D. B. Income Tax Reference Application v. Jethmal Boob

D. B. INCOME TAX REFERENCE APPLICATION NO.10/2000 (Commissioner of Income Tax, Jodhpur v. Jethmal Boob) DATE OF ORDER :::: 21-09-2007 HON'BLE MR. JUSTICE BHAGWATI PRASADHON'BLE MR. JUSTICE MUNISHWAR NATH BHANDARI Mr. K.K.Bissa, for Petitioner. Mr.Sanjeev Johari, for Respondent. '-BY THE COURT (PER HONBLE BHANDARI, J.) : Revenue has preferred this reference application under theprovisions of Section 256 (2) of the Income Tax Act, 1961(hereinafter referred to as ' the Act of 1961'). The Income TaxAppellate Tribunal (hereinafter referred to as 'the Tribunal')refused to make reference under the order dated 17.02.1999. A reference application was earlier filed before theIncome Tax Tribunal under the provisions of Section 256 (1) ofthe Income-tax Act, for reference of certain questions to thisCourt. It was arising out of the order dated 25.08.1998, inrelation to the block period of 1986-87 to 1996-97. Followingquestions were sought for reference :- “(1) Whether on the facts and in thecircumstances of the case, the ITAT wasjustified in law in deleting the additionofRs.2,51,056/- made as undisclosed income forassessment year 1991-92 on account ofunexplained investment in gold ornaments etc.? (2) Whether on the facts and in thecircumstances of the case, the ITAT wasjustified in law deleting the addition ofRs.8,45,525/- made as undisclosed income forassessment year 1991-92 on account ofunexplained investment in silver articles ? (3) Whether on the facts and in thecircumstances of the case, the Tribunal wasjustified in law in holding that, statement ofthe assesse regrading surrender on account ofstock recorded at the time of search is to beignored ? (4) Whether on the facts and in thecircumstances of the case, the ITAT wasjustified in law in deleting the addition ofRs.5.59 lakhs made on account of unexplainedstock, on the basis of misconceived fact thatsurrender by assesses also refers to “othermiscellaneous documents” and that thedifferences were too meagre and deserved tobe ignored ? (5) Whether on the facts and in thecircumstances of the case the finding of theTribunal that the land sold by the assesses wasagricultural land and that it was situated atdistance of more than 8 Km. From the locallimits of the Municipality etc. was not perversebeing based on unproved facts ? (6) Whether on the facts and in thecircumstances of the case, the Tribunal wasjustified in law in holding that the transactionof sale of land at Doli was not in the nature oftrade and thereby deleting the addition ofRs.10,91,780/- ? (7) Whether on the facts and in thecircumstances of the case, the ITAT wasjustified in law in altogether ignoring thecircumstantial evidence and deleting theaddition of Rs.26,051/- lakhs made on accountof undeclared payments made for the purchaseof various immovable properties ? (8) Whether on the facts and in thecircumstances of the case, the Tribunal wasjustified in law in holding that the statement ofthe assesses regarding surrender on accountof unexplained investment in construction ofhouse at 115-Central School Scheme, Jodhpur,recorded at the time of search is to beignored ? (9) Whether on the facts and in thecircumstances of the case, the Tribunal wasjustified in law in deleting the addition ofRs.4,57,330/- out of the addition of Rs. 5 lakhsmade on account of unexplained investmentin construction of house at 115-Central SchoolScheme, Jodhpur ? (10) Whether on the facts and in thecircumstances of the case, the ITAT wasjustified in law in deleting the addition ofRs.58, 57, 400/- made on account ofunexplained investment in purchase of land atPali Road ? (9) Whether on the facts and in thecircumstances of the case, the Tribunal wasjustified in law in deleting the addition ofRs.4,57,330/- out of the addition of Rs. 5 lakhsmade on account of unexplained investmentin construction of house at 115-Central SchoolScheme, Jodhpur ? (10) Whether on the facts and in thecircumstances of the case, the ITAT wasjustified in law in deleting the addition ofRs.58, 57, 400/- made on account ofunexplained investment in purchase of land atPali Road ? (11) Whether on the facts and in thecircumstances of the case, the ITAT wasjustified in law in allowing the benefit oftelescoping to the assesses in respect ofconsideration of agricultural land sold in thepast with reference to purchase of land at PaliRoad even though the assesses had failed toestablish the nexus between the two ? (12) Whether on the facts and in thecircumstances of the case, the ITAT wasjustified in law in holding that while makingblock assessment under Chapter XIVB of theI.T. Act, 1961, estimated addition on accountof unrecorded household expenses was notpermissible to make.” The learned Tribunal, vide its order dated 17.02.1999,dismissed the application, so moved by the Revenue, afterdealing with all the twelve questions. According to the Tribunal,none of the questions is having a referable question as it wasbased on finding of fact and that too recorded after appreciationof evidence on a question. Learned counsel appearing for the Revenue submitted thatthe tribunal failed to consider that all the questions wereessentially raised to decide the principle of laws. It was urgedthat in view of the judgment of the Apex Court in the case ofC.I.T. v. Indian Woolen Textile Mills (1951 ITR 291) held that ifthe Tribunal does not consider the evidence covering all essentialmatters. Rather findings are recorded, ignoring even availablematerial, then such findings would give rise to the questionliable to be referred. Reference of another judgment of theHon'ble Apex Court has been made, where in the matter ofC.I.T. v. Satnam Malik (120 ITR 309), it was held that if afinding is arrived at without proper consideration of the entirematerial, a question of law arises. After placing reliance on thesetwo judgments, learned counsel for the Revenue urged that allthe questions raised for reference were required to be referred to by the Tribunal, because order passed by the Income TaxAppellate Tribunal was without proper appreciation of materialavailable on record. On the other hand, learned counsel appearing for theassesses, submitted that none of the questions raised forreference involves a question of law, rather it is not even acase, where Income Tax Appellate Tribunal has failed to considerevidence available on record or even ignored any material beforedrawing its conclusion. The perusal of the order passed by theTribunal reveals that the said order was passed, after properappreciation of facts available on record. Thus, essentially, thematter was decided by