the question can only be referred if there is some doubt about the application of section 147 to the circumstances of this case. For this purpose, it is only necessary to refer to the reasons contained in the report to the Commissioner which is reproduced in the order of the Tribunal. That report is as follows :
'During the course of the assessment proceedings, it was discovered that there were opening balances of following parties who are known to be mere name-lenders in the assessment year 1965-66 which has been completed.
Rs.1. Gopal Dass Manohar Lal 20,0002. Afghan Fruit Co. 15,000 Besides these there may be other deposits. These deposits were treated as genuine. The above amounts were deposited during the assessment year 1964-65. Due to the failure on the part of the assessed to disclose fully and truly, income has escaped assessment for the assessment year 1964-65.
Permission may be given to reopen the assessment for the said year.
Hari Shanker, ITO,
Special Circle-VII, New Delhi.'
4. We have tried to get some meaning out of these reasons, but have been unable to locate, what are the reasons for reopening the assessment. The Tribunal in its order has made the following observations :
'This report, in our opinion, is also vague and unsupported by any evidence. There is no evidence to show that Gopal Dass Manohar Lal was a mere name-lender. The only evidence made available to us is his confessional statement which we have already analysed above. Even such a statement is missing in the case of Afghan Fruit Co. and there is not even an iota of evidence implicating the remaining two parties.'
5. It may be mentioned that earlier in the order, the following observations were made regarding Gopal Dass Manohar Lal :
'Manohar Lal Gopal Dass clearly admitted that he had income of Rs. 3,600 from brokerage which he had earned by arranging finances to different parties. In other words, the fact that he had acted as a broker for obtaining finances for the parties could not be doubted. He, of course, further admitted that he had not advanced his own money to any party either at Delhi or at Bombay between December 5, 1963, to September, 1965, which covers the period of appeal also. At the same time, he again admitted that during the above period, he was arranging loans for parties at New Delhi and earning finance brokerage. It was only in the case of M/s. Pishori Lal Surrinder Kumar that he confessed that the transactions were hawala entries on which only brokerage was earned by him. In this statement, there is not even a hint to suggest that the entries relating to the transaction with the assessed were either hawala entries or bogus entries or that the credits appearing in his account represented the income of the assessed itself. It is possible that the assessed might have credited the account of Manohar Lal Gopal Dass, although the finances might have come from some other party through his acting as a broker. It is an inference of the Income-tax Officer himself that the credit in the name of Manohar Lal Gopal Dass represented the income of the assessed. Even in his report to the Commissioner, the Income-tax Officer has stated that there were opening balances in the name of Gopal Dass Manohar Lal and Afghan Fruit Co., who according to him were known to be mere name-lenders.'
6. Thus, the Tribunal came to the conclusion that there were no facts or information available with the Income-tax Officer to justify the action under section 147(a).
7. In our view. the law relating to reopening of assessments is so well-settled that it is too late in the day for the Department to contend that a mere suspicion can permit the Income-tax Officer to set aside the previous assessment at his will and to substitute any other assessment he feels like on mere suspicion.
8. It was contended by counsel for the assessed that here there was no change in the primary facts and virtually the same material was being treated differently by the Income-tax Officer and hence no question of law arose being either not a question of law or being so settled not to deserve being referred once again to this court.
9. Learned counsel for the Department has cited a number of cases, but the strongest case was ITO v. Mahadeo Lal Tulsyan : 111ITR25(Cal) . There also hundi loans were involved, which were accepted in the original assessment. Later on, according to the Income-tax Officer, those loans were found to be not genuine and hence there was a reopening of the assessment.
10. In that case, the Income-tax Officer had closely scrutinised the accounts and documents of the hundi merchants and found that they are said to have advanced huge loans without any funds. They also had no discounting facilities with banks and hence they could not do any business in hundis. They also did not maintain accounts. Thus, in that case, there was an investigation which had revealed that true facts had not been disclosed by the assessed. That would almost certainly be a completely different case from the present.
11. In the present case, the amount of Rs. 15,000 was received, even according to the Income-tax Officer in the assessment order, by cheque from M/s. Afghan Fruit Co. So, there is no evidence at all to show that the primary facts disclosed by the assessed were untrue.
12. In the circumstances, we think, this case is concluded by the findings of the Tribunal that the reopening under section 147(a) was done without any material. We would accordingly dismiss the application as raising a question of fact and not of law. No costs.