High Court Of Delhi
CIT vs. B.K. Oil Traders
Sections 256(2), 69A
Asst. Year 1981-82
Rabinder Nath Pyne, C.J. & G.C. Jain, J.
IT Case No. 38 of 1988
29th September, 1988
Wadhera & R.C. Pandey, for the Revenue : C.S. Aggarwal, for the Assessee
C. JAIN, J. :
The CIT, Delhi-V, has filed this petition under s. 256(2) of the IT Act, 1961 (hereinafter to be referred as “the Act”), for directing the 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 Tribunal is right in law in holding that the CIT (A) had no power to set aside the assessment with a direction to the IAC (Assessment) to redo the same de novo after making full inquiries/investigation into the various aspects of the appellant’s case ?
(2) Whether, the CIT (A) in terms of s. 250(4) is bound in law to make enquiries himself only and has no power to direct the IAC (Assessment) to make further enquiry ?
(3) Whether, in law, the Tribunal was right in holding that the order of the CIT (A) 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 CIT (A) ?
(4) Whether the Tribunal was correct in law in setting aside the order of the CIT (A) and deleting the additions when the CIT (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(5) Whether, on the facts and in the circumstances, there was any material for the Tribunal to hold that the assessment originally made by the IAC (Assessment) was wrong ?
(6) Whether, in law and on facts and in the circumstances of the case, the CIT (A) had no discretion/jurisdiction to set aside the order of the IAC (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 findings and directions given by the CIT (A) ?”
The firm, B. K. Oil Traders, respondent, is a dealer of HPC for petroleum products. It purchases and sells petroleum products in bulk. For the asst. yr. 1981-82, it filed its return on August 1, 1981, declaring a total income of Rs. 50,540. The learned IAC (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 purpose 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 a much higher price. With these findings, he made an addition of Rs. 6,70,493 under s. 69A of the Act and further enhanced the profit by 5 per cent on the alleged sales to the said three firms amounting to Rs. 33,525.
Feeling aggrieved, the assessee filed an appeal before the CIT (A). It was held that there was not sufficient material before the IAC (Assessment) to review the above findings. The appeal was allowed. The assessment made by the IAC (Assessment) was set aside and the case was remanded to the IAC (Assessment) for making the assessment de novo after making full inquiries/investigation into the various aspects of the appellant’s case.
The assessee filed an appeal against this order before the Tribunal. The Tribunal, vide order dated November 24, 1986, accepted the appeal of the assessee and deleted the addition originally made by the IAC (Assessment). Feeling aggrieved, the CIT made an application under s. 256(1) of the Act before the Tribunal for referring 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 s. 256(2) of the Act.
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 CIT could not set aside the order of the ITO or the IAC (Assessment). The finding of the Tribunal is that such setting aside should be in accordance with sub-s. (4) of s. 250 and necessary directions for the enquiry to be made, should be given by the CIT (A). The finding of the Tribunal that the order in this case has been set aside by the CIT (A) 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 Tribunal dated November 24, 1986, whereby the appeal of the assessee was allowed. It was nowhere held that the had no jurisdiction to remand the case with a direction to the IAC (Assessment) to make further investigation. On the other hand, it was clearly observed that the CIT (A) no doubt had the power to set aside the order of the IAC (Assessment) and remand the case with a direction to make further investigation. What was held was that the CIT (A) had not given the required directions. The learned IAC (Assessment) had already made detailed enquiries/investigation. The order of the learned CIT (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. 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 CIT (A) which indicated that there was no case made out for an addition.
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 IAC (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 CIT (A) held that there was no sufficient material on the record to arrive at the said finding and the conclusions drawn by the IAC (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 CIT (A) 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 CIT 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 assessee. With these findings, the Tribunal held, “we entirely agree with the reasoning given by the learned CIT (A) in his order to hold that the IAC (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.
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.
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.
[Citation : 177 ITR 230]