proper appreciation of material availableon record to answer the question of facts. If any conclusion wasdrawn by the Tribunal, based on those facts, then Revenuecannot ask for reference for the purpose of re-appreciation ofmaterial. Learned counsel further urged that the judgments citedby the Revenue has no application to the present matter asthose judgments were given by the Hon'ble Apex Court on itsown facts, where Tribunal either failed to consider materialavailable on record or the findings were arrived at without dueand proper consideration of entire material. According to theassesses, it is not a case where either of the conditions issatisfied for seeking reference. We have considered counter arguments of the parties andperused the record. Learned Tribunal, by its impugned order,refused to refer Question No.1, after considering the factsavailable on record. The first question was regarding deletion ofaddition of Rs.2,51,056/- which relates to unexplainedinvestment in gold ornaments. The addition was deleted on theground that gold ornaments in question already declared inwealth tax return. Thus, considering the fact, said issue wasdecided by the Tribunal in the appeal, so preferred by theassesses and it being a issue purely based on appreciation offacts, hence no question of law arises on that count. The second question was regarding addition of Rs.8, 45,525/- regarding unexplained investment in silver articles. Again,the said amount was deleted on the basis of wealth tax returnand the issue was decided by the Appellate Tribunal in appealafter considering the entire material available on record. Thus, areference cannot be asked for appreciation of facts. Questions No. 3 and 4 relate to surrender of stock foundduring the course of survey and not during the course of search.According to the Revenue, the Appellate Authority failed to takeinto consideration the statement recorded at the time of search, however, the said fact was properly noticed and decided byappreciating the material available on record. In fact, both theparties had not acted on the statements and thus, having notaccepted the statement either by the assesses or by theRevenue, then, none was held to be entitled to take benefit ofportion of the statement. The issue was determined after evenconsidering all the documents available on record. Thus, itcannot be said that the Tribunal failed to consider either thematerial available on record or the finding was recorded inignorance of the facts available. The fifth question was pertaining to location of theagricultural land, i.e., as to whether it is situated at a distance ofmore than 8 Kms. A reference was also made to the judgmentof the Hon'ble Apex Court in the case of Sarifa Bibi MohamedIbrahim & Others v. C.I.T. (204 ITR 631), in which the ApexCourt held that whether piece of land is agricultural land or notis essentially a question of fact, therefore, even the said questionwas not found proper for the reference. The sixth question was also not found referable as it wasalso in regard to transaction of sale of land situated at Doli andwhether this transaction is in the nature of trade. The Tribunalhas considered this issue and finding that it again needs appreciation of evidence, thus refused to refer the same. Question No.7 was regarding deletion of addition ofRs.26,05 lacs on account of undeclared payment for purchase ofimmovable properties. This addition was made by the Revenue,purely on circumstantial evidence and not based on a documentor material seized at the time of the search. Therefore, theAppellate Tribunal deleted the same, referring to the decision ofthe Nagpur High Court in 29 ITR 1008. Questions No. 8 and 9 are regarding addition on account ofunexplained investment in construction of house, essentially, thiswas a question based on facts and the Appellate Tribunal decidedthe same, after considering the entire material, because the saiddifference was assessed by the Revenue on account of differencebetween the valuation report of D.V.O. The Tribunal, therefore,find no issue of law for its reference. Question No.10 was pertaining to deletion of addition ofRs.56,57,400/- on the ground that the assesses actually paidonly Rs. 18 lacs, details of which were noted in the documents.Thus, it being a question of fact, was not found to be referable. The eleventh question was pertaining to benefit of telescoping of the assessment in respect of the sale of theagricultural land. It is settled law that telescoping should beallowed, hence no illegality was found in the order of theTribunal. Question No.10 was pertaining to deletion of addition ofRs.56,57,400/- on the ground that the assesses actually paidonly Rs. 18 lacs, details of which were noted in the documents.Thus, it being a question of fact, was not found to be referable. The eleventh question was pertaining to benefit of telescoping of the assessment in respect of the sale of theagricultural land. It is settled law that telescoping should beallowed, hence no illegality was found in the order of theTribunal. The last question was pertaining to decision of theTribunal that under Chapter XI V-B of the Income Tax Actestimated addition on account of unrecorded householdexpenses is not permissible. We are of the opinion that whilecompleting the assessment under Chapter XI VB, additions canbe made only on the basis of incriminating document/materialcollected seized during the course of search. The variousBenches of the Tribunal are following this principle. This being asettled principle of law, no reference is recommended on thisaccount also. Thus, the matter was not referable. Taking note ofall the fact, the Tribunal passed the order, therefore, again, itbeing a settle law, it was not found to be issue for reference tothe scope. We have considered each of the issues asked forreference, however, taking note of the fact that all the issues arebased on facts and essentially, require re-appreciation which isnot permissible for reference to this Court. It is not a case whereeither material available on record was ignored or the Tribunal recorded its finding without considering the material, ratherperusal of the order reveals that each and every material wasproperly considered to arrive at the finding. In view of the facts discussed above, we are not inagreement with the Revenue to accept this reference application,so as to call for reference for its answer under the provisions ofSection 226 (2) of the Income Tax Act. Hence, this referenceapplication preferred by the Revenue is not accepted, the sameis hereby dismissed. (MUNISHWARNATHBHANDARI)J (BHAGWATI PRASAD),J. Scd.