P.B. Mukharji, J.
1. The question for determination on this Income Tax Reference is:--
'1. The Income Tax Appellate Tribunalin its order dated 27th March 1961, havingheld that the Income Tax Officer has madeaddition of Rs. 4,60,000/- to the income ofthe appellant without any basis and arbitrarily,was it justified in adding estimated income andis such addition arbitrary and fanciful andbased on no materials?
2. In the facts and circumstances of the case was the Appellate Tribunal justified in coming to the conclusion that any part of the income of Hanuman and Company should be added to the income of the appellant or wasthe same done arbitrarily and without any materials?'
2. The statement of the case in this Reference makes the following farts relevant for the purpose of determining or deciding this question.
3. The assessee is Nandalal Kasera of 243 Ghittaranjan Avenue and an individual, owning some properties and having a share in the firm of Messrs. Bengal Kopak Ginning. The assessment year is 1948/49. The accounting year is 8003/4 Diwali ending on the 11th November, 1947. The original assessment for the year 1948/49 was completed on the 11th December 195S on a total income of Rs. 2,985 only it was then subsequently discovered and the Income-tax Officer came to know that the assessee had done extensive speculative business in jute and hessian, in his own name and also in the name of Messrs, Hanuman and Co. and had acquired considerable property from such business, which he had concealed. Notice was therefore issued under Section 34(1)(a) by the Income-tax Officer for the reassessment of the total income of the assessee. The assessee in reply filed a return of income showing a loss of Rs. 181 only. The assessee admitted before the Income-tax Officer that he had done some speculative business with one Madanlal Saraf which was supposed to result in a huge loss but the assessee had not shown that loss in the return filed on the flimsy grounds that he had no details relating to the transaction. Thereupon the Income-tax Officer issued notice under Section. 22(4) of the Act calling upon the assessee to produce all the books of account and vouchers. On the date of hearing the assessee appeared with his authorised representative and stated that he had not maintained any books of account whatever. Indeed the assessee denied any connection with Hanuman and Co. and in fact in his deposition recorded by the Income-tax Officer under Section 37 on the 8th January 1958 the assesses made the following statement:
'I hereby declare that I have not done any business in the name of Messrs. Hanuman and Co. I have not entered into any business transaction with the said Hanuman and Co.'
4. This has now been proved to be wholly an outrageous falsehood. The Income-tax Officer did not accept the plea that was made. The investigations made by him from the banks revealed that the assessee was himself the proprietor of Hanuman and Co.
5. The assessee did not produce any books of account in compliance with the statutory notices. In the circumstances the Income-tax Officer made a reassessment to the best of his judgment under Section 23(4) of the Income-tax Act, 1922 read with Section 34 estimating the income of the assessee from: the undisclosed business at Rs. 4,60,000. The total income assessed by the Income-tax Officer by his order dated 31st January 1958 was Rs. 4,62,652. The assessee thereafter on the 1st April 1956 (sic) filed a petition under Section 27 of the Act for canceling the assessment made under Section 23(4) of the Act. There the assessee came forward with the story for the first time that he had only halfshare as a partner in Hanuman and Co. andthat the books of account of Hanuman and Co. were not with him when the requisition was made by the Income-tax Officer under Section 22(4) of the Act and that was the reason why he was not in a position to produce those books of account before the Income-tax Officer. He, however, admitted even in the petition under Section 27 of the Act that those books were them available and he was ready to produce the same.
6. As the case made m the application under Section 27 of the Act was wholly inconsistent with the declaration that the assessee had made to the effect that he had no business transaction with Hanuman and Co., he was asked to explain this outright discrepancy. The assessee's explanation which is recorded is extraordinary and is in the following terms:
'As the matter was fairly old and your petitioner had become an old man his memory had failed regarding the actual position of M/S. Hanuman and Co.
7. The whole attempt from now onwards was to explain these two irreconcilable statements only on the ground of lapse of memory on medical certificate. The Income-tax Officer rejected the plea of lapse of memory and dismissed the assessee's application under Section 27 of the Act.
