Commissioner Of Income-Tax vs B.K. Oil Traders
1988 Latest Caselaw 289 Del

JUDGMENT

G.C. Jain, J.

1. The Commissioner of Income-tax, Delhi,-V, has filed this petition under section 256(2) of the Income-tax Act, 1961 (hereinafter to be referred as "the Act"), for directing the Income-tax Appellate Tribunal, Delhi Bench, Delhi, to state a case and refer the following purported questions of law to this court for its opinion:

"(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that the Commissioner of Income-tax (Appeals) had no power to set aside the assessment with a direction to the Inspecting Assistant Commissioner (Assessment) to redo the same de novo after making full inquiries/investigation into the various aspects of the appekkabt's case ?

(2) Whether, the commissioner of Income-tax (Appeals) in terms of section 250(4) is bound in law to make enquiries himself only and has no power to direct the Inspecting Assistant Commissioner (Assessment) to made further enquiry ?

(3) Whether, in law, the Tribunal was right in holding that the order of the Commissioner of Income-tax (Appeals) was without any rationale and further whether the Tribunal was correct in law in deciding the matter itself without any material and without conducting any enquiry against the findings of the Commissioner of Income-tax (Appeals) ?

(4) Whether the Income-tax Appellate Tribunal was correct in law in setting aside the order of the Commissioner of Income-tax (Appeals) and deleting the additions when the Commissioner of Income-tax (Appeals had set aside the order for making further enquiries ?

(5) Whether, on the facts and in the circumstances, there was any material for the Tribunal to hold that the assessment originally made by the Inspecting Assistant Commissioner (Assessment) was wrong ?

(6) Whether, in law and on facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) had no discretion/jurisdiction to set aside the order of the Inspecting Assistant Commissioner (Assessment) ?

(7) Whether, on the facts and in the circumstances, the findings given by the Tribunal were defective, unreasonable, perverse and vitiated especially in view of the finding and directions given by the Commissioner of Income-tax (Appeals) ?"

2. The firm, B.K. Oil Traders, respondent, is a dealer of Hindustan Petroleum Corporation for petroleum products. It purchases and sells petroleum products in bulk. For the assessment year 1981-82, it lied its return on August 1, 1981, declaring a total income of Rs. 50,540. The learned Inspecting Assistant Commissioner (Assessment), Range XI, New Delhi, by order dated March 7, 1984, came to the conclusion that the sales stated to have been made to three firms, namely, (1) Shankar Trading Corporation for Rs. 3,07,598, (2) Kumar Agencies for Rs. 1,76,828, and (3) Quickies Clean Sales for Rs. 1,86,067, were never made to them. The said concerns were bogus and were merely floated for the purposes of declaring sales which, in fact, were never made. The goods, subject-matter of those sales, appeared to have been sold to some other parties on or about the same time at much higher price. With these findings, he made an addition of Rs. 6,70,493 under section 69A of the Act and further enhanced the profit by 5% on the alleged sales to the said three firms amounting to Rs. 33,525.

3. Feeling aggrieved, the assessed filed an appeal before the Commissioner of Income-tax (Appeals). It was held that there was not sufficient material before the Inspecting Assistant Commissioner (Assessment) to review the above findings. The appeal was allowed. The assessment made by the Inspecting Assistant Commissioner (Assessment) was set aside and the case was remanded to the Inspecting Assistant Commissioner (Assessment) for making the assessment de novo after making full inquiries/investigation into the various aspects of the appellant's case.

4. The assessed filed an appeal against this order before the Income-tax Appellate Tribunal. The Tribunal, vide order dated November 24, 1986, accepted the appeal of the assessed and deleted the addition originally made by the Inspecting Assistant Commissioner (Assessment).

5. Feeling aggrieved, the Commissioner of Income-tax made an application under section 256(1) of the Act before the Tribunal for refereeing the said purported questions of law to this court for reference. This was declined by the Tribunal on April 21, 1987. Hence, this application under section 256(2) of the Act.

