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Smt. Shanti Devi Jalan and ors. Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 440 of 1971
Judge
Reported in[1983]139ITR288(Cal)
AppellantSmt. Shanti Devi Jalan and ors.
RespondentCommissioner of Income-tax
Appellant AdvocateA.C. Bhabra, Adv.
Respondent AdvocateAjit Sen Gupta, Adv.
Cases Referred(a) Edwards (Inspector of Taxes) v. Bairstow
Excerpt:
- .....sen gupta, learned counsel for the revenue, has submitted on the other hand that even before the tribunal the assessee did not try to raise any question challenging the findings of fact. he submitted that it was settled law that unless a reference was made to the high court challenging the findings of fact arrived at by the tribunal, the court would have no jurisdiction to go behind or question the statement of fact. in support of this contention, mr. sengupta cited a decision of the supreme court in cit v. s.p. jain : [1973]87itr370(sc) , where the supreme court stated as follows (p. 381):' in our view there can be no doubt that unless the tribunal has been asked to refer a question impugning the validity of the findings sustainable on any principle of law, the facts stated in the.....
Judgment:

Sen, J.

1. The facts found and/or admitted in these proceedings are shortly as follows:

The assessee, Shanti Devi Jalan and others, constituted a HUF styled as ' Late K. D. Jalan, represented by his successors and legal heirs, Smt. Shanti Devi Jalan, Shri Sushil Kumar Jalan, Shri Sudhir Kumar Jalan and others '.

2. At the relevant time, the assessee was a partner in a firm known as M/s. Soorajmull Nagurmull having a share of one anna, one pie therein.

3. In the course of assessment proceedings for the assessment year 1959-60 (the relevant accounting period being the year 2015 R.N., covering the period March 29, 1958 to April 16, 1959), the ITO found that one S.K. Jalan and one Sudha Bai, being a son and a daughter of late K.D. Jalan, were married, respectively, in June, 1958 and February, 1959. The marriage expenses were shown in the books of the firm, Soorajmull Nagurmull, to be Rs. 15,000 and Rs. 10,000, respectively. The ITO considered the said expenses to be inadequate. He noted that no amount was debited for the purchase of jewellery or as expenses for decoration. Anothersum of Rs. 10,800 debited to the account of Shanti Devi Jalan in the books of the said firm stated to be for the purchase of jewellery for the daughter was not accepted by the ITO. The ITO took into account the social status of the family and the fact that it has been found by the Income-tax Investigation Commission that an expenditure of Rs. 1,00,000 used to be incurred in each of the marriages in the family of the partners of the said firm. The ITO estimated the expenses of the said two marriages at Rs. 1,50,000 and, deducting the expenses shown in the account, a sum of Rs. 1,25,000 was added to the assessee's income as income from undisclosed sources.

4. Being aggrieved by the assessment, the assessee preferred an appeal to the AAC who confirmed the addition. Still aggrieved, the assessee preferred a further appeal to the Income-tax Appellate Tribunal. It was contended in the appeal before the Tribunal that there was no justification for estimating the expenses of the said marriages when separate accounts of the marriages were maintained with necessary details. It was contended further that the estimate of expenses made was without any basis or material and was pure conjecture and surmise. It was contended further that there could be no comparison between the marriages which took place in the family in the lifetime of K.D. Jalan and the marriage, in the instant case, after the latter's death. The assessee reiterated that jewellery was purchased for the daughter by Shanti Devi Jalan to the extent of the debit in her account in the firm.

5. It was contended on behalf of the Revenue that from the papers seized by the authorities, it was noticed that the marriage expenses were grossly understated in the books of the firm. Where actual expenses were about Rs. 4,00,000, the amount debited was only Rs. 60,000. It was also pointed out that the estimate of the marriage expenses of two other daughters of late K.D. Jalan was Rs. 2,00,000 each.

6. The Tribunal did not accept that Rs. 25,000 and Rs. 10,800 were the only amounts spent for the said two marriages. The Tribunal found further that the estimate of expenses made by the ITO was reasonable and based on sufficient materials. The Tribunal, however, accepted that the said debit of Rs. 10,800 represented the amount spent for the purchase of jewellery for the daughter, and directed that the said amount should be deducted from the estimated total expenditure. Therefore, the addition of Rs. 1,25,000 was reduced by Rs. 10,800.

