Special Leave Petition Civil Nos 497389 and 1276389
From the Judgment and Order dated 3111989 of the Kerala High Court in OP No 321888 and dated 25382 of the Income Tax Appellate Tribunal Cochin in ITA No 302Coch1977 78
KK Venugopal and KR Nambiar for the Petitioner
Soli J Sorabjee Attorney General section Ganesh and Ms A Subhashini for the Respondents
The Judgment of the Court was delivered by SABYASACHI MUKHARJI CJ
This is a petition under arti cle 136 of the Constitution for leave to appeal against the orders of the tribunal and the High Court
The High Court vide its order dated 31st January 1989 had dismissed the application for reference
There is also an order of the tribunal refusing to make a reference under section 2561 of the Income Tax Act 1961 hereinafter called the Act 
This petition also seeks leave to appeal directly from the said order of the tribunal
7 However in order to appreciate the controversy in this case the facts reiterated by the High court of Kerala in its said judgment and order are important it had observed as follows For the assessment year 1969 70 the petitioner filed a return declaring a total income of Rs9571
In completing the assessment the assessing authority proceeded on the basis that the assessee was the owner of the gold seized on 91168 and confiscated by the Customs authorities worth Rs20 lakhs and accordingly the Income tax Officer treated the sum of Rs20 lakhs as income from undisclosed source applying the provisions of Section 69 A of the Income tax Act 1961
On appeal the Appellate Assistant Commissioner held that the assessee was not the owner of the contraband gold seized by the Central Excise Authority and therefore reduced the assessee s total income by Rs20 lakhs
The Revenue filed a second appeal before the Appellate Tribunal Cochin Bench
After going through the evidence the Tribunal came to the conclusion that the car belonged to the assessee and the special places of concealment had been provided by design in the car
Further the assessee himself was driving the car in which the gold was found
The assessee also has not attributed the ownership to anybody else
The assesee also has not established that the gold was given to him by any third party
In view of all these the addition of Rs20 lakhs made by the Incometax Officer but deleted by the Appellate Asstt
Commissioner was restored
The additional ground raised by the Revenue that the appeal is not main tainable before the Appellate Asstt
Commissioner was re jected
The assessee thereafter filed a Miscellaneous Peti tion for rectification of the order of the Tribunal
The rectification sought to be made are  1 Business loss to the tune of Rs2000000 incurred by the assessee due to investment in gold and the confiscation of the gold by the Customs authorities be allowed for the assessment year 1969 70 in view of the decision of the Supreme Court in CIT vs Piara Singh decided on 8 5 1980 and reported in  2 the income tax and special surcharge amounting to Rs 16 19395 Rs2000000 and 8 3 as the tax has already been collected from the amount of Rs 2000000 no interest was payable
 The High Court noted that the tribunal could not accede to the requests of the petitioner as these could not be considered as mistakes apparent from records
The points had not been raised by way of cross appeal or cross objections
Thereafter the assessee filed a petition us 256 of the Act seeking reference of the following questions of law 1
Whether the Tribunal is right in law in its view that the right to file an application under Section 2542 of the Income tax Act 1961 is open to be exercised only by the applicant and not by the respondent in the appeal before it 2 Whether the Tribunal is right in law in rejecting the application under Section 2542 on the ground that the applicant was not the appellant before it and that he had also not filed any memo of Cross objections in the appeal against him 3
Whether on the facts and in the circumstances of the case the assessee was bound to raise before the Tribunal at the stage when he was only supporting the order appealed against him of his case for deduction which he was legally entitled to claim in case of allowance of the appeal against him 4
Whether on facts and circumstances of the case the Tribu nal was right in law in holding that the claim of loss on account of confiscation of the gold was not the subject matter of the appeal The tribunal dismissed the petition holding that none of the questions sought to be raised was decided by the tribu nal and as such did not arise out of the order of the tribu nal
Aggrieved by these two orders one being refusal by the tribunal to refer the question as aforesaid us 2561 and the other of the High Court directing the tribunal to refer the questions and state the case to the High Court the petitioner has come up to this Court
We find that it can legitimately be argued in the facts and the circumstances of the case that the question which essentially arose which had to be borne in mind and which 9 was argued before the tribunal was whether the sum of Rs20 lakhs could be subject to taxation in the context as found by the tribunal as the income of the assessee
The asses see s further contention was that in view of the decision of this Court in CIT Patiala vs Piara Singh even if Rs20 lakhs could be treated as the income of the asses see inasmuch as this has been ordered to be confiscated there was a business loss as held in the said decision of this Court
Therefore this question should have been gone into which was sought to be raised by a MiscellaneOus Appli cation before the tribunal after disposal of the appeal by the tribunal
The principle by which this should be determined has been fairly laid down by this Court in CIT Bombay vs Scindia Steam Navigation Co Ltd  wherein this Court at page 612 had observed as follows Section 561 speaks of a question of law that arises out of the order of the Tribunal
Now a question of law might be a simple one having its impact at one point or it may be a complex one trenching over an area with approaches leading to different points therein
Such a question might involve more than one aspect requiring to be tackled from different standpoints
All that section 661 requires is that the question of law which is referred to the court for decision and which the court is to decide must be the question which was in issue before the Tribunal
Where the question itself was under issue there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal
It will be an over refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 661 of the Act
That was the view taken by this Court in Commissioner of Income tax vs Ogale Glass Works Ltd and in Zoraster  Co vs Commissioner of Income tax  and we agree with