KILASHO DEVI BURMAN VS COMMISSIONER OF INCOME-TAX
1997 P T D 616
[219 I T R 214]
[Supreme Court of India]
Present: S. P. Bharucha and S. Saghir Ahmad, JJ
SMT. KILASHO DEVI BURMAN and others
Versus
COMMISSIONER OF INCOME-TAX
Civil Appeals Nos. 2242 to 2246 of 1978, decided on 08/02/1996.
(Appeals by special leave from the judgment and order, dated July 14, 1977, of the Calcutta High Court in Income-tax Reference No.90 of 1968).
(a) Income-tax--
----Reference---Powers of High Court---Finality of finding of fact---High Court can call for supplementary statement of case---High Court cannot consider evidence which was not before Tribunal even when deciding whether finding of Tribunal was perverse---Indian Income Tax Act, 1961, S.256.
The High Court in a reference under the taxation statutes exercises advisory jurisdiction in regard to questions of law. It is only when it has before it a question that `asks whether the Tribunal has, upon the evidence on record before it, come to a conclusion which is perverse, that it may go into facts, for this is a question of law. A conclusion is perverse only if it is such that no person, duly instructed, could, upon the record before him, have reasonably come to it. It is the Tribunal that finds facts. It sets these out in the statement of case whereby it refers questions of law to the High Court. The High Court, in reference proceedings, cannot go behind the facts found. Where the High Court is of the view that it is requisite that facts other than those found need to be ascertained it must call upon the Tribunal to submit a supplemental statement of case. Even when the High Court is required to decide whether the findings of fact reached by the Tribunal are perverse, the High Court is confined to the evidence that was before the Tribunal. The High Court cannot' took at evidence that was not before the Tribunal when it reached the findings in question to hold that these findings are perverse.
An assessment was said to have been made on a Hindu undivided family for the assessment year 1955-56. The assessment order on the record of the Revenue bore no signature. According to the assessee, neither the statutory notices, nor the demand notice, nor the assessment order had been received. On the record there was an acknowledgement slip bearing the, date April 25, 1958, signed by P. According to the assessee, there was no such person who had any authority to receive any notice on his behalf. There was no material to show that the demand raised in the demand notice had been paid by the assessee. The assessee filed a partition suit. For the assessment years 1956-57 to 1961-62, no notices were issued to the Hindu undivided family. The income from the properties which were covered by the partition suit was returned by, and assessed in the hands of the erstwhile members of the Hindu undivided family. The Income Tax Officer thereafter took proceedings under section 147(a) of the Income Tax Act, 1961, and concluded that the assessee's Hindu undivided family had escaped assessment. The Tribunal went into the question as to whether there was an assessment on the Hindu undivided family for the assessment year 1955-56. Its conclusions were: (i) that there was no signed assessment order; (ii) that even if a demand notice was taken to exist in this case, the assessment was invalid as, in spite of there being a positive demand thereunder, it had not been served on the assessee; (iii) that if there was no assessment on the Hindu undivided family (for 1955-56), there was no need on the part of the assessee to come forward with an application under section 25-A of the Indian Income-tax Act, 1922, as that section contemplated an application being made thereunder only when there was already an assessment on the Hindu undivided family. The Tribunal held that the assessment in the status of a Hindu undivided family when the family had ceased to exist had to be set aside as it was not valid. On a reference, the High Court held that the findings of the Tribunal were perverse as the records showed that P. had received a number of notices on behalf of the assessee on various dates. It held that there was a valid assessment on the Hindu undivided family for 1955-56. On appeal to the Supreme Court:
Held, allowing the appeal, the High Court had not given due importance to the fact that upon the record produced by the Revenue before the Tribunal there was no signed assessment order nor a signed assessment form. A valid assessment upon the Hindu undivided family for the assessment year 1955-56 was central to the case of the Revenue. Since it was unable to establish, by the production of a signed assessment order for that year, that there was such a valid assessment, its case fell and the Tribunal was right in its conclusions. The High Court was in error to concluding that the findings of the, Tribunal on the records were perverse The judgment and order of the Tribunal were valid. There was no valid assessment on the Hindu undivided family for the assessment year 1955-56.
(b) Income-tax---
----Assessment---Validity of assessment---Assessment order must be signed--?Indian Income Tax Act, 1961, S.143.
An assessment order has to be signed.
Kalyankumar Ray v. CIT (1991) 191 ITR 634 (SC) fol.
Ellis C. Red v. CIT (1930) 5 ITC 100 (Bom.) ref.
