SARDARMAL SHIVDAYAL VS COMMISSIONER OF INCOME-TAX, 1998 PTD-GAUHATI-HIGH-COURT-INDIA 1073 (1996)

Income-tax---

----Reference---Powers of High Court---High Court can refuse to answer question which is purely a question of fact---Indian Income Tax Act, 1961, S.256.

The High Court has power to refuse to answer any question which either does not arise out of the order of the Tribunal or is purely a question of fact and a question of law which is purely academic even though at an earlier stage a direction was given for referring the same:

Held, that whether there was legal and admissible evidence to support the inference that the assessee was indulging in unaccounted transactions, and the Tribunal was right in restoring the additions made by the Assessing Officer was purely a question of fact. The question would not be answered.

C.I.T. v. Sint. Anusuya Devi (1968) 68 ITR 750 (SC) ref.

Dr. A. K. Saraf and K. Gupta for the Assessee.

G.K. Joshi and K. Bhuyan for the Commissioner.

JUDGMENT

D. N. BARUAH, J.---In this reference under section 256(2) of the Income Tax Act, 1961, the following question has been referred for opinion of this Court which is quoted below:

"(6) Whether, on the facts and in the circumstances of the case, there was legal and admissible evidence to support the inference that the assessee was indulging in unaccounted for transactions and whether on such an inference, the Tribunal was right in restoring the additions of Rs.24,000 and Rs.60,000 to the assessment of the assessee?" .

The facts are as follows:

This reference is connected with the assessment year 1972-73. The assessee is a registered firm and the assessee's firm carried on its wholesale business in grocery. The returned income was of Rs.76,380 with a net profit of Rs.54,610 which was computed after deducting a sum of Rs.1,000 being composition fee paid to the Sales Tax Department. The assessee, vide letter dated September 13, 1972, informed the Income-tax Officer that the sales tax authorities have searched the assessee's premises and seized certain books of account on the basis of which the turnover of the assessee was increased. The assessee claimed that the composition fee paid to the sales tax authorities was deductible and that the additional turnover estimated by the sales tax authorities should not be taken into account in determining the income of the assessee under the Income-tax Act. The Assessing Officer, after going through the exercise book seized by the Sales Tax Department arid after examining the partners of the firm as well as persons mentioned in the exercise book, came to the conclusion that the amounts relating to the turnover in grocery was suppressed and accordingly he estimated it at Rs.6,00,000 and deduced the income by applying the gross profit rate of four per cent. thereon to make an addition of Rs.24,000. The assessee took up the matter before the Appellate Assistant Commissioner of Income-tax. The Appellate Assistant Commissioner allowed the relief by estimating the same at seven per cent. of the turnover against ten per cent. adopted by the Income-tax Officer. The matter was further taken up by the Appellate Tribunal by way of appeal. A cross-objection was also filed. The Tribunal dismissed the appeal filed by the assessee and allowed the cross-appeal filed by the Revenue. At the instance of the assessee, the above question has been referred. The Tribunal refused to refer the same and thus the assessee approached this Court and filed an application which was registered vide Civil Rule No. 86(M) of 1979 and this Court by an order, dated January 2, 1989, directed the Appellate Tribunal under section 256(2) of the Income-tax Act, 1961, to refer the said question.

We have heard Dr. Saraf, learned counsel for the assessee, and Mr. Joshi, learned counsel appearing for and on behalf of the Department, we have also perused the question and have gone through the statements. Mr. Joshi submits that this is entirely a question of fact. Dr. Saraf, on the other hand, submits that this Court has directed the Tribunal to refer the same. Therefore, it may not be proper to dispose of the matter in the manner by holding that no question of law is involved. In this connection, reference may be made to the decision of a case between CIT v. Sint. Anusuya Devi (1968) 68 ITR 750, in which the apex Court observed thus :

"The High Court is, however, not bound to answer a question merely because it is raised and referred. It is well-settled that the High Court may decline to answer a question of fact or a question of law which is purely academic, or has no bearing on the dispute between the parties or though referred by the Tribunal does not arise out of its order. The High Court may also decline to answer a question arising out of the order of the Tribunal, if it is unnecessary or irrelevant or is not calculated to dispose of the real issue between the taxpayer and the Department. If the power of the High Court to refuse to answer questions other than these which are questions of law directly related to the dispute between the taxpayer and the Department, and which, when answered, would determine qua that question the dispute, be granted, we fail to see any ground for restricting that power when by an erroneous order the High Court has directed the Tribunal to state a case on a question which did not arise out of the order of the Tribunal. "

In the said case, the Supreme Court observed that the High Court has power under section 256 of the Income-tax Act to refuse to answer any question which either does not arise out of the order of the Tribunal or is purely a question of fact and a question of law which is purely academic even though at an earlier stage a direction was given for referring the same. We find that the question referred is purely a question of fact, therefore, we do not answer the question. The reference is returned unanswered.

A copy of this judgment under the signature of the Registrar and the seal of the High Court shall be transmitted to the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati.

M.B.A./1265/FCReference returned unanswered.