B.K. Mehta, J.
1. This reference relates to four assessment years, viz., 1965-66 to 1968-69 (corresponding to the accounting years S.Y. 2020 to 2023) of the assessee, Tribhovandas Vithaldas, Hindu undivided family which consisted of S/Shri Ramanlal, Manherlal and Rameshchandra, who are the sons of late Tribhovandas, and Bai Reva who is the widow of said Tribhovandas. According to the Income-tax Officer, Shri Natverlal Tribhovandas was also a coparcener. The first accounting year 2020 corresponding to the assessment year 1965-66, comprised of a period commencing from October 18, 1963, to November 4, 1964. The assessee claimed that there was a partial partition of the capital of the Hindu undivided family on Magsar Vad 11 of S.Y. 2020, and there was a partition amongst the four members, namely, Ramanlal, Manherlal, Rameshchandra and Bai Reva. This claim of partial partition was rejected by the Income-tax Officer. The Income-tax Officer noted that aforesaid Manherlal, Rameshchandra and Bai Reva became partners in S.Y. 2020, corresponding to the assessment year l965-66 and the new firm carried on a business as wholesalers in coconut in 1he name and style of M/s. Rameshchandra Manherlal & Company. It was further found by him that the capital introduced by these persons in the firm was transferred by cross-entries from their account with the Hindu undivided family and they had failed to prove that they had made any independent contributions. The Income-tax Officer, therefore, included the share income from this firm of these partners in the assessment of the assessee-Hindu undivided family for the assessment year l965-66.
2. Accordingly, for the remaining three years also, he clubbed the share income of these partners with the income of the Hindu undivided family.
3. The assessee, therefore, carried the matter in appeal before the Appellate Assistant Commissioner. On behalf of the assessee, it was contended that the amounts withdrawn by the said Shri Rameshchandra and Manherlal from the funds of the Hindu undivided family were used by them or the purposes of purchasing ornaments and the capital contributions which these two persons made in the firm were raised by borrowing moneys from third parties. On behalf of Bai Reva, it was claimed before the Appellate Assistant Commissioner that she had withdrawn from her capital account in the books of the Hindu undivided family and made the contribution to the firm. The Appellate Assistant Commissioner, therefore, by his order of July 20, 1970, thought it advisable to investigate as to the precise source of contribution which the Income-tax Officer had not done and he, therefore, remanded the matter to the Income-tax Officer for investigating the source of contribution and certify his findings on the inquiry so made.
4. In pursuance of the above direction, the Income-tax Officer for the purposes of inquiry into the source of contribution, recorded the statements of Manherlal and Rameshchandra and those of the alleged lenders to the said two partners, namely, Manherlal and Rameshchandra. He also recorded the statements of the alleged vendors of gold ornaments said to have been purchased by these two partners. He, thus, recorded in all the statements of two partners, four lenders and about six vendors of ornaments. Over and above this oral evidence, the assessee produced the documentary evidence comprising the promissory note renewed from time to time in respect of the borrowings, the extracts from the revenue records consisting of village forms VII, XII and VIII-A for purposes of showing the extent of the land held by these lenders and the bills evidencing the sale of the agricultural produce to the co-operative societies by these lenders and the receipts evidencing the payment of the price of the gold ornaments passed by the aforesaid vendors containing, inter alia, the details of the ornaments said to have been sold. The extracts of the individual accounts of the aforesaid partners in the trading books of the firm were also produced for the purpose of establishing that these amounts borrowed by the said two partners were repaid with interest in S.Y. 2023, and that they were debited to the respective accounts.
5. So far as Bai Reva was concerned, it was pointed out from the particulars recorded in the capital account of Bai Reva in the books of the Hindu undivided family that she had a credit balance which was, inter alia, made up of the insurance moneys though it is not clear as to whose insurance it was.