8. The facts on record show from the statement of case that the Income-tax Officer found that the assessee had speculative dealings through one Madanlal Saraf Stock and Share Broker, of No. 7, lyons Range Calcutta. This Madanlal Saraf paid Rs. 6,979 to M/s. Hanuman and Co. by cheque on the 24th February 1957 on the Comilla Union Bank. That cheque was collected by Hindusthan Mercantile Bank Ltd. on the account of payee Hanuman and Company. On examination of the proposal form for opening the bank account it was found that the assessee Nand-lal Kasera was mentioned there as the proprietor of Hanuman and Company. The Income-tax Officer also found that Messrs. Sagarmal Dhanraj of 1, Roopchand Roy Street, Calcutta had speculative dealings with the assessee. In fact the karta of Sagarmal Dhanraj produced Hundis paid to Hanuman and Company to settle the differences, These very Hundis had been endorsed by the assessee, Nandlal Kasera himself on behalf of Hanuman and Company to other persons and Sagarmal Dhanraj had made the final payment to the holder in due course.
9. The Income-tax Officer therefore rightly held that the assessee was the sole proprietor of Hanuman and Company and he rightly disbelieved the plea of the assessee that the account books of Hanuman and Company were not in his custody when he had made the requisition under Section 22(4) of the Act.
10. At this point it is necessary to make a reference to some other fact on the basis of which certain arguments were made on behalf of the assessee before us on this reference. In the statement of case it has been said that the assessee produced the statement before the Income-tax Officer purported to have been granted on behalf of Messrs. East India Jute and Hessian Exchange Ltd. showing that a sum of Rs. 21,28,875/- had been deposited by Messrs. Hanuman and Company with the Clearing House Bank as against Rs. 12,33,839-1-0 received by Messrs. Hanuman and Company. That statement was also supposed to show that the business of Messrs. Hanuman and Company was closed on the 17th November 1947. Now the point to be remembered about this fact is that this was not disclosed at the time of the best judgment assessment under Section 23(4) of the Act. This was a smoke-screen put up at the time of the application under Section 27 of the Act, when the assessee thought that his game of concealment was up, This fact will be important when we come to consider the order of the Tribunal which reduced the assessment Rs. 1,00,000/- from Rs. 4,60,000/- on this fact alone.
11. To proceed with the account of relevant facts, it is necessary to state that, the Income-tax Officer dismissed the assessee's application under Section 27 of the Act by his order dated 18th February 1958. The assessee thereafter appealed to the Appellate Assistant Commissioner both against the best judgment assessment as well as against the order dismissing his application under Section 27 of the Act. The Appellate Assistant Commissioner dismissed both the appeals by his consolidated order dated 4th February 1959. The Apellate Assistant Commissioner came to the con-elusion that : --
'the observations and finding of the Income-tax Officer in my view are well-founded'
He also came to the finding and conclusion that :--
'It is quite evident after going through the above facts that the assessee has in a well-calculated way falsely disowned his proprietorship of Messrs. Hanuman and Company and that in pursuance of this false declaration of the said purpose of preventing a proper assessment of his profits on the above concern, he did not make available his books of account in spite of the ample opportunities given to him under Section 22(4).
12. The Appellate Assistant Commissioner also found as a fact that the whole case of the assessee about his medical certificate and lapse of memory was unacceptable. He records the fact that the assessee was attending the Appellate Assistant Commissioner, had been talking and arguing his own case and he found :--
'My impression is that at any rate now he fully recapitulates all the material facts of his case and even minor detail as well.'
He, therefore, accepted the Income-tax Officer's finding on this point and rejected the assessee's story of loss of memory.
13. The Appellate Assistant Commissioner thereafter proceeds to discuss the merits of the case and records his findings of fact. He finds that it is clear that Messrs. Sagarmal Dhanraj made a total sum of Rs. 5,22,626 by way of difference in jute and he assigned them to Hanuman and Company, Copies of accounts of Hanuman and Company from Messrs. Sagarmal Dhanraj and Madanlal Saraf were cited by the Appellate Assistant Commissioner in support of his finding. it is also found as a fact that the account with Sagarmal Dhanraj as noted above showed payment of Rs. 5,22,626/- as speculative profit to Hanuman and Company and Rs. 71,706 as speculative profit realised from Hanuman and Company during the financial year 1947-48. Thirdly, the Appellate Assistant Commissioner confirms the Income-tax Officer's finding on the record that the account with Madanlal Saraf showed a total debt of Rs. 12,052/- and total credit of Rs. 20,413/-resulting in a profit of Rs. 8,368/- to the appellant during the financial year 1947-48. Fourthly, the Appellate Assistant Commissioner also confirmed the Income-tax Officer's finding that Madan Lal Saraf had paid Rs. 6,979/11/0 to Messrs. Hanuman and Company by cheque dated the 24th August 1957, and which cheque was collected by Hinduthan Mercantile Bank On account of the payee Hanuman and Company. Fifthly, the copies of opening and proposal forms showed that Kasera, the assesses, was the sole proprietor of Hanuman and Company.
