C.K. Banerji, J.
1. In this reference tinder Section 256(2) of the I.T. Act, 1961, at the instance of N. K. Agarwal, the assessee, the Tribunal has drawn up a statement of case and has referred the following questions of law for the opinion of this court :
'1. Whether the Tribunal was correct in confirming the order of the Income-tax Officer ignoring the affidavit of Govind Saran Agarwal which was filed before the AAC and admitted by him
2. Whether the order of the Tribunal in confirming the conclusion of the ITO that the assessee had purchased the winning tickets from the real holders is based on no material evidence and is perverse ?'
2. The material facts found or admitted in these proceedings are as follows :
3. In the assessment year 1972-73, for which the relevant previous year ended on the 31st March, 1972, the assessee claimed that Rs. 64,913 being winnings on horse racing from seven jackpots and four trebles were his receipt of a casual and non-recurring nature and exempt from tax. Most of the payments were claimed to have been received by the assessee in cheques drawn by the Royal Calcutta Turf Club and a certificate to that effect was produced from the said turf club. In his income-tax assessment for the previous year, being the assessment year 1971-72, the assessee had claimed similar exemption in respect of Rs. 16,996, being his race winnings foom horse racing which had been rejected by the ITO but hadbeen allowed by the AAC. Following his decision in the said previous year the ITO rejected the assessee's claim in the instant year and added the said amount as income from undisclosed sources. The assessee appealed to the AAC who found that the facts in the instant year were identical to those in the previous year and following his order in the previous year deleted the said addition.
4. The revenue preferred an appeal to the Income-tax Appellate Tribunal. From the order of the ITO passed in the earlier assessment year 1971-72 and from the statement of the assessee recorded in the proceedings for the said assessment year by the ITO under Section 131 of the I. T. Act, 1961, the Tribunal found that the assessee was ignorant of the happening at the race course, did not have an elementary knowledge of races and did not even remember the names of the jockeys or horses which ran on the last leg of the jackpot events or the major races or cups in which the assessee had won. The Tribunal found this to be uncommon for a person who had won huge amounts in altogether eleven jackpot and treble events within a span of two years. The Tribunal held that the receipt, of the winning amounts by cheques from the turf club by itself did not establish that the assessee was the real holder of the winning tickets and the observation of the ITO that the assessee might have purchased the winning tickets from the real holders to give a colour of genuineness to the receipts was not without any material on record. From the said evidence and the materials collected by the ITO the Tribunal found that it was incredible that the assessee had won so many events in two years. The Tribunal accordingly set aside the order of the AAC and restored the assessment as made by the ITO.
5. The learned counsel for the assessee urged before us at the hearing that for the earlier assessment year 1971-72, the AAC deleted the addition of the race winnings of the assessee mainly on the ground that the ITO did not bring any material on record to show that the assessee had purchased the winning tickets from the real holders and the observation of the ITO that the assessee might have done so was based merely on suspicion and surmise. The revenue not having challenged the said order of the AAC his findings became final and conclusive and the Tribunal could not reappraise such findings in the said earlier assessment year and come to a contrary conclusion in the present year. He further urged that in the earlier assessment year an affidavit of one Govind Saran Agarwal, a relation of the assessee, corroborating the statements of the assessee before the ITO had been filed before the AAC in support of the assessee's contention. This was not considered by the Tribunal in the instant year at all, and in fact neither the ITO nor the Tribunal made any independent enquiry to come to a separate finding in the present year. It was urged that, in any event, the suspicion or surmises of the ITO on which the assessment of theprevious year was based were absurd and preposterous as it was inconceivable how the assessee could have found out the seven winners of jackpots and four winners of treble events and purchased the winning tickets from them. There was no reason why the real holders of the winning tickets did not collect their winnings themselves but waited on the off-chance of being discovered by the assessee for purchase of the winning tickets It was submitted that no adverse inference could be drawn from the fact that the assessee did not obtain all the payments from the race-course counter within the half hour allowed for the same at the end of each event.
6. It was also urged that the assessee never claimed to be a person versed in the races and had deposed that he had merely followed the tips furnished by Govind Saran Agarwal and his friend, N. Das, only for the jackpot and the treble events. It was but natural that he did not know the happenings of the race course or remember the names of the jockeys or horses or the major races or cups of the winning events. The Tribuaal's observation that the assessee had stated before the ITO that he used to watch the races from the members' enclosure was wholly erroneous as no such statement of the assessee was recorded.