K.B. Rohtegi, Anup Sharma and Ms. Aparna Rohtagi for Appellants.
R.R. Mishra, Senior Advocate, (R. Satish and S.N. Terdol, Advocates, with him) for Respondents.
JUDGMENT
S. P. BHARUCHA, J.---This is an appeal by special leave. The order that is impugned was passed by the High Court at Calcutta, in an income-tax reference. The questions that the High Court was called upon to answer were:
"(1) Whether, on the fact and in the circumstances of the case, there was a valid assessment on a Hindu undivided family for the assessment year 1955-56?
2. If the answer to question No. 1 is in the affirmative, then whether, on the facts and in the circumstances of the case, the assessments for 1958-59 to 1962-63 in the status of a Hindu undivided family are valid?"
The reference related to the assessment years 1958- 59 to 1962-63, the relevant previous years whereof were B. S. years 1364 to 1368. The assessee was Rash Behaari Das Buman, who was governed by the Mitakshara school of Hindu law. It is unnecessary for the purposes of this decision to go into his family history, which is referred to both in the statement of the case placed before the High Court by the Income-tax Appellate Tribunal and the judgment of the High Court. What we now set out is what is relevant and it is taken from the statement of the case. For the assessment year 1955-56, the assessee submitted a return, dated November 14, 1957, describing himself as the Karta of his Hindu undivided family. An assessment was said to have been made on the Hindu undivided family. The assessment order on the record of the Revenue bears no signature. There is no signed copy of the assessment form. There is a demand notice, dated April 10, 1958, with some initial or signature in it. According to the assessee, neither the statutory notice nor the demand notice nor the assessment order had been received. On the record there is an acknowledgment slip bearing the, date April 25, 1958, signed by one Phool Singh. According to the assessee, there was no such person who had any authority to receive any notice on his behalf. There was no material to show that the demand raised in the demand notice had been paid by the assessee.
The assessee filed a partition suit (bearing No. 665 of 1955) in the Calcutta High Court. A settlement was arrived at. The properties were to be divided by metes and bound, but that remained to be done when the statement of case was drawn by the Tribunal.
For the assessment years 1956-57 to 1961-62, no notices were issued to the Hindu undivided family under section 22 of the Indian Income ?tax Act, 1922. Similarly, for the assessment 1962-63, no notice was issued to the Hindu undivided family under section 239 of the Income-tax Act, 1961. The income from the properties which were covered by the partition suit was returned by and assessed in the hands of the erstwhile members of the Hindu undivided family.
The Income-tax Officer, thereafter, took proceedings under section 147(a) of the Income-tax Act, 1961, and concluded that the assessee's Hindu undivided family had escaped assessment; this was on the basis that no genuine partition had taken placed and that the assessee had made a return which misrepresented the facts. The Income-tax Officer started proceedings under section 148 for the assessment years 1958-59 to 1961-62 and under section 139(2) for the assessment year 1962-63. The assessee filed "nil" returns under protest. The Income Tax Officer rejected the assessee's contention and made assessments on the Hindu undivided family. The assessee appealed but, except for certain reductions in the quantum, the orders of the Income-tax Officer were affirmed.
The assessee appealed to the Tribunal. The assessee urged that during the relevant assessment years there was no Hindu undivided family and no valid proceeding there against could be taken. It was also urged that the Hindu undivided family had never been assessed and that, therefore, there was no reason to make an application under section 25-A of the 1922 Act. On behalf of the Revenue, it was submitted that there was an assessment on the Hindu undivided family as was clear from the order for the assessment year 1955-56 and that, so long as that assessment stood, it was permissible to proceed against the Hindu undivided family for the Hindu undividend family was presumed to exist until an order under section 25-A of the 1922 Act was passed. The Tribunal went into the question as to whether there was an assessment on the Hindu undivided family for the assessment year 1955-56. Its conclusions were:
"(i) There was no signed assessment order;
(ii) even if a demand notice is taken to exist in this case, the assessment is invalid as, in spite of there being a positive demand thereunder, it had not been served on the assessee;
(iii) if there was no assessment on the Hindu undivided family (for 1955.56), there was no need on the part of the assessee to come forward with an application under section 25-A as that section contemplated an application being made thereunder only where already an assessment on the Hindu undivided family;
(iv) the absence of an application under section 25-A could not, under these circumstances, give the income tax authorities any jurisdiction to proceed against the family as such;
(v) section 25-A(3) had no operation because there was no assessment on the family, the disputed Hindu undivided family being in the same position as a dead assessee whose income until section 24-B was enacted could not be subjected to tax (see Ellis C. Reid v. CIT (1930) 5 ITC 100 (Bom.); and
(vi) the -assessment in the status of a Hindu undivided family when the family had ceased to exist had to be set aside as it was not valid."