6. The Income-tax Officer by his report of December 6, 1972, certified these findings where, for the reasons stated in the said report, he refused to accept the version of the said Manherlal, Rameshchandra and Bai Reva. According to the Income-tax Officer, the evidence collected by him disclosed that there was very little possibility for the alleged lenders to save amounts from their meager net earnings from their lands which would enable them to advance moneys. The Income-tax Officer also emphasised in this behalf that these alleged lenders have themselves obtained some advances from the Agricultural Credit Society of which they were members. The Income-tax Officer could not persuade himself to accept the version of the said two Partners, Manherlal and Rameshchandra, about the investment of the amounts drawn from the Hindu undivided family funds in purchase of the ornaments. The reason which weighed in rejecting this version was that the alleged vendors of the ornaments could not satisfy him about the necessity for them to sell the ornaments, and that they were actually in need of the money at the relevant time, nor was there any satisfactory material to show as to how these vendors had acquired the ornaments, nor any evidence was adduced to show that they did possess the ornaments. He also emphasised the fact that the said two partners who claimed to have purchased the ornaments could not satisfy him by producing the ornaments so that the description of the ornaments as given in the receipts passed by the vendors could be tallied, since according to these two partners, the form of the ornaments was changed. They could not, according to the Income-tax Officer, give the name of the goldsmith by whom these ornaments were remade. In the circumstances, he rejected the version of the said two partners. Unfortunately, however, the Income-tax Officer did not give his finding qua Bai Reva so far as her claim was concerned that the moneys which she had drawn from the funds of the Hindu undivided family were from her capital account which comprised, inter alia, insurance money.
7. The Appellate Assistant Commissioner, on consideration of these evidence, disagreed with the Income-tax Officer and for the reasons stated in his order of January 31, 1973, accepted the explanation of the said two partners that the amounts which they had withdrawn from the funds of the Hindu undivided family were invested in the purchase of the ornaments, and that they had borrowed moneys from the agriculturists. In the opinion of the Appellate Assistant Commissioner, the Income-tax Officer's estimate of the net income of the lenders was conservative since he had estimated the household and other agricultural expenses at a higher amount. The fact of the lenders themselves borrowing from the society could not have been pressed into service by the Income-tax Officer in support of his finding as the lenders might have borrowed from the credit society, since the advance by the credit society would be only at a nominal rate of interest. The Appellate Assistant Commissioner emphasised that the Income-tax Officer did not give sufficient weight to the fact that these amounts have been repaid to the lenders and they have been debited to the respective accounts of the partners. He also emphasised that the firm had filed its income-tax return for the assessment year 1968-69 on October 19, 1968, together with the necessary statement of accounts which, inter alia, included the individual account of the partners where the fact of repayment is evidenced by debits to the said account. The initiation of proceedings in the case of the Hindu undivided family for including the income of the said Shri Rameshchandra and Shri Manherlal started much later than the filing of the return together with the aforesaid statement of account of the firm. This, in the opinion of the Appellate Assistant Commissioner, went a long way to establish the genuineness of the accounts. The Appellate Assistant Commissioner also examined the version of the investment of the amounts drawn by these two partners from the funds of the Hindu undivided family in purchase of the ornaments. In the opinion of the Appellate Assistant Commissioner, there was no cogent and satisfactory reason for rejecting the oral evidence of the vendors of these ornaments who were examined before the Income-tax Officer and the documentary evidence produced in the form of receipts of payment of the price of these ornaments. The reasons that these vendors could not explain as to why they were required to sell the ornaments, or their failure to produce some written evidence as to when they acquired these ornaments, cannot be said to be a compelling and a just reason for rejecting this evidence.
8. As regards Bai Reva's explanation, the Appellate Assistant Commissioner found on reading of the extracts from the individual accounts of Bai Reva in the books of the Hindu undivided family that these funds were from Bai Reva's funds lying deposited with the Hindu undivided family. In that view of the matter, the Appellate Assistant Commissioner accepted the appeal of the Hindu undivided family to that extent, though the other contentions urged on behalf of the Hindu undivided family in respect of disallowance of salary payment, expenses, etc., were not pressed.
