(Appeals by special leave from the order, dated February 28, 2001 of the Karnataka High Court in Civil Petitions Nos. 132 and 132‑A of 1999).

Income‑tax‑‑‑--

‑‑‑‑Reference‑‑‑Question of law‑‑‑Additions made on account of bogus purchases and unaccounted income from sales‑‑‑Appellate Tribunal‑ Deleting additions‑‑ ‑Does not give rise to question of law‑‑‑Indian Income Tax Act, 1961, S.256(2).

Whether the Appellate Tribunal was right in deleting additions made on account of bogus purchases of ground nut cakes as well as additions made on account of unaccounted income from sale of ground nut oil does not involve a question of law.

The order of the Karnataka High Court (M.F. Saldanha and D.V. Shylendra Kumar, JJ.), dated February 28^th, 2001, delivered by Saldanha, J., was as follows:‑‑‑

We have heard the petitioner's learned counsel and the respondent's learned counsel at considerable length in this civil petition. Whereas it is the case of the Revenue that a reference is not only justified but is necessary on the record of the present case, principally on the ground that the circumstances under which the original assessment order was set aside and the appellate order was confirmed, are vulnerable in law, the respondent's learned counsel has vehemently submitted that a careful scrutiny of the record will indicate that this is a case in which the authorities at each level were concerned only with a pure appreciation of evidence. It was also our view with a certain degree of force, that the conclusions that were' arrived at by the original assessing authority were virtually run away conclusions in so far as these findings cannot be justified on the basis of whatever materials are on record and that consequently, where the authority had rightly interfered, the present attempt is to reopen the issue relating to the appreciation of evidence. Our attention has been drawn to a long list of judgments wherein the Courts have unequivocally held that if the issue is confined to a pure appreciation of evidence or pure question of fact that it is totally beyond the scope of a reference to the High Court. We are in respectful agreement with this proposition, but what we need to record at this stage is that, a careful assessment of the present record will indicate that there is a definite point of law involved in the present proceedings and that consequently, the conclusion arrived at by the Tribunal that it is not a case where a reference was competent, was incorrect.

In this view of the matter, the civil petition succeeds. We direct the Tribunal to drew up a statement of case and make a reference to the High Court within a period of three months from today. The civil petition is accordingly allowed. No order as to costs.

Officer to take note of the fact that since there are two assessment orders involved and since separate Court‑fee has been paid, this civil petition will have to be separately numbered as 132 of 1999 and 132‑A of 1999. They shall be reflected in the title of the order and the Tribunal shall also take note of the fact that two references will have to be made.

The assessee preferred appeals to the Supreme Court by special leave.

Ms. S.R. Anuradha Pradeep, Ms. Kavitha Wadra Mahinder Singh and Mrs. Pratibha M. Singh Advocates for Appellant.

Soli J. Sorabjee, Attorney‑General of India (Ranbir Chandra and B.V. Balram Das, Advocates for Respondent.

ORDER

Leave granted.

The order under challenge was passed by a Division Bench of the High Court of Karnataka on an application by the Revenue under section 256(2) of the Income Tax Act, 1961.

The Revenue sought to refer to the High Court the following question:‑‑

"Whether, on the facts and in the circumstances of the case, the Income‑tax Appellate Tribunal is right in law in deleting the additions made on account of bogus purchases of ground nut cakes as well as additions made on account of unaccounted income of sale of ground nut oil for the assessment years 1990‑91 and 1991‑92?"

The Tribunal declined to make the reference because, in its view, the question was not a question of law. The. High Court found it necessary to record that a careful assessment of the record would indicate that there was a definite point of law involved and that the Tribunal's conclusion was incorrect.

As we read the question, it does not involve any question of law and the High Court has not recorded what definite point of law it found was involved. We must record that, with fairness, the learned Attorney General has not supported the order of the High Court.

The civil appeals are allowed. The order under challenge is set aside.

No order as to costs.

M.B.A./1094/FCAppeal allowed.