9911796707
TMI Blog2007 (9) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... as drawn our attention to a decision of the Supreme Court in Homi Jehangir Gheesta v. CIT [1961] 41 ITR 135, to contend that the order passed by the Tribunal should not be examined sentence by sentence, through a microscope as it were, so as to discover a minor lapse here or an incautious opinion there to be used as a peg on which to hang an issue of law. 3. He has also drawn our attention to a decision of this court in Mahavir Woollen Mills v. CIT [2000] 245 ITR 297, wherein this court considered what is a substantial question of law. It was observed that a question of fact becomes a question of law if the findings are without any evidence or material or the finding is contrary to the evidence or perverse or there is no direct nexus between the conclusion of fact and the primary fact upon which that conclusion is based. It was further held in that decision that even though the words "substantial question of law" have not been defined, usually five tests are accepted for determining whether a substantial question of law is involved. These five steps, as enumerated by this court, are as under (page 300) : "1. whether, directly or indirectly, it affects substantial rights of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facially know the basis on which the Tribunal has reached some conclusions. It is necessary to go through various materials which learned counsel for the assessee informs us are included in the written submissions filed by the assessee before the Tribunal. We find this to be not only unsatisfactory but also impermissible. 6. In this view of the matter and keeping the above principles in mind, we admit this appeal and frame two questions of law, which we think take care of the entire controversy before us. 7. We may mention here that the Revenue has raised before us as many as ten questions of law but because of what we have stated above, we are framing only two questions of law since we are of the opinion that some of the other questions of law framed by the Revenue do not arise, and the questions of law framed by us take care of other issues that have been raised by the Revenue. 8. The two substantial questions of law are as follows : "(i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in deleting the addition of Rs. 19,45,000 made by the assessee on account of investment in property bearing number B-22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to reconsider the first issue before us, we make it clear that we are not expressing any opinion on the effect, if any, of section 142A of the Act on the controversy in issue. 17. In so far as the second substantial question of law is concerned, we find that there are several issues that were not adequately considered by the Tribunal. We may mention only four of them here, by way of example. 18. The first issue is concerned with the total turnover of the business carried on by the assessee under the name of M/s. Shri Ram Silk Mill, Ashu Textiles Traders and P. R. Trading Company. We were told that the asses-see was carrying on business under seven different names and the income in respect of four entities had been disclosed by the assessee while in respect of the three abovementioned entities, the income was not disclosed. 19. The Assessing Officer found that the assessee did not maintain any account books and so, on the basis of the bank accounts maintained by the assessee, he calculated the turnover of these three entities at Rs. 14.81 crores. Before the Tribunal, it was contended by learned counsel for the assessee that certain amounts which had been credited but s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 per cent. on the turnover of Rs. 11.50 crores. Again, there appears to be no cogent basis for arriving at this estimate. Learned counsel for the assessee contended that in respect of the concerns of the assessee (presumably those concerns for which the income was disclosed) the net profit rate ranges between 0.30 per cent. to 0.80 per cent. over a period of time. The Tribunal merely adopted the average of the two extremes and then came to the estimate of 0.6 per cent. as the net profit rate on the turnover of Rs. 11.50 crores. 24. As already mentioned above, it is not evident how the Tribunal had come to the estimated turnover of Rs. 11.50 crores and similarly, the basis for estimating the net profit rate at 0.6 per cent. is also not discernible. Even if the net profit rate is correctly arrived at, the total addition would change when the total turnover changes. 25. The view expressed by the Tribunal is to be found in paragraph 59 of its order, which reads as follows : "59. We also find that the Assessing Officer has applied the net profit rate at 6 per cent. of the total turnover. We find that the asses-see has been carrying on these activities in his own name as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 3 lakhs by the brother of the assessee for organising the events. But the Tribunal considered, in paragraph 64 of its order, the estimated income at Rs.1 lakh and therefore, an addition of Rs. 50,000 was made in the hands of the assessee as undisclosed income. Again, there seems to be no reason at all for this estimate. This is what the Tribunal says in paragraph 64 of its order : "64. As regards income from lucky draw, we agree with the learned Departmental representative that the assessee was not doing any charity word in conducting a lucky draw. If the assessee along with his brother was operating the lucky draw regularly, it was not a case of self-service. The income from such lucky draw has to be treated as undisclosed income. However, we adopt the income from such activity at Rs. 1 lakh and as the assessee was doing this business with his brother, the addition of Rs. 50,000 only is confirmed in the hands of the assessee as undisclosed income. The addition of the balance amount is deleted." 28. We have mentioned these four matters only by way of examples to show that it is not possible to appreciate, from a bare reading of the order of the Tribunal, the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case in reducing the addition to Rs. 6 lakhs from 45 lakhs as the capital introduced in the benami business units ? (d) Whether the learned Income-tax Appellate Tribunal was correct in law and on the facts and circumstances of the case in estimating the turnover from the three benami businesses at Rs. 11.50 crores as against the turnover assessed by the Assessing Officer at Rs. 14.81 crores on the basis of the documents seized during the search ? (e) Whether the learned Income-tax Appellate Tribunal was correct in law and on the facts and circumstances of the case in reducing the income from property No. B-222, Okhla Industrial Estate, from Rs.8,76,120 to Rs. 2,08,530 accepting one-fourth share in the property in spite of that the learned Income-tax Appellate Tribunal declined to go into the question of share of the assessee in the property ? (f) Whether the learned Income-tax Appellate Tribunal was correct in law and on the facts and circumstances of the case in reducing the income from Maruti Draw to the estimated figure of Rs. 50,000 when the Assessing Officer has given the exact calculation to arrive at the income ? (g) Whether the learned Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