9. The Revenue, therefore, carried the matter in appeal before the Tribunal. The Tribunal, after setting out the rival contentions, observed that the Tribunal was not concerned with the fact whether the agriculturists who were said to have advanced moneys to these two partners, namely, Manherlal and Rameshchandra, were capable of advancing the amounts or not. The Tribunal oversimplified the problem by stating that it was concerned only as to whether it was borrowed capital or it is an amount withdrawn from the books of the Hindu undivided family which were invested in the firm. The Tribunal, therefore, did not proceed to consider the rival contentions on merits but in a very cryptic observation that 'no independent and acceptable evidence has been produced on behalf of the assessee that all amounts were not advanced by the Hindu undivided family', found that the capital contributions were made from the amounts withdrawn from the Hindu undivided family. The Tribunal, however, accepted the explanation of Bai Reva that her capital contribution was from her own funds and not from the amounts drawn from the funds of the Hindu undivided family. The Tribunal by its order of February 24, 1975, partially allowed the Department's appeal.
10. It is on the facts and in the circumstances aforesaid that the assessee claimed for a reference which was not granted, with the result that the assessee was required to move this court which called for the statement of the case and, therefore, the Tribunal set out the following three questions for our opinion :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the share of profit received by Manherlal Tribhovandas and Rameshchandra Tribhovandas from the firm of M/s Rameshchandra Manherlal is assessable in the hands of the Hindu undivided family of Shri Tribhovandas Vithaldas
(2) Whether the Tribunal has erred in not following correctly the general principle of Hindu law relevant to the point at issue and that of the Income-tax Act as to the meaning or interpretation of income and the entity in whose hands assessable
(3) Whether the Tribunal was justified in applying the Supreme Court's decision referred to in its order to this case instead of holding that the same was distinguishable looking to the facts and circumstances involved in this case and whether the finding in question is reasonable and based on evidence on record ?'
11. After hearing at length the learned advocate for the assessee as well as the learned counsel for the Revenue, we, however, unfortunately find ourselves unable to answer the questions. The reason for our inability is, with respect to the Tribunal, its cryptic order since it is on the finding of fact made by the Tribunal that we have to answer the question of law arising from the order of the Tribunal. It is axiomatic to say that the Income-tax Appellate Tribunal is a fact-finding forum and, therefore, it is necessary for it that every fact for and against must have been considered with due care and the Tribunal is under an obligation to give its finding so as to clearly indicate as to precisely what were the questions arising for its determination, what was the evidence for and against on the record in regard to each one of these questions and what were its findings reached and on what evidence before it. It is a trite position in law that the conclusions reached by the Tribunal should not have been based on irrelevant considerations nor on suspicion, conjectures or surmises and they should be warranted in the evidence placed before it, which evidence should be relevant, and the Tribunal should not have improperly rejected any relevant material. If the Tribunal is remiss in its obligation, its findings, even though they may be findings of fact, would be liable to be set aside by the court (See Lalchand Bhagat Ambica Ram v. CIT : 37ITR288(SC) and Omar Salay Mohamed Sait v. CIT : 37ITR151(SC) ). It is no doubt true that in order to find out as to whether the Tribunal has discharged its obligation the impugned order in question is not to be scrutinised sentence by sentence with a view to discover the minor lapses here or there, but it has to be read as a whole (See Bhaichand Amoluk Co. v. CIT : 44ITR511(SC) ). Having read and re-read the order of the Tribunal, we are of the opinion, with respect to the Tribunal, that it has not fulfilled its role as envisaged by the Supreme Court. We may, with respect to the Tribunal, point it out to bear in mind what the Supreme Court has observed per curiam in CIT v. S. P. Jain : 87ITR370(SC) , since this would otherwise expose the taxpayers as well as tax collectors to the vagaries of protracted litigation. As the Tribunal has failed to consider each and every fact for and against the assessee and did not give its finding in respect of the evidence which has been adduced, nor has it considered, as it ought to have, the reasoning which compelled the Appellate Assistant Commissioner to reach the findings, we think that the grievance of the assessee before us that the findings are vitiated has great force. In the circumstances, therefore, we intend to adopt the course suggested by the Supreme Court in CIT v. Indian Molasses Co. P. Ltd. : 78ITR474(SC) and leave the questions unanswered so as to enable the Tribunal to re-hear the appeal and dispose of the same according to the correct principles of law. Reference is disposed of accordingly with no order as to costs.