1967 (4) TMI 11 - SC - Income Tax

Credit entries - proceedings for reassessment commenced under s. 34 - there was evidence before the Tribunal to hold that the credit of ₹ 55,293 in the account of the wife of the assessee did not represent the sale proceeds of her gold ornaments - assessee s appeal allowed

Summary

Issues:
1. Refusal of High Court to call upon the Income-tax Appellate Tribunal to state a case and submit questions of law arising from the Tribunal's order.
2. Assessment of income-tax on amounts credited to the assessee's wife's account.
3. Rejection of the assessee's claim regarding the sale proceeds of gold ornaments.
4. Tribunal's rejection of the application for reference under section 66(1) of the Indian Income-tax Act.
5. Judicial function and authority of the Income-tax Appellate Tribunal.
6. Manifest infirmity in the Tribunal's judgment.
7. Requirement for a fair and full review of evidence by the Tribunal in tax matters.

Analysis:
The judgment pertains to a case where the High Court of Judicature at Bombay refused to direct the Income-tax Appellate Tribunal to state a case and submit questions of law arising from the Tribunal's order. The assessee had migrated from Pakistan to India and set up a money-lending business. The Income-tax Officer accepted part of the amount credited to the assessee's wife's account as assets brought during migration but reassessed and brought certain amounts to tax in subsequent years. The Tribunal rejected the assessee's claim regarding the sale proceeds of gold ornaments, leading to the application for a statement of the case and reference to the High Court, which was rejected by both the Tribunal and the High Court.

The Appellate Assistant Commissioner had accepted the claim based on documentary evidence provided by the assessee regarding the sale of gold ornaments, which the Tribunal did not consider. The Tribunal's failure to adjudicate on the truth of the case in light of the evidence presented by the assessee was a significant infirmity. The Tribunal's decision was deemed flawed as it did not consider all evidence and did not act judicially in disagreeing with the Appellate Assistant Commissioner's view.

The Supreme Court emphasized that the Tribunal, as a judicial body under the Income-tax Act, must consider all material facts and record findings on all contentions raised. In this case, the Tribunal's failure to fully review the evidence and conclusively determine the factual questions raised was highlighted. The Court held that the questions of law raised by the assessee did indeed arise from the Tribunal's order, overturning the High Court's decision and directing the Tribunal to draw up a statement of the case for submission to the High Court.

The judgment underscores the importance of a fair and comprehensive review of evidence by income-tax authorities and tribunals in determining tax liabilities. It also reaffirms the judicial function and authority of the Income-tax Appellate Tribunal in considering all evidence and contentions to reach a just decision in tax matters.