High Court Of Kerala
CIT vs. Jibie K. John
Section 4
Asst. Year 1984-85
G. Sivarajan & Kurian Joseph, JJ.
IT Ref. No. 10 of 1999
20th August, 2003
Counsel Appeared :
P.K.R. Menon & George K. George, for the Commissioner : M. Pathrose Mathai & John Ramesh K.I. John, for the Assessees
JUDGMENT
By the court :
The Tribunal, Cochin Bench, has referred the following three questions of law for decision by this Court :
“1. Whether, on the facts and in the circumstances of the case and after having found that ‘there was failure on the part of the assessee to disclose the cash balance of Rs. 80,000 as agricultural income even for rate purposes’, the Tribunal is right in law and fact in holding that there is nothing wrong in accepting the cash balance shown by the assessee?
Whether, on the facts and in the circumstances of the case and considering the human conduct and human nature being what it is, if the amount added according to the assessee is agricultural income will not the assessee be over enthusiastic in showing the same in the return for rate purposes and should not the Tribunal have taken such a human conduct into consideration before accepting the cash balance as agricultural income and is not the finding and acceptance of the submission illogical and against commonsense?
Whether, on the facts and in the circumstances of the case, should not the Tribunal have, in view of the submission/explanation made/given for the first time before the Tribunal, remanded the case to the assessing authority for consideration and is not the order and acceptance of the submission without giving an opportunity to the Revenue wrong and illegal?”
2. The brief facts are as follows : The respondent-assessee is the finance manager of Travancore Cements Ltd., Nattakam, Kottayam, and is an assessee to tax under the IT Act, 1961, for short, “the Act”. The assessment year concerned is 1984-85, the previous year ended 31st March, 1984. The assessee had filed a return under the Act for the year showing a total income of Rs. 23,790. This was accepted under s. 143(1) of the Act. The assessment was taken for subsequent scrutiny. The assessee had submitted the statement of total wealth showing an amount of Rs. 80,000 as cash balance available with him. The assessee was asked to explain the source of this cash balance. Since the explanation was not satisfactory, the assessment was reopened under s. 147(a) of the Act and the reassessment was completed on 20th March, 1989, on a total income of Rs. 1,03,790 which included a cash balance of Rs. 80,000 as unexplained income. The contention of the assessee before the AO was that the said sum of Rs. 80,000 represents his savings and agricultural income. However, the assessee has later taken the stand that the sum of Rs. 80,000 represented the agricultural income alone. In the appeal filed by the assessee, the CIT(A) did not accept the said contention in toto. He granted relief to the extent of Rs. 20,000 which according to him would have been agricultural income from approximately an extent of 4 acres and 81 cents of agricultural property owned by the assessee. In further appeal filed by the assessee, the Tribunal accepted the explanation offered by the assessee in respect of the balance Rs. 60,000 also and had directed the AO to deduct the entire sum of Rs.80,000 from the assessment. Sri George K. George, learned standing counsel appearing for the applicant submits that the assessee had different explanations in respect of the sum of Rs. 80,000 before the assessing authority itself, that the assessee had initially stated that the said sum of Rs. 80,000 represents his savings from the salary and also agricultural income and later the assessee had stated that it represented the agricultural income. Standing counsel also submitted that the assessee had not disclosed any agricultural income in the return filed for this year under the Act and also in the returns filed for the earlier and subsequent two years. Standing counsel submitted that the assessee had a statutory duty to disclose agricultural income, if any, obtained by him in the IT return which is required for rate purpose. Standing counsel further submitted that there was no material before the first appellate authority except the fact that the assessee owned an approximate extent of 4.81 acres of land and that the
Tribunal at any rate was not justified in granting relief to the assessee in respect of the entire Rs. 80,000. Sri John Ramesh, learned counsel appearing for the assessee, on the other hand, submits that the reference itself is incompetent in view of the Circular No. 1903, dt. 28th Oct., 1992, and Instruction No. 1777, dt. 4th Nov., 1987, as per which no reference application can be filed by the Department where the pecuniary limit was below Rs. 50,000. Counsel submits that in the instant case, as per the order of the AO giving effect to the first appellate authority’s order, the tax liability is only Rs. 46,079. Counsel on the merits of the case submitted that the Tribunal had found as a fact that the assessee had agricultural income from 4 acres and 81 cents of land owned by him and that in the absence of a challenge to the said finding of fact as perverse, this Court in reference will not interfere with the findings of fact entered by the Tribunal. Counsel in support of the said proposition has relied on the three Judges Bench decision of the Supreme Court in K. Ravindranathan Nair vs. CIT (2000) 164 CTR (SC) 498 : (2001) 247 ITR 178 (SC). Counsel submits that the Tribunal had considered all the materials placed before it and came to the conclusion that the cash flow statement in regard to the sum of Rs. 80,000 was found to be acceptable, which finding has not been specifically challenged as perverse. We do not propose to go into the contention regarding the maintainability of the reference in this reference. We only observed that this is a contention which should have been taken by the assessee before the Tribunal, in which case, the Department would have been in a position to verify the circulars cited by the assessee and to address the arguments on the said aspect. The assessee did not raise any such contention before the Tribunal and the Tribunal has referred the question which we have specified in the opening paragraph. We are not saying that if, as a matter of fact, the circulars issued by the CBDT interdict the filing of reference applications in matters where the pecuniary limit is within a specified limit, this Court will not go into the question of maintainability of reference. Of course, this will be done in appropriate cases. Coming to the merits of the case, though the assessee had initially stated that the sum of Rs. 80,000 represents his savings from salary and also agricultural income, later he has taken the definite stand that the said amount represents his agricultural income. The assessee has also filed a cash flow statement. The first appellate authority had accepted the explanation to the extent of Rs. 20,000 which has not been questioned by the Department. The Tribunal has simply extended the same to the entire amount of Rs. 80,000 on the ground that the assessee had 4.81 acres of agricultural income, that the guidelines issued by the Board of Revenue provide for the yield from such rubber estate and that going by the guidelines contained in the circular, the assessee’s explanation that he had agricultural income to the tune of Rs. 80,000 is justified. True, the assessee had not placed any material other than the extent of land owned by him.
The fact that the assessee had in fact planted the said land with rubber trees and that it was yielding during the previous years and the assessee had sufficient yield to derive agricultural income to the tune of Rs. 80,000 are not seen considered by the Tribunal. The decision, it would appear has been rendered on hypothesis. However, in the absence of a question regarding the perversity of the findings entered by the Tribunal as held by the Supreme Court in K. Ravindranathan Nair’s case (supra) it will not be proper on the part of this Court in the reference jurisdiction to hold that the finding of the Tribunal is perverse. This is what the Supreme Court has observed on this aspect, which reads as follows (p. 181) : “A decision on fact of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there was no such question before the High Court. Unless and until a finding of fact reached by the Tribunal is canvassed before the High Court in the manner set out above, the High Court is obliged to proceed upon the findings of fact reached by the Tribunal and to give an answer in law to the question of law that is before it. The only jurisdiction of the High Court in a reference application is to answer the questions of law that are placed before it. It is only when a finding of the Tribunal on fact is challenged as being perverse, in the sense set out above, that a question of law can be said to arise.”
7. In the light of the legal position laid down as above in the absence of a specific question challenging the findings of fact of the Tribunal as perverse we are not justified in holding that the finding of the Tribunal is perverse. We accordingly answer the three questions referred in favour of the assessee and against the Revenue.
[Citation : 265 ITR 73]
