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TMI Blog1980 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... versy between the parties, the Division Bench reframed the question by framing two separate questions on two aspects of the controversy which was involved in this case and the two questions which the Division Bench reframed are as follows : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the capital gains on the footing that the price of the share was Rs. 50 per share, cannot be said to have accrued to the assessee in the accounting year relevant to the assessment year 1968-69 ? (2) Whether the benefit of the reduction of price of the shares from Rs. 80 per share to Rs. 50 per share has in fact been passed on to the assessee ? " The facts that we are setting out hereinbelow are taken from the judgment delivered by the Division Bench on November 19, 1975. The facts giving rise to Reference No. 104 of 1974 may now be stated at this stage. We are concerned with the assessment year 1968-69, the year of account being Samvat Year 2023 (October-November, 1966, to October-November, 1967). The assessee is an individual. At the relevant time he was a minor. His natural guardian is Subodhbhai Mangaldas. Subodhbhai's brother, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies were also reduced and altered by the award dated February 10, 1969. The assessee filed the return for the assessment year 1968-69 on April 15, 1969, that is, after the final award, or what has been referred to as the supplementary award of February 10, 1969, was made by the arbitrators, and, by that time, it was known that the price of the Navjivan Mills Ltd.'s shares had been reduced from Rs. 80 per share to Rs. 50 per share. It must be noted that by the supplementary award of February 10, 1969, the price payable by the group of Subodhbhai and Gunvantbhai was reduced from Rs. 80 per share to Rs. 50 per share, so far as Navjivan Mills Ltd. was concerned. In view of the supplementary award, the ITO calculated the capital gains on the footing that the cost of acquisition per share was Rs. 50 per share and assessed the income accordingly. Against the decision of the ITO the assessee took the matter in appeal before the AAC. On behalf of the assessee, before the AAC it was contended that the assessee was not a party to the supplementary award of February 10, 1969. It was secondly con, tended that the assessee did not derive any benefit from the reduction in the price of the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 9,600 and that the supplementary award dated February 10, 1969, did not affect the assessee during the year under appeal. Thereafter, at the instance of the revenue, the question set out hereinabove at the commencement of this judgment was referred by the Tribunal for the opinion of the High Court. In order to bring out the real controversy between the parties, the question was split up and the two questions set out hereinabove were reframed by the High Court at the time of the hearing of Reference No. 104 of 1974 in November, 1975. We will come later on in the course of this judgment to the arguments of both sides in that case but the conclusion of the Division Bench was that there was no material on record to show whether the benefit of reduction in the price of the shares of Navjivan Mills Ltd., namely, at the rate of Rs. 30 per share, was in fact passed on to the assessee. It was observed : ".. ...... it is not clear from the materials on record whether the benefit of the supplementary award in the shape of reduction in the price from Rs. 80 per share to Rs. 50 per share has been passed on to the assessee. Unless and until this question about the benefit of the redu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hon'ble High Court is justified in law ?" The order of the Tribunal against which Income-tax Reference No. 2 of 1979 has been brought before this court proceeds on the following reasoning. After the matter went back to the Tribunal on the earlier order passed by this court in Income-tax Reference No. 104 of 1974, the Tribunal sent down the matter to the AAC and before the AAC evidence was led on behalf of the assessee to show that entries were made in the account of the HUF of Gunvantbhai (HUF consisting of Gunvantbhai, his wife and his son, Amitbhai) and the entry was first made on October 31, 1970, in the books of Shri Gunvantbhai Mangaldas (HUF) and the account of Shantilal and others was debited to the extent of Rs. 36,000 on 31st October 1970. The relevant narration read as under : " The amount of difference at the rate of Rs. 30 per share in respect of 1,200 shares of Navjivan Mills Ltd. purchased from you by Shri Amitbhai which was due to us is debited to your account by crediting to share difference account." The copy of the share difference account mentioned in the narration was not produced but the copy of the account of Shantilal Mangaldas and others relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, question No. (2) is to be decided in the affirmative ", that is, by stating that the amount did in fact reach the hands of Amitbhai, the minor assessee. Now, the learned Advocate-General is right when he contends that the Tribunal has overlooked one important fact, namely, that the entries in the books of account of Gunvantbhai Mangaldas, (HUF) were not challenged by the department as a device or as a cloak to evade the tax. Nowhere on the record the department challenged that the entries did not reflect the real transaction between the parties. In the absence of any such challenge, according to the learned Advocate-General, it was not open to the Tribunal to come to the conclusion that the money was not received by Gunvantbhai in his capacity of HUF but was received by him in his capacity as the guardian of Amitbhai. The basic principle is the same in the law relating to income-tax as well as in civil law, namely, that if there is no challenge to the transaction represented by the entries or to the genuineness of the entries, then it is not open to the other side -in this case the revenue to contend that that which is shown by the entries is not the real 'state of affai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary to whatever evidence that has been led on behalf of the assessee and this evidence has not been challenged on behalf of the revenue. Under these circumstances, in view of the fact that the earlier order of the High Court in Income-tax Reference No. 104 of 1974 dated November 19, 1975, had become final and in view of the fact that the only question that the Tribunal had to consider was whether the amount of Rs. 36,000 had in fact reached the assessee, Amitbhai, or not, the Tribunal should have concentrated its attention on the question in the light of the contentions taken up by the revenue and in the light of the evidence led before it. It was not open to the Tribunal in law to draw the inference when the entries in the books of account of Gunvantbhai Mangaldas, (HUF) were not challenged as a device or as a cloak to evade tax. Under these circumstances, the Tribunal's conclusion that the money had in fact reached the hands of the natural guardian of Amitbhai and, hence, the assessee, is not based on any evidence on record. Question No. (1), therefore, arising in Income-tax Reference No. 2 of 1979 must be answered in the negative, that is, in favour of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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