HIRA SINGH & CO. VS COMMISSIONER OF INCOME-TAX
1999 P T D 3548
[230 I T R 791]
[Himachal Pradesh High Court (India)]
Before M. Srinivasan, C.J. and A.L. Vaidya, J
HIRA SINGH & CO.
Versus
COMMISSIONER OF INCOME-TAX
Income-tax Reference No, 2 of 1987, decided on 29/04/1997.
(a) Income-tax---
Income from undisclosed sources---Additions made on the basis of admission by assessee--Justified---Indian Income Tax Act, 1961.
(b) Income-tax---
------Reference--Reference can be made only on a question of law-- Reference of question of fact cannot be made on grounds of natural justice---Indian Income Tax Act, 1961, 5.256.
Under section 256(1) of the Income Tax Act, 1961, the Tribunal is required to refer to the High Court any question of law arising out of the order passed by it. There is no provision in the Income-tax Act for referring any question of fact on the ground of natural justice.
A bill showing a sale of Rs. 1,12,275 was discovered by the Assessing Officer while assessing a firm. A partner of the firm admitted it to be a "katcha bill" made by its accountant. The Assessing Officer added the amount. The Tribunal considered the evidence and upheld the addition. On a reference:
Held, that the question was one of fact. In any event, it was dear from the facts that the addition made by the Tribunal was justified.
Nemo for the Assessee.
Inder Singh with M.M. Khanna for the Commissioner.
JUDGMENT
M. SRINIVASAN, C.J.---The question referred to this Court by the Tribunal reads as follows:
"Whether, on the facts and circumstances of the case, the Appellate Tribunal was justified in upholding the addition of Rs. 1,12.275 on the basis of a katcha bill' made by the accountant and admitted to be so by the partner of the firm?"
The assessment year is 1971-72. The assessee is a forest contractor. A bill showing sale of Rs.1,12,275 was given to the Income-tax Department. When the said bill was put to one of the partners of the firm, he admitted the same to be a "kacha bill" and also admitted that it was made by an accountant, who was no more with them. It is also admitted that it is only a "pacca bill", which will be entered in the books of account and all the sales will be made to the financiers. The Income-tax Officer on the basis of those facts made the total addition of Rs.1,12,275 on account of the said bill.
On appeal, the Commissioner of Income-tax deleted the said amount and observed that it was just a bill not from the bill books and the bill has not been owned as belonging to the firm and the said transaction was also denied by the purchasers.
When the matter came before the Tribunal, the latter reversed, the findings of the Commissioner of Income-tax and restored the findings of the Income-tax Officer. The Tribunal referred to the questions put to the partner, Hira Singh, by the Income-tax Officer and the answers given by him, which read as follows:
"I show you this bill in the name of Misri Lal Jagan Nath Timber Merchants, Dehradun, dated, January 11, 1971, of the value of Rs.1,12,275.01. Could you please tell me whether it is recorded in your books?"
The answer is that:
"This bill shall not find place in the books as a pacca bill. We issue bills only in the names of the financiers and not in the name of the party who purchased the wood."
Again, the Income-tax Officer asked him whether the bill issued in the name of Misri Lal Jagan Nath did not find place in the books of account, and what the partner had to say about it. The partner replied that it was only a kacha account, and added that their accountant, Shri Rattan Chand, wrote that bill and that he did not work with the firm any more.
Thus, it is evident from the questions and answers that the transaction was not disowned by the assessee. On the other hand, the assessee accepted the genuineness and truth of the bit' and only added that it was a kacha bill and it would not find a place in the regular account. The Commissioner of Income-tax was clearly in error in thinking that it was not a bill from the bill book and, therefore, it could not have been added by the Income-tax Officer.
The question is only one of fact. We do not find any question of law arising in the situation. The Tribunal has observed that the question is referred only for the sake of natural justice. We are unable to appreciate the observation made by the Tribunal that the question should be referred for the sake of natural justice to this Court. Under section 256(1) of the Income-tax Act, the Tribunal is required to refer to the High Court any question of law arising out of the order passed by it. Hence, there is no provision in the Income-tax Act for referring any question of fact on the ground of natural justice.
In any event, the question having been referred to this Court, we answer the same in the affirmative by holding that the Appellate Tribunal was justified in upholding the addition of Rs.1,12,275 on the basis of a kacha bill made by-the accountant and admitted to be so by the partner of -the firm. The reference is answered accordingly.
M.B.A./3134/FC???????????????????????????????????????????????????????????????????????????????? Reference answered,