6. The learned Tribunal refused to refer questions Nos, 1,2, and 6 on the ground that these questions did not arise out of the order of the Tribunal. It was observed that "it is not the finding of the Tribunal that the Commissioner could not set aside the order of the Income-tax Officer or the Inspecting Assistant Commissioner (Assessment). The finding of the Tribunal is that such setting aside should be in accordance with sub-section (4) of section 250 and necessary directions for the enquiry to be made, should be given by the Commissioner of Income-tax (Appeals). The finding of the Tribunal that the order in this case has been set aside by the Commissioner of Income-tax (Appeals) merely to get the enquiry done in the case of Shri R. N. Sehgal is, in our opinion, a pure finding of fact and no question of law arises out of it." In our view, the order is absolutely correct and calls for no interference. We have examined the order of the Income-tax Appellate Tribunal dated November 24, 1986, whereby the appeal of the assessed was allowed. It was nowhere held that the Commissioner of Income-tax had no jurisdiction to remand the case with a direction to the Inspecting Assistant Commissioner (Assessment) to make further investigation. On the other hand, it was clearly observed that the Commissioner of Income-tax (Appeals) no doubt had the power to set aside the order of the Inspecting Assistant Commissioner (Assessment) and remand the cases with a direction to make further investigation. What was held was that the Commissioner of Income-tax (Appeals) had not given the required directions. The learned Inspecting Assistant Commissioner (Assessment) had already made detailed enquiries/investigation. The order of the learned Commissioner of Income-tax (Appeals) did not disclose what further evidence was required to be collected. Questions Nos. 1,2 and 6 do not relate to this finding. The Tribunal was correct in refusing to refer these questions.

7. Questions Nos. 3,4,5 and 7 were declined on the ground that these questions related to pure findings of facts and no principle of law was applied by the Tribunal to arrive at the aforesaid findings. The Tribunal simply quoted from the order of the Commissioner of Income-tax (Appeals) which indicated that there was no case made out for an addition.

8. It cannot be disputed that the question for determination before the authorities was whether the sales to the three concerns mentioned above were genuine. The Inspecting Assistant Commissioner (Assessment) found that these sales were never made to the said firms as the said firms were bogus and had been floated for the purpose of declaring sales which, in fact, were never made to them. The Commissioner of Income-tax (Appeals) held that there was no sufficient material on the record to arrive at the said finding and the conclusions drawn by the Inspecting Assistant Commissioner (Assessment) required to be further supported by proper evidence/investigation before the said conclusion could be said to be tenable and reasonable. The learned Tribunal accepted the view of the Commissioner of Income-tax (Appeals) that there was no sufficient material to hold that the sales to the said three firms were not genuine. It was further found that the Commissioner had doubts about the affairs of R. N. Sehgal who was found to be the proprietor of the said three concerns but that suspicion justified an investigation with regard to the affairs of R. N. Sehgal and not of the assessed. With these findings, the Tribunal held, "we entirely agree with the reasoning given by the learned Commissioner of Income-tax (Appeals) in his order to hold that the Inspecting Assistant Commissioner (Assessment) had failed to place relevant material on record to sustain the addition in question." In other words, the Tribunal came to the conclusion that there was no material to hold that the sales to the said three firms were bogus. This was a pure question of fact. No question of law was involved. In our opinion, the learned Tribunal did not decide any question of law as such. The main question was about the genuineness or otherwise of the three sales which was a pure question of fact.

9. Mr. K. K. Wadhera. Learned counsel for the petitioner, contended that the Tribunal had not recorded a clear finding that the sales were genuine. We do not agree with this contention. The Tribunal had given a clear finding that there was no material on record to sustain the addition in question.

10. In the result, we hold that the learned Tribunal was justified in refusing to refer the said questions. The application is dismissed. No order as to costs.