COMMISSIONER OF INCOME-TAX VS SHIV 1IARI MADHU SUDAN, 2000 PTD-RAJASTHAN-HIGH-COURT-INDIA 1239 (1997)

Income-tax---

----Reference---Revision--Finding that assessment was not erroneous and prejudicial to Revenue and that revision was not justified---Finding of fact---No question of law arose---Indian Income Tax Act, 1961, Ss.256 & 263.

Held, dismissing the application for reference, that in this case the Tribunal had examined the evidence and found that the assessment as framed by the Income-tax Officer had been made by him after conducting proper enquiries and the Commissioner of Income-tax was not justified in setting aside the said assessment on the ground of the same being erroneous and prejudicial to the interests of the Revenue. This was a pure finding of fact. No question of law arose from the order of the Tribunal.

Sandeep Bhandawat for the Commissioner.

Anjay Kothari for Vineet Kothari for the Assessee.

JUDGMENT

B. R. ARORA, J.---The Revenue, by this application under section 256(2) of the Income Tax Act, 1961, has prayed that the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, may be directed to refer the following questions of law for the opinion of this Court:

"(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that the order passed by the Assessing Officer on February 1, 1989, was not erroneous and prejudicial to the interests of the Revenue?

(2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct in holding that the Commissioner of Income-tax was not justified in passing order under section 263 of the Income Tax Act, 1961?"

The brief facts, which led to the present controversy, are that the assessee, which is registered firm, derived its income from the trade of silver ornaments. For the assessment year 1988-89, the assessment was completed by the assessing authority on February 1, 1989, under section 143 of the Act who assessed the income of Rs.61,160 as against Rs.41,060 declared by the assessee. The Commissioner of Income-tax, Jodhpur, while exercising his powers under section 263. of the Act, was of the opinion that the assessment made by the Income-tax Officer was erroneous and prejudicial to the interests of the Revenue. While arriving at these findings, the Commissioner of Income-tax was of the view that proper enquiries were not conducted by the Income-tax Officer and he, therefore, remanded the case for fresh assessment by the assessing authority was preferred - against the order passed by the come-tax before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, and the Tribunal, while allowing the appeal filed by the assessee, recorded the following findings:--

"The assessment order shows that it was after conducting enquiries that the Income-tax Officer. ad chosen to make a lump sum addition of Rs.15,000 to the declared results. He had discussed the result declared by the assessee in sufficient length in paragraph 2 of his order. In doing that, the Income-tax Officer appears to have kept in mind that past history of the case of the assessee. The Commissioner of Income-tax was, therefore, not,, in my opinion, justified in holding that the Income-tax Officer had-not made enquiries into the trading results. In so far as the question of payment of salary to the brothers of the partners was concerned, the Income-tax Officer had dealt with the point in paragraph 3. He had not accepted the entire claim of the assessee in that behalf and had thought of making some additions in that respect. In paragraph 4 of his order, the Income-tax Officer had clearly mentioned that he was making a lump sum addition of Rs.15,000 to cover-up all possible leakage of income derived by the assessee and inadmissible items of expenditure debited in profit and loss account.

It is, thus, clear that the Income-tax Officer had conducted proper enquiry on this point also.

In so far as the question of allowing interest payment of Rs.72,827 to the relatives of the partners is concerned, I find that this issue had come up before the same Commissioner of Income-tax, in the assessee's case for the assessment year 1986-87 and the addition made was deleted by him. . . Therefore, the assessment as framed by the Income-tax Officer on the point does not appear to be erroneous and prejudicial to the interests of the Revenue...

To sum up, I am of the opinion that the assessment as framed by Income-tax Officer in this case had been made by him after conducting proper enquiries and the learned Commissioner of Income-tax was not justified in setting aside the said assessment on the ground of the same being erroneous and prejudicial to the interests of the Revenue."

All these findings arrived at by the Income-tax Appellate Tribunal, are purely findings of facts and no question of law arises. The Tribunal was, therefore, justified in rejecting the application moved by the Revenue under section 256(1) of the Act.

Since no question of law arises out of the judgment passed by the Tribunal, we, therefore, do not find any merit in this application. The application under section 256(2) of the Income-tax Act, filed by the Revenue is, therefore, dismissed.

M.B.A./3373/FCApplication dismissed.