The Revenue sought a reference to the High Court contending, among other things, that the factual findings of' the Tribunal were "unsupported by any evidence and is unreasonable and perverse". The Tribunal modified the questions suggested and framed the two questions which are quoted above. Having regard to the frame of the questions that the Revenue wanted the Tribunal to refer to the High Court, it was, in our view, open to the High Court to consider the record before the Tribunal to determine whether the Tribunal's factual conclusions were perverse.
The High Court in a reference under the taxation statutes exercises advisory jurisdiction in regard to questions of law. It is only when it has before it a question that asks whether the Tribunal has, upon the evidence on record before it, come to a conclusion which is perverse that it may go into facts for this is a question of law. A conclusion is perverse only if it is such that no person, duly instructed, could, upon the record before him, have reasonably come to it.
In the instant case, the High Court placed reliance upon the acknowledgement slip, dated April 25, 1958, signed by Phool Singh. It said, "Records show this Phool Singh to have received a number of notices on behalf of the assessee on widely separated dates". The "records" which the High Court referred to was a statement of "facts which are admitted and/or found by the Tribunal and which are necessary for drawing up a statement of the case (vide paragraph 3 of the reference application" which was annexed to the Revenue's reference application. This statement said, "Records show this Phool Singh to have received a number of notices on behalf of the n assessee on widely separated dates". The statement of the case does not say this about Phool Singh.
It is the Tribunal that finds facts. It sets these out in the statement of the case whereby it refers questions of law to the High Court. The High Court, in reference proceedings, cannot go behind the facts found. Where the High Court is of the view that it is requisite that facts other than those found need to be ascertained it must call upon the Tribunal to submit a supplemental statement of the case. Even when, as here, the High Court is required to decide whether the findings of fact reached by the Tribunal are perverse, the High Court is confined to the evidence that was before the Tribunal. The High Court cannot look at evidence that was not before the Tribunal when it reached the impugned findings to hold that these findings are perverse.
The statement of "admitted" facts was placed by the Revenue before the Tribunal as an annexure to its reference application. That the statement of the case does not state that Phool Singh had received the earlier notices on behalf of the assessee shows that the Tribunal had not so found; that there is no mention of this at all suggests that the Revenue did not place this argument and the supporting material before the Tribunal. The High Court could have required the Tribunal to ascertain whether Phool Singh had received the earlier notices on behalf of the assessee and prepare a supplemental statement of the case, but the High Court could not, upon these "admitted" facts, have reached the conclusion that the Tribunal's findings of fact were perverse.
The High Court based itself upon the demand notice and the acknowledgement slip signed by Phool Singh and observed. "Unless an assessment order was passed under or in pursuance of the Act question of a notice of demand in the prescribed form specifying the sum payable by the assessee could not arise". The High Court did not give due importance to the fact that upon the record produced by the Revenue before the Tribunal there was no signed assessment order nor a signed assessment form.
That an assessment order has to be signed is established by the judgment of this Court in Kalyankumar Ray v. CIT (1991) 191 ITR 634. It said (page 638):
"If, therefore, the Income Tax Officer first draws up an order assessing the total income and indicating the adjustments to be made, directs the office to compute the tax payable on that basis and then approves of it, either immediately or some time later, no fault is can be found with the process, though it is only when both the computation sheets are signed or initialed by the Income Tax Officer that the process described in section 143(31 will be complete...All these decisions emphasise that all that is needed is that there must be some writing initialed or signed by the Income Tax Officer before the period of limitation prescribed for completion of the assessment has expired m which the tax payable is determined and not that the form usually styled as the 'assessment order' should itself contain the computation of tax as well."
A valid assessment upon the Hindu undivided family for the assessment year 1955-56 was central to the case of the Revenue. Since it was unable to establish, by the production of a signed assessment order for that year, that there was such a valid assessment, its case fell and the Tribunal was right in so holding. The High Court was m error in concluding that the findings of the Tribunal on the record were perverse.
The appeal is allowed. The judgment and order under appeal is set aside. The judgment and order of the Tribunal is restored.
The respondents shall pay to the appellants the costs of the appeal.
M.B.A./1128/PTD?????????????????????????????????????????????????????????????????????????????? Appeal allowed.