7. In support of his contention learned counsel for the assessee cited a decision of the Supreme Court in ITO v. Murlidhar Bhagwan Das : 52ITR335(SC) , where the Supreme Court considered the meaning of the expression 'finding' as appearing in the second proviso to Sub-section (3) of Section 34 of the Indian I.T. Act, 1922, and held that a finding on an irrelevant or extraneous matter would not be a finding but only the material finding necessary for the disposal of the proceeding before the authority would be so.
8. Learned counsel for the revenue contended on the other hand that the affidavit of Govind Saran Agarwal although filed before the AAC was neither considered by the latter nor his findings were based thereon. The assessee also did not rely on the same before the Tribunal and the Tribunal was justified in not considering the said affidavit. It was contended that question No. 1 did not arise out of the order of the Tribunal. It was next urged that the ITO in his earlier assessment order had given categorical reasons for his conclusion that the alleged race winnings of Rs. 16,996 in the earlier year was the income of the assessee from undisclosed sources. In the present assessment year, the ITO adopted his reasonings in the said earlier order and came to a similar conclusion. The AAC merely adopted his reasonings in his earlier order as he found that the facts in the present year were identical to those in the earlier years. In the appeal from the order of the AAC who had categorically held that the facts in this year were identical to those in the earlier year, the Tribunalnecessarily had to consider the facts found for the assessment year 1971-72. The Tribunal found that the explanation of the assessee was not convincing and that the facts found by the ITO clearly established the utter improbability of the story of the assessee having won huge amounts from the races in two successive years.
9. It was next urged that the deposition of the assessee related to both the earlier and the present assessment years. The conclusion of the Tribunal was based on the totality of the facts and circumstances which all had to be taken into account and the conclusion to which the Tribunal arrived at in the instant case could not be said to be unjustified. In support of this contention learned counsel for the revenue cited a decision of the Supreme court in Sree Meenakshi Mills Ltd. v. CIT : 31ITR28(SC) and relied on the following observations (p. 37):
'When a conclusion has been reached on an appreciation of a number of facts established by evidence, whether that is sound or not must be determined, not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in. their setting in the picture as a whole.'
10. We agree with the contention of learned counsel for the revenue that question No. 1 does not arise out of the order of the Tribunal and that no reliance was placed by the AAC on the affidavit of Govind Saran Agarwal in making his order. We, therefore, decline to answer question No. 1.
11. To appreciate the controversy involved in question No. 2 the following facts have to be kept in view. The assessments for both the present year and the earlier year were made on the same date, that is, the 28th February, 1974, and a detailed discussion of the facts were made by the ITO in his order for the assessment year 1971-72 wherein the statement of the assessee under Section 131 of the Act was recorded. In making the assessment for the year 1971-72 the ITO took note of the subsequent fact, viz., the winnings of the assessee in the subsequent year, that is, the present year. On the facts and circumstances and on a consideration of the materials before him the ITO came to the tentative conclusion, that the winning tickets presented at the race-course counter for payment might be the tickets which were purchased by the assessee from their real holders after the close of the event. The assessee sought to support his claim on the cheques received from the turf club and the certificate issued by it in favour of the assessee. Apart from the fact that the assessee was not conversant with the happenings in the race course and did not remember the names of the horses or the jockeys or the important events which brought him the winnings, no material or evidence was before the ITO on record to displace the evidence adduced by the assessee. In the appeal for the assessment year 1971-72 the AAC heldthat the findings of the ITO were based on suspicion and surmises and that he did not bring any material on record to establish that the assessee had purchased the winning tickets from the real holders. The above conclusion and findings of the AAC stand concluded. In the present year there has been no independent enquiry at any rate for rejection of the claim or explanation of the assessee. We agree with the contention on behalf of the assessee that the observation of the ITO in the assessment order for the assessment year 1971-72 could not be treated as his findings for the subsequent year. The Tribunal proceeded solely on the basis of the assessment order for the assessment year 1971-72 which was set aside on appeal and, as such, the order of the Tribunal appears to be based on no material or evidence. Even for the assessment year 1971-72 the ITO did not find that the assessee had purchased the winning tickets from the real holders thereof but merely guessed that such might have been the case and the Tribunal was clearly in error in treating such guess-work of the ITO in the earlier year as his finding or conclusion, in the subsequent year. The fact that the assessee did not in all cases obtain payment of his winnings from the race course counter within the period of half hour allowed for the same at the close of an event, could not lead to the conclusion that the assessee purchased all the winning tickets from the real holders thereof. For the reasons given above we answer question No. 2 in the affirmative and in favour of the assessee. There will be no order as to costs.
Dipak Kumar Sen, J.
12. I agree.