1972 (9) TMI 17 - SC - Income Tax

Whether there was any evidence before the Income-tax Appellate Tribunal to justify its conclusion that the firm, made no profit other than those according to its accounts in the procurement and supply of paddy and rice during the relevant period - it is clear that the finding reached by the Tribunal--a finding of fact-- fully supported by the evidence on record. Whether that finding is correct or not is not for the High Court to decide

Summary

Issues:
1. Validity of assessment under section 66(2) of the Indian Income-tax Act, 1922.
2. Rightfulness of assessment under section 44 of the Indian Income-tax Act, 1922.
3. Existence of evidence to support the conclusion that the firm did not make profits.

Detailed Analysis:
1. The case involved an appeal against the decision of the High Court of Assam and Nagaland regarding the rejection of the Commissioner's application under section 66(2) of the Indian Income-tax Act, 1922. The Tribunal had set aside the assessments made on the assessee, an association of persons, on the grounds that illegal profits were made by individual members and not the association itself. The Commissioner sought to refer three questions of law to the High Court, which were deemed academic by the Tribunal and the High Court due to the finding that the assessee did not make any profits. The key consideration was whether a case existed to refer the third question regarding the evidence supporting the Tribunal's finding that the assessee did not make profits in the relevant years.

2. The Tribunal's findings revealed that the firm, consisting of three partners, had engaged in procurement and supply of paddy and rice to the Government of Assam. The Shome Commission's Report highlighted malpractices in procurement, indicating that illegal profits were earned by individual partners, not the firm itself. The Tribunal concluded that the firm did not participate in the illegal profits, as major procurements were made through licensed dealers, not directly from agriculturists. The evidence showed that individual partners, not the firm, made profits, as evidenced by cash credits in the partners' separate firms. The Tribunal's finding was considered a fact fully supported by the evidence on record, emphasizing that the correctness of the finding was not within the purview of the courts.

3. The Supreme Court upheld the Tribunal's findings, emphasizing that the conclusion was based on evidence and constituted a finding of fact. The Court clarified that its role was not to determine the correctness of the finding but to assess whether it was supported by evidence. Consequently, the appeals were dismissed, affirming the Tribunal's decision that the firm, as an association of persons, did not partake in the illegal profits made by individual partners. The Court ordered the dismissal of the appeals with costs and a hearing fee.