14. Sixthly, The Income tax Officer has examined the Karta of Messrs. Sagarmal and Company and also the Karta of Messrs. Sagarmal Dhanraj who testified that the hundis which were paid to Hanuman and Company were to settle differences in speculative profits. The statement on behalf of Sagarmal Dhanraj showed that the payments made by them to the assessee was speculative profit. The Appellate Assistant Commissioner noticed that in the account of the Income-tax Officer one single entry only was there in respect of a cheque return for Rs. 11,350/-. The total receipts were Rs. 5,22,325/-. The debits were Rs. 71,706. This gave a net profit of Rs. 4,50,819/- in the dealings with Messrs. Sagarmal Dhanrai. The profit from Madan Lal Saraf during the financial year 1947-48 came to Rs. 8,366/-. The total of these amounts came to Rs. 4,59,185. The Income-tax Officer estimated the appellant's income at Rs. 4,60,000. On those facts the Appellate Assistant Commissioner on the calculation and figure set out above came to the following conclusion :--
'In these facts and circumstances of the case the estimate as made by the Income-tax Officer would not be excessive.'
15. He, therefore, confirmed the Income-tax Officer's order under Section 23(4) and dismissed the assessee's application under Section 27 of the Income-tax Act.
16. The assessee thereafter, appealed to the Tribunal both for relief against the best assessment judgment under Section 23(4) as well as the order made under Section 27 of the Act. What the Tribunal did was this: The Tribunal dismissed the assessee's application under Section 27 of the Income-tax Act The relevant finding on the point of the Tribunal is :--
'His (assessee's) failure to produce the books of accounts of the business in response tonotice under Section 22(4), was therefore clearly a default which invited assessment under Section 23(4). We are not impressed by his plea of lapse of memory to explain away his categorical disclaimer about his having any connection with Hanuman and Company nor are we satisfied that he had sufficient reasons not to produce the books before the assessment was made when he could so conveniently produce them after the assessment was made. We, therefore, hold that the Income-tax authorities were justified in refusing to reopen the assessment under Section 27.'
17. Pausing here for a moment on the above decision and on the point under Section 27 of the Act, it is quite clear that the Tribunal was coming to a finding that the attempt to produce documents and specially the hint of the fact in the statement purporting to have been granted by the East India Jute and Hessian Exchange Ltd. showing the deposit of the sum of Rs. 21,28,875/- by Hanuman and Company with the Clearing House Bank as against Rs. 12,33,839/1/- received by Hanuman and Company was not found to be dependable fact. These are the books or statement of account which the Tribunal says were 'conveniently' produced after the assessment was made.
18. But curiously enough the Tribunal on the merits came to a very strange conclusion. The Tribunal records that the Income-tax Officer did not give any basis for making the addition of Rs. 4,60,000/- in the order it self but the Appellate Assistant Commissioner had tried to give the basis from certain particulars contained in the foot-note to the assessment order. The Tribunal forgot that the Income-tax Officer and the Appellate Assistant Commissioner were both authorities to find facts. The Tribunal was entirely wrong in mentioning a 'foot-note' to the assessment order. There was no foot-note in fact, in theory or in imagination. What the Tribunal thought was in the foot-note were the facts on record, namely, the evidence from Sagarmal Dhanraj, the bank, Madan Lal Saraf and other evidence which we have just mentioned above. The Appellate Assistant Commissioner summarised serially almost all the relevant facts and reasons showing to the hilt even by calculation that the Income-tax Officer's estimated income of the assessee at Rs. 4,60,000 under the best assessment judgment was supported by all material facts relevant for the purpose. Therefore, this conclusion of the Tribunal is not supported by any fact or evidence.
19. But the Tribunal does not stop there.
20. The Tribunal proceeds to say :--
'That the appellant received considerable amount from Messrs. Sagarmal Dhanraj but his contention is that he received them not on his own but on account of some other clients and that his only income was brokerage income from these transactions. . . Reliance is also placed on the fact that on the balance the appellant had paid Rs. 9 lakhs more to the Clearing House than he has received from it . The Income-tax Officer could not know this fact in view of the non-co-operation of the appellant ..... In view however of the fact that ignoring all this important aspect introduces an element of arbitrariness in the assessment we will take that into account and reduce the addition to Rs. 1,00,000/- as estimated income from the business in the name of Hanuman and Company.'
