1968 (2) TMI 13 - HC - Income Tax

Question of law - When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final, its decision as to the legal effect of those findings is a question of law which can be reviewed by the court

Summary

Issues Involved:
1. Whether the Tribunal was justified in law in declining to consider the documents already on record which the department wanted to adduce as evidence.
2. Whether the Tribunal's finding that the purchase of shares by Rana was not a benami transaction was legally valid.
3. Whether the Tribunal's findings regarding the income and transactions in Tax Cases No. 16, 17, and 18 were perverse having regard to the evidence on record.

Detailed Analysis:

1. Justification in Declining to Consider Documents:
The Tribunal refused to state a case to the High Court under section 66(1) of the Income-tax Act, leading the Commissioner of Income-tax to seek direction from the High Court to state a case on specific legal questions. The High Court directed the Tribunal to state a case on whether it was justified in law in declining to consider the documents already on record which the department wanted to adduce as evidence. The judgment emphasized that findings on questions of pure fact by the Tribunal are not to be disturbed unless there was no evidence before the Tribunal to support its conclusion or if the finding is perverse. The High Court determined that the Tribunal had considered all relevant evidence and materials, thus its decision not to consider additional documents was upheld.

2. Legality of Tribunal's Finding on Benami Transaction:
The principal question was whether the purchase of shares by Rana was a benami transaction with Jain as the real owner. The Tribunal found that the transaction was not benami but a genuine purchase by Rana. The High Court cited several precedents, including Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax, to highlight that an inference from facts, such as determining a benami transaction, is a pure question of fact. The High Court concluded that the Tribunal's findings were based on solid facts and were not unreasonable or perverse. Thus, the Tribunal's finding that the purchase was not a benami transaction was legally valid.

3. Perverse Findings Regarding Income and Transactions:
The High Court examined whether the Tribunal's findings regarding the income and transactions in Tax Cases No. 16, 17, and 18 were perverse. The specific questions were:
- Tax Case No. 16: Whether the finding that the dividend income of Rs. 1,81,300 and the profit on sale of shares amounting to Rs. 28,47,652 were not the assessee's own income was perverse.
- Tax Case No. 17: Whether the finding that the dividend income of Rs. 1,87,500 was not the assessee's own income was perverse.
- Tax Case No. 18: Whether the Tribunal was justified in deleting Rs. 10,80,000 from the total income by holding that Rana was not the benamidar of the assessee.

The High Court reiterated that findings of fact by the Tribunal can only be reviewed if there is no evidence to support them or if they are perverse. The Tribunal had considered all evidence and materials, and its conclusions were based on solid facts. The High Court found no grounds to deem the findings perverse or unsupported by evidence. Therefore, the Tribunal's findings in all three tax cases were upheld.

Conclusion:
All questions referred to the High Court under section 66(2) of the Income-tax Act were answered in favor of the assessee and against the Commissioner of Income-tax. The High Court found that the Tribunal's findings were based on solid evidence and were neither unreasonable nor perverse. Consequently, there was no order as to costs.