7. At the instance of the assessee, this court, under Section 256(2) of the I.T. Act, 1961, has directed the Tribunal to draw up a case and refer the following question as a question of law arising out of the order of the Tribunal: .

' Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the addition of Rs. 1,14,200 in the assessee's total income for 1959-60 as its income from undisclosed source '

8. At the hearing, Mr. A.C. Bhabra, learned counsel for the assessee, sought to impugn the decision of the Tribunal on the ground that there was no material on which the said addition of Rs. 1,14,200 to the assessee's income could be sustained. It was pointed out to Mr. Bhabra that none of the facts found had been sought to be challenged by the assessee as being based on no evidence or irrelevant evidence or that such decision was perverse. By reason of the form in which the question had been referred, the assessee could be held to be estopped from making such contentions.

9. Mr. Bhabra submitted that the form of the question was wide enough for the assessee to challenge any finding of fact as being perverse or based on no material. In support of his contentions, Mr. Bhabra cited the following decisions ;

(a) Edwards (Inspector of Taxes) v. Bairstow [1955] 28 ITR 579. This decision was cited for the following observations in the judgment of Lord Radcliffe (at p. 592 of the report) :

' If a party to a hearing before Commissioners expresses dissatisfaction with their determination as being erroneous in point of law, it is for them to state a case and in the body of it to set out the facts that they have found as well as their determination. I do not think that inferences drawn from other facts are incapable of being themselves findings of fact, although there is value in the distinction between primary facts and inferences drawn from them. When the case comes before the court, it is its duty to examine the determination having regard to its knowledge of the relevant law. If the case contains anything ex facie which is bad law and which bears upon the determination, it is, obviously, erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. In those circumstances, too, the court must intervene. It has no option but to assume that there has been some misconception of the law and that this has been responsible for the determination. So there too, there has been error in point of law. I do not think that it much matters whether this state of affairs is described as one in which there is no evidence to support the determination or as one in which the evidence is inconsistent with and contradictory of the determination, or as one in which the true and only reasonable conclusion contradicts the determination. Rightly understood, each phrase propounds the same test. For my part, I prefer the last of the three, since I think that it is rather misleading to speak of there being no evidence to support a conclusion when in cases such as thesemany of the facts are likely to be neutral in themselves, and only to take their colour from the combination of circumstances in which they are found to occur.'

(b) Sree Meenakshi Mills Ltd. v. CIT : [1957]31ITR28(SC) . This decision was cited to show that the Supreme Court quoted with approval part of the observations of Lord Radcliffe in Bairstow's case [1955] 28 ITR 579 as follows :

' ......I think that it is rather misleading to speak of there being noevidence to support a conclusion when in cases such as these many of the facts are likely to be neutral in themselves, and only to take their colour from the combination of circumstances in which they are found to occur. '

10. Mr. Ajit Sen Gupta, learned counsel for the Revenue, has submitted on the other hand that even before the Tribunal the assessee did not try to raise any question challenging the findings of fact. He submitted that it was settled law that unless a reference was made to the High Court challenging the findings of fact arrived at by the Tribunal, the court would have no jurisdiction to go behind or question the statement of fact. In support of this contention, Mr. Sengupta cited a decision of the Supreme Court in CIT v. S.P. Jain : [1973]87ITR370(SC) , where the Supreme Court stated as follows (p. 381):

' In our view there can be no doubt that unless the Tribunal has been asked to refer a question impugning the validity of the findings sustainable on any principle of law, the facts stated in the statement of the case would form the basis on which the legality or otherwise of the assessment would alone require to be considered by the High Court. '

11. The submissions of Mr. Sengupta are not without substance. This court also has consistently taken the view that unless a fact is specifically challenged by the assessee and a question raised and referred incorporating such challenge, the court would not suo motu go into the validity of a finding of fact. It does not appear to us that the observations of Lord Radcliffe in Bairstow's case [1955] 28 ITR 579, were meant to lay down that the assessee would be entitled to challenge a finding of fact without raising a question recording such challenge. It also does not appear to us that the Supreme Court read or understood the observations of Lord Radcliffe as Mr. Bhabra has contended.

12. Accordingly, without any challenge on the facts, it cannot be said that the order of the Tribunal was otherwise erroneous in law.

13. For the reasons stated above, we answer the question referred in the affirmative and in favour of the Revenue. In the facts and circumstances, there will be no order as to costs.

C. K. Banerjee, J.

14. I agree.


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