21. This is an extraordinary decision and conclusion by the Tribunal. It is open to serious criticism and cannot be sustained. We shall briefly state the reasons.
22. In the first place the Tribunal having rightly rejected the assessee's application under Section 27 of the Act should never have considered statements or facts produced with that application under Section 27. The reason is simple. The rejection of the application under Section 27 of the Act is rejection also of the supposed statements and facts that were intended to be introduced by that application under Section 27. Having rejected that application it was improper and illegal on the part of the Tribunal to refer again to such documents or statements which were part of the application under Section 27 of the Act. This whole story of the assessee about Rs. 21,28,875 and Rs. 12,33,839/1/- set out above was for the first time smuggled by the assessee through his application under Section 27 of the Act it is not evidence and the Tribunal should never have relied on that statement.
23. Secondly, the Tribunal was wrong in holding that disregard of this fact introduced any element of arbitrariness in the orders of the Income-tax Officer and the Appellate Assistant Commissioner. On the contrary, consideration by the Tribunal of matters not on record or in evidence or properly brought within the procedure of the Income-tax Act vitiated the Tribunal's decision on this point.
24. Thirdly the Tribunal's decision to add Rs. 1 lakh as the estimated income was wholly unwarranted by the facts. There is not an iota of evidence in support of such a figure as Rs. 1 lakh which the Tribunal estimated. It is an absolute and utter fancy, a mere caprice and whimsical figure. As against that arbitrary decision of the Tribunal, the figure of Rs. 4,60,000/- arrived at by the Income-tax Officer carefully analysed by the Appellate Assistant Commissioner is clearly accounted. We are of opinion that the amount of Rs. 4,60,000 was based on incontestable fact and evidence on record. There was no evidence to contradict There was no evidence legal or otherwise to show that the assessee paid nine lakhs of rupees more. Even then there was no evidence that by any process of calculation or payment or by any method or reason it is possible to arrive at the figure of Rs. 1,00,000 which the Tribunal did We, therefore, hold that the Tribunal had no basis to add the sum of Rs. 1,00,000 or to come to that figure as an estimate and that this sum of Rs. 1,00,000 was arbitrary and based on no material. At the same time we come to the finding that the figure of Rs. 4,60,000 was not arbitrary but supported by reason, facts, figures and evidence.
25. It will be the appropriate stage here to refer to some of the decisions cited at the bar and in particular to the arguments about the nature of jurisdiction under Section 66 of the Income-tax Act. Before discussing the decisions and the arguments on the scope and ambit of the jurisdiction under Section 66 of the Income-tax Act it will he convenient to give the answer to the questions. For the reasons and the facts stated above we proceed to answer the question in the following manner :--
26. In the first question the interrogation is based on the hypothesis and assumption contained in the expression, 'forming part of the question, namely, 'having held that the Income-tax Officer has made an addition to Rs. 4,60,000 to the income of the appellant without basis and arbitrarily'. The hypothesis or assumption is wrong and we are of the opinion that the addition by the Income-tax Officer of the sum of Rs. 4,60.000 to the income of the appellant was not arbitrary nor without any basis, but was fully supported by facts and figures and was a correct and appropriate sum. On the second part of the first question raising the point, 'was it (Tribunal) justified in adding the sum of Rs. 1 lakh to the income of the appellant as estimated income and is such addition arbitrary and fanciful and based on no materials', we hold and answer this part of the question by saying that the addition of the said sum of Rs. 1 lakh as aforesaid by the Tribunal was arbitrary and fanciful and was not supported by any material whatsoever.
27. The answer to the second question asked on this reference follows from the above answer to the first question. We hold and answer that the Appellate Tribunal was certainly justified in coming to the conclusion that a part of the income of Hanuman and Co. should be added to the income of the appellant and to that part of the question the answer must be in the affirmative. The second part of the second question raising the point 'or was the same done arbitrarily and without any materials'--the answer is in the affirmative so far as the sum of Rs. 1 lakh was concerned, and we hold that the proper addition should have been Rs. 4,60,000, as done by the Income-tax Officer and confirmed by the Appellate Assistant Commissioner.
