1971 (1) TMI 1 - SC - Income Tax

In an application under s. 66(2) the High Court cannot be asked to call for a statement of case on a question on which the Tribunal was not asked to submit a statement of case - Revenue s appeal dismissed

Summary

Issues:
Assessment of income-tax for the assessment year 1943-44, imposition of penalty under section 28(1)(c) of the Indian Income-tax Act, refusal of the Tribunal to refer a question under section 66(1) of the Act, jurisdiction of the Tribunal to arrive at a different conclusion in penalty levy proceedings compared to assessment proceedings.

Analysis:
The judgment pertains to four appeals with common facts, focusing on one appeal (Civil Appeal No. 631 of 1967) concerning income-tax assessment for the year 1943-44. The Income-tax Officer made additions to the declared income of the assessee due to inflation in purchase, spurious cash credits, diversion of sales, and bogus speculation losses, resulting in a revised taxable income of Rs. 1,43,433. This decision was upheld by the Appellate Assistant Commissioner and the Tribunal. Additionally, a penalty of Rs. 24,500 was imposed under section 28(1)(c) of the Act, which was later reduced to Rs. 2,000 by the Tribunal based on concealment of cash credits and sales suppression. The Commissioner sought a reference under section 66(1) on concealment of income, which was declined by the Tribunal and High Court, leading to an appeal in the Supreme Court.

The Supreme Court held that the question raised for reference was factual, and if the Tribunal's conclusion indicated no suppression of sales, no legal issue arose for reference under section 66(1). The Court emphasized that the Tribunal's findings were based on the evidence presented, and no question of law warranted a reference to the High Court. The appellant's argument regarding the Tribunal's jurisdiction to differ from its assessment findings in penalty proceedings was dismissed as it was not raised in the initial reference application under section 66(1). The Court clarified that the question submitted for reference did not encompass the jurisdictional issue raised by the appellant, leading to the dismissal of the appeals with costs.

In summary, the judgment revolves around the assessment of income-tax, imposition of penalty, and the Tribunal's refusal to refer a question on concealment of income. The Court emphasized the factual nature of the issue, highlighting that no legal question arose for reference under section 66(1) based on the Tribunal's findings. The appellant's argument regarding the Tribunal's jurisdictional aspect was deemed invalid as it was not part of the initial reference application. Consequently, the appeals were dismissed by the Supreme Court.