Punjab-Haryana High Court
Commissioner Of Income-Tax vs Shadi Lal Puri on 9 January, 1995
Author: R.P. Sethi
Bench: R.P. Sethi
JUDGMENT R.P. Sethi, J.
1. Through the medium of this writ petition (sic), the Revenue has prayed for issuance of a direction to the Income-tax Appellate Tribunal, requiring it to state the case and refer the same to this court in terms of the prayer made in the application filed under Sub-section (1) of Section 256 of the Income-tax Act, 1961. The Appellate Tribunal, vide its order dated August 1, 1990, had accepted the appeal of the assessee and set aside the order of assessment, holding that no case was made out for addition of a sum of Rs. 97,746 as had been done by the income-tax authorities. It is submitted that the questions of law, formulated in the present petition are such questions of law, which are required to be referred to this court for adjudication. In support of his submissions, learned counsel for the petitioner has relied upon the decision in CIT v. S. P. Jain [1973] 87 ITR 370 (SC).
2. The jurisdiction of the High Court can be invoked under Section 256 of the Income-tax Act for interpretation of any provision of the statute or for settlement of a legal controversy, not adjudicated earlier. The jurisdiction conferred upon this court is purely advisory and was never intended to secure general interpretation or guidance than to grant relief in any particular case. While exercising such jurisdiction, the High Court neither acts as a court of appeal, nor as a revisional court. The Supreme Court in C. Vasantlal and Co. v. CIT [1962] 45 ITR 206 has held that the jurisdiction of the High Court in such cases is merely advisory. It was further held (at page 210) :
" The High Court does not sit in appeal over the judgment of the income-tax authorities; it is not concerned to decide whether the conclusion of the Tribunal on appreciation of evidence is correct."
3. Similar views have been expressed by the apex court in CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589 (SC) and New Jehangir Vakil Mills Ltd. v. CIT [1959] 37 ITR 11 (SC). For exercise of the powers under Section 256, it is required that a question of law should arise from the order passed by the Appellate Tribunal and such question of law has not been decided earlier either by the jurisdictional High Court or the apex court. It is also a condition precedent that such a question of law should have been raised before the Tribunal by the party seeking reference to the High Court. The conclusions of fact arrived at after perusing the evidence cannot be impugned by way of a petition under this section. The section is not intended to be either punitive or retributive. The finding based upon inferences drawn from the facts of the case is a question of fact and cannot be stretched to the extent of arguing that such conclusions are questions of law requiring reference. The Supreme Court in CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349, held that the finding of facts, which are perverse or not supported by evidence are admittedly open to challenge in a reference. It implies, therefore, that if a finding of fact is arrived at by wrongly applying the principles, the same can be questioned by the aggrieved party and a reference can be directed to be made in that event. On the basis of various judgments pronounced by the Supreme Court and other High Courts in the country, it can be said that the reference to this court can be sought on the following grounds :
" (1) When the point for determination is a pure question of law, not earlier adjudicated.
(2) When the point for determination is a mixed question of law and fact and the finding of the Tribunal on the facts is arrived at without application of settled principles of law ;
(3) If a finding of fact is erroneous in law or is not supported by any evidence or is otherwise perverse ; and (4) When the finding of fact arrived at by the Tribunal is based upon conjectures and surmises or suspicions."
4. The CIT v. Chander Bhan Harbhajan Lal [1966] 60 ITR 188 ; AIR 1966 SC 1490, the apex court while dealing with the old Income-tax Act held that when the question of law raised is not substantial and the answer to the question is self-evident, the High Court is not bound to require the Tribunal to refer the question. It was further held that where in the facts and circumstances of the case a question of law arises, the Tribunal under Sub-section (1) of the main section is bound to draw up a statement of the case and refer the question to the High Court. However, where the Tribunal refuses to do so and the High Court is moved under Section 66(2) of the old Act, the position becomes different. The sub-section confers a discretion on the High Court and if the High Court is of the opinion that though a question of law arises, it is not substantial or that it is well settled, it can reject the petition. The use of the word "may" in Sub-section (2) of Section 256 of the Act is intended to give wide discretion to the High Court to require the High Court to make the reference only in such cases where all the conditions are strictly complied with. In a specific case where the amount involved is meagre but the question of law raised is substantial, the High Court may decline to require the Tribunal to make a reference on the ground that such reference was likely to amount to punishing the assessee. It is true, that the assessee under the Act is bound to pay the tax under law, but the provisions of the Act are not intended to be punitive, to be exercised at the whim or caprice of some authority under the Act. The object of the enactment can be achieved if a rational approach, as stated hereinabove, can be adopted. Applications under Section 256, which are filed in routine and without definite material or proper application of mind, deserve to be dismissed at the initial stage lest it may not unnecessarily burden the assessee, who has been absolved of his liability by the speaking orders passed by the Appellate Tribunal particularly when they are based on the law already settled.
5. The reliance of learned counsel upon CIT v. S. P. Jain [1973] 87 ITR 370 (SC), is misplaced inasmuch as in that case, the Supreme Court held as follows (headnote) :
" The High Court and the Supreme Court have always the jurisdiction to interfere with the findings of the Appellate Tribunal if it appears that either the Tribunal has misunderstood the statutory language, because the proper construction of the statutory language is a matter of law, or it has arrived at a finding based on no evidence or where the finding is inconsistent with the evidence or contradictory of it, or it has acted on material partly relevant and partly irrelevant or where the Tribunal draws upon its own imagination and imports facts and circumstances not apparent from the record or bases its conclusions on mere conjectures or surmises or where no person judicially acting and properly instructed as to the relevant law could have come to the determination reached."
6. In the instant case, the alleged questions of law sought to be referred have rightly been held to be mere questions of fact. The conclusions arrived at by the Tribunal cannot be held to be perverse or contrary to the record. The mere possibility of arriving at a different conclusion on the facts cannot be made the basis for seeking a reference to this court under Sub-section (2) of Section 256 of the Act. There is no merit in the petition, which is hereby dismissed.