28. The questions, therefore, are answered in the manner aforesaid.
29. What is now said is that the jurisdiction of this Court under Section 66 of the Income-tax Act is limited to the finding of the fact by the Tribunal that only a sum of Rs. 1 lakh should be added and no more and that this reference being at the instance of the assessee and not the Commissioner of Income-tax, this High Court cannot in effect by answering the question enhance the assessment fixed or held by the Tribunal. This raises an interesting legal point.
30. A look at Section 66 of the Income-tax Act 1922 reveals the nature and character of the statement of case by the Tribunal to theHigh Court and the High Court's jurisdiction to dispose of such reference. The basic feature, of this reference under this Section that it deals only with a 'question of law'. it does not, therefore, deaf with a question of fact The High Court, acting as a Court of Reference under this section, therefore, is not a Court of facts like an ordinary trial Court or a Court of appeal. The second basic feature of this jurisdiction is that the reference has to be disposed of by deciding the question asked on the reference. In other words, the jurisdiction of the High Court under Section 66 of the Income-tax Act is the jurisdiction to decide and answer the question raised in the statement of case referred to the High Court. From that point of view the jurisdiction of this High Court as a Court of Reference under Section 66 of the Income-tax Act is a jurisdiction limited to the question asked and that question is necessarily a question of law. The third basic feature of this jurisdiction is that when the High Court disposes of an Income Tax Reference under Section 66 of the Income Tax Act it has to 'deliver it s judgment thereon containing the grounds on which such decision is founded.' Therefore, the reference is disposed of by this High Court by judgment containing the grounds of the decision, deciding the question of law raised on the reference. In so far as it is a judgment and decision containing the grounds such a judgment of the High Court on an Income Tax Reference, has all the attributes of a judgment of a Trial Court or an Appellate Court. What does not happen, however, is that this judgment is not in the technical sense followed by a decree of the High Court so that there could be an execution of such a decree. But although there is no decree under Section 65 (5) of the Income-tax Act yet there is a very significant provision therein which is its fourth special feature.
31. When the High Court has decided the question of law raised in the reference by a judgment containing the grounds on which the decision is founded, the matter apparently goes back to the Tribunal and the provision of Section 65 (5) of the Act is--'and shall send a copy of such judgment under the seal of the Court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment.' Therefore, there is that residue of judicial work left, for the Tribunal to do. That residue is to pass such orders as are necessary to dispose of the case conformably to the judgment given by the High Court it means that the final order is that of the Tribunal and the Tribunal must of course act in conformity with the judgment given by the High Court on the reference.
32. This in brief is the main substance and content of the jurisdiction of the High Court under Section 66 of the Income-tax Act in disposing of a reference. It has been variously described it has been said in some cases that it is an advisory jurisdiction. It s advisory character follows from the features that the High Court answers only the questions raised and that it does not deal with questions of fact but deals with questions of law. But this jurisdiction, even though it might be called advisory in that sense, yet is not merely precatory or persuasive or voluntary requests which could be either accepted or rejected. In that .sense it is compulsory and is binding not only on the parties before the reference in the High Court but upon the Tribunal which is directed by the statute to act conformably to the judgment of the High Court on the reference, even though it is not a judgment in the form being susceptible to execution as understood in ordinary civil cases.
33. Analysing the language of Section 66 (5) of the Income-tax Act, 1922 the jurisdiction is obligatory upon the High Court to deride the question of law because the words are 'shall decide the questions of law.' In deciding such questions of law and is the process of coming to that decision no impediment or obstruction in our view should be placed before the High Court because the statute does not qualify in any manner the High Court's jurisdiction in this respect to decide the questions of law. The questions of law are not academic questions which the High Court is required to answer under this jurisdiction. The High Court is not like an examinee sitting with a law paper set to test his ability and knowledge in answering questions of law, nor does the High Court write a thesis or discourse on questions of law under this jurisdiction. These questions of law are questions of law arising on the facts of a particular controversy which is the subject-matter of the reference. Therefore, they are not academic questions of law bat practical questions of law that the High Court has to decide under this jurisdiction under Section 66 of the Income-tax Act. To say, therefore, that the High Court has to answer the question of law but not look at facts is first to make the High Court blind and then to call for vision from the High Court on the point of law. No point of law can be answered except through a set of facts in a Court of law and especially in a matter so prosaic about facts as income-tax. But this capacity of the High Court to look into facts arises from the very nature of the duty cast upon the High Court it has to look into the facts on which the question of law arises. The question of law is not like an orchid growing in the high air but it grows on the soil of hard facts and more than usual hard facts of income-tax in this jurisdiction. The Court's approach has been cautious and rightly 10 in this respect.
34. The Courts, therefore, have evolved certain principles. These principles illustrate the function of the Court and demonstrate that what this Court does in such a case is, not act as a Court of facts in the sense that it does not find new facts or take notice of new facts not already on the record. The fact finding authorities in these proceedings are in the first place, the Income-tax Officer, in the second place, the Appellate Assistant Commissioner and lastly in the third place, the Tribunal. These are the fact finding authorities. Therefore, the provisions in made that before exercising jurisdiction under Section 66 of the In-come-tax Act 'a statement of the case' has to be drawn up by the Tribunal either on it s own motion or upon direction by this Court. This statement of the case is the soil of facts and the question of law has to arise on this soil of facts. Normally the statement of case deals with the facts at different stages, before the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal. it is not said by the statute or any of the sub-sections under Section 66 of the Income-tax Act that the High Court in deciding the reference is bound by any finding of fact reached by the Tribunal, but the High Court what has to do is to decide a question of law arising out of the order of the Tribunal and not the order of the Income-tax Officer or the Appellate Assistant Commissioner.
35. The next principle is that this basic duty of the High Court to decide the question of law must have to be discharged and in son discharging if it there be any question of fact which has to be interpreted, then that power must be held to be implicit in this High Court's jurisdiction under Section 66 of the Income-tax Act. If that implicit power is denied then the High Court's jurisdiction to decide the question of law raised on this reference would be seriously crippled and jeopardised. No doubt, this interpretation of fact must be a fact which is essential to the interpretation to determine (he question of law and no doubt it must be such interpretation of a fact without which it is not possible to decide that question of law. Within those limits this High Court must be implied to have this essential ancilary power to interpret the facts which give rise to the question of law it is required to answer,
36. Necessarily certain corollaries have, flowed out from this doctrine. A fact found which is not supported by any material on record has been held to be such a fact which this High Court has jurisdiction under Section 66 of the Income-tax Act to set aside when though it might be a finding of fact reached by me Tribunal. That is why it was said by the Supreme Court in Commissioner of Income-tax, Calcutta v. Daulatram Rautmal (1964) 58 ITR 574 that even though file finding of the Tribunal on the fact is final, its decision as to the legal effect of those findings is a question of law which can be reviewed by the High Court and that a finding on a question of fact even though reached by a Tribunal, is open to attack under Section 66(1) of the Act as erroneous in law when there is no evidence to support it or if it is perverse. See the observations of Shah J., in that case at pp. 579-80.
37. In this case and m the present Reference before us, it is clear and plain beyond doubt that the sum of rupees one lac as found by the Tribunal was not based on any material or fact or circumstance but was a pure guess-work or fancy of the Tribunal. Therefore, that finding of fact about the figure of rupees one lac must be set aside on the principle just enunciated. Equally on the principle that where there is some fact to support the finding then this Court should accept such finding of fact and, therefore, on the same principle, the sura of Rs. 4,60,000 as found by the Income-tax Officer and confirmed by the Appellate Assistant Commissioner and proved almost to the hit by evidence on record, must be accepted by this Court as an unalterable fact.
38. This result also follows from the application of the above principles in another way. The Supreme Court in Daulatram Rant-mars case, : 53ITR574(SC) just mentioned, says that the legal effect of a finding of fact is a question of law which can be reviewed by the High Court within its jurisdiction. What is the apparent fact on which the Tribunal came to the figure of rupees one lac in this case? The apparent fact is an unproved assertion illegally received and more illegally considered by the Tribunal regarding the receipt and payment of Rs. 21,00,000 and Rs. 12,00,000 and odd which we have discussed above. This material was not in the assessment proceedings; this material did not become part of the record at any stage of the assessment proceedings and especially in view of the fact mat the assessee's application under Section 27 of the Act had been dismissed all through by the Income-tax Officer, by the Appellate Assistant Commissioner and what is more, by the Tribunal it self. The Tribunal, therefore, acted illegally in noticing facts, which it had no jurisdiction to notice, after having dismissed the assessee's application under Section 27 of the Act. What is more and what is worse is. even on the basis of that material, the sum of rupees one lac which the Tribunal hit upon cannot be worked out by any process either by material or by logic or by mathematics.
39. The final role to be played by the Tribunal under Section 86 (5) of the Act, which we have just discussed, was noticed by the Bombay High Court in Raj Kumar Mills Ltd. v. Income-tax Appellate Tribunal : 33ITR750(Bom) .
40. We should have thought that the point was concluded by the decision of the Supreme Court in Sree Meenakshi Mills Ltd., Madurai v. Commissioner of Income-tax, Madras, 0044/1956 : 1SCR691 where fee principle was clearly established that Findings on questions of pure fact arrived at by the Tribunal are not to be disturbed by the High Court on a reference even though the High Court would on the evidence come to a different conclusion, unless it appears that there is no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they had come. In this Reference, we are not troubled by the doctrine of fine distinctions between pure facts and pure law, between mixture of facts and law, the degrees of their mixture and their permutations and combinations affecting the potency of such mixture of fact or law to turn the question either to a question of fact only or of law only. Here, we hold, there was no evidence before the Tribunal to arrive at the figure of rupees one lac and we also hold that there was ample evidence, if not conclusive evidence, to prove that the actual figure of concealed income was Rs. 4,60,000 and that fact is on the record. Therefore it is not even a case where there could be a possible or impossible plea for remand for a finding of fact on this point.
41. Lest it be forgotten, it has got to be emphasised that this was a best judgment assessment and where the attempt to reopen it under Section 27 had failed. The tests for such a judgment are now well settled ever since Commissioner of Income-tax United and Central Provinces v. Badridas Rainrai . No doubt, such an assessment has to be according to the best of the Income Tax Officer's judgment. The Privy Council laid down the test that the Income-tax Officer in coming to such judgment must not act vindictively or capriciously in the matter, but must make what he honestly believes to be a fair estimate of the proper figure of assessment. For that purpose, he is entitled to consider local knowledge, assessee's circumstances, his own knowledge of previous returns of the assessee and all other matters which he thinks would assist in arriving at a fair and proper estimate. The Privy Council pointed out that though there must necessarily be guesswork in the matter, it must be honest guesswork. We have no hesitation in holding in the facts of this case that the Income-tax Officer and the Appellate Assistant Commissioner exercised their best judgment in accord with the tests laid down by the Privy Council. The best judgment assessment in this case was neither vindictive nor capricious nor penal. In deed it was fully supported by undeniable facts, some of which were admitted by the assessee himself, which he tried to deny at the beginning but which ultimately he unsuccessfully tried to explain away. This Court therefore is satisfied that the best judgment assessment in this, case was a reasonable assessment based on facts.
42. Had there been an iota of evidence to support the Tribunal's decision about the figure of Rs. one Lakh, we would not have interfered with its decision on the principle laid down by the Supreme Court in Bank of Bihar Ltd., Patna v. Commissioner of Income-tax, Bihar and Orissa : 45ITR427(SC) emphasising the principle that where there is some evidence to justify the conclusion of the Tribunal it is not open to the High Court in a reference under Section 66 of the Income-tax Act to make a re-appreciation of that conclusion.
43. In that view of the matter, the interesting argument for the assessee that in this Reference, the High Court cannot enhance the assessment from rupees one lac to RS. 4,60,000 loses much of its force. This Court is really not enhancing the assessment to any ew figure or amount, or making an assessment of its own, but restoring the assessment of the Income Tax Officer and confirmed by the Appellate Commissioner, wrongfully and illegally' set aside by the Tribunal. The High Court certainly has jurisdiction to answer me questions asked. The actual questions asked in this case leave us free to enhance the assessment. We have only answered the questions as they have been framed and done no more. If the jurisdiction is to be understood in terms of questions and answers as it must under Section 66 (5) of the Act which places a mandate upon this Court to decide such questions then that jurisdiction is not limited or qualified by saying that the decision must be so given as not to enhance the assessment made by the Tribunal. That will be laying a limitation on the powers and jurisdiction of this High Court, which is not there under Section 66 (5) of the Act. Supposing by answering a question of law it follows that the assessment must be enhanced as a matter of course, then is it going to be said that because it leads to enhancement, therefore, the High Court answers either should not be given or must be modified? We have no hesitation in holding that such a view is entirely wrong and against the Statute.
44. Some reference to some of the relevant sections of the Income Tax Act on this point may not be without an interest on this subject. Apart from the express and unqualified language of Section 66 (5) of the Act giving the power, the duty and the jurisdiction to this High Court to decide the questions of law on the reference, Section 33 which is the section to deal with appeals against orders of Appellate Assistant Commissioner, specially by its Sub-section (6) provides--'save as provided in Section 66 orders passed by the Appellate Tribunal on appeal shall be final.' Therefore, the finality attaching to the Tribunal's order is only 'save as provided in Section 66.' That is Section 66 which gives this High Court jurisdiction. Section 35(5) of the Income-tax Act, 1922 mentioning about assessment of a partner in a firm or of the firm uses the words 'enhancement made in the income under Section 66' and necessarily implies that enhancement of the assessment is not beyond the purview of Section 66 (5) of the Income Tax provided of course that follows from the decision on the question of law asked on the reference. It is argued by Mr. Ghose for the assessee that because the proviso to Section 66 (7) mentions reduction in the amount of assessment, therefore it was reduction and not enhancement which would come under this jurisdiction. This argument is unsound. This reduction in the assessment is mentioned there, only in connection with refund under Section 66 (7), and that cannot limit the jurisdiction of the High Court under Section 66(5) of the Act only to reduction and prevent enhancement, if that follows from the decision on the question of law asked on the Reference. Such cases of refund of excess after reduction in the assessment are also mentioned in such other clauses as the third proviso to Section 18A (6) of the Act, but they cannot control the unqualified jurisdiction of this High Court under Section 66 (5) to decide a question of law arising on the reference. It was also argued that Section 31 (3) (a) expressly gives to the Appellate Assistant Commissioner, in disposing of an appeal before him, the power not only to reduce but also to enhance the assessment, and therefore, unless the power to enhance the assessment is expressly given it cannot be assumed. That argument does not impress us. If that were so, then such express power, either of reduction or enhancement, is not given to the Tribunal either, because all that Section 33 (4) says is this that the Appellate Tribunal may pass such orders as it thinks fit. Therefore, it must be implied that the Tribunal has the jurisdiction to pass an order either enhancing or reducing the assessment made by the Appellate Assistant Commissioner, by virtue of the Tribunal's statutory powers to 'pass such orders as it thinks fit.' On a parity of reasoning, Section 66 (5) says that High Court shall decide the questions of law and if in deciding the questions of law, the assessment is enhanced or reduced, that will be the effect that must follow. We read nothing in Section 66 (5) of the Act to find any limitation that the High Court in dealing with a Reference under Section 66 (5) of the Act is limited only to confirmation of the Tribunal's assessment or its reduction and is not competent to enhance it if the answers to the questions of law decided by the High Court demand it. Finally, on this branch of the argument, Mr. Ghose, for the assessee, contends that because this is a Reference at the instance of the assessee, therefore, the assessment made by the Tribunal cannot be enhanced to his detriment. In support of this branch of his argument, he says that if that was what was sought for by the Income-tax authorities, then they should have brought a Reference at their instance. We do not think that this High Court can be held at ransom and its jurisdiction determined by the person at whose instance the Reference is made under Section 66 of the Act. No matter at whose instance the Reference is made under Section 66 of the Act, be it of the assessee or of the taxing authorities or be it under direction of court, once the Reference is before the Court, the Court has unqualified jursrdiction to decide the questions of law raised on that Reference irrespective of the fact at whose instance the Reference is made. It is in that sense an advisory or opinion jurisdiction on the points of law asked on the Reference, and unlike an ordinary litigation or suit at the instance of a plaintiff.
45. In this view of the matter, it is not necessary for us to discuss at any more length the observations in the decision of a Division Bench of this Court in Chainrup Sampatrain v. Commissioner of Income Tax, West Bengal : 20ITR484(Cal) on the nature and character of the jurisdiction under Section 66 of the Income-tax Act.
46. Before concluding, we have only to record the significant fact that the questions in this case were framed by the Bench that made the Rule absolute and the questions that the Bench framed were larger than the questions which the assessee had suggested presumably because the Bench making the Rule absolute was not sure that the hypothesis or the assumption in question (1) as noticed above was right or wrong.
47. Therefore, this Court answers the questions in the manner already set out above.
The assessee will pay the costs of this Reference. This Reference is not certified for two Counsel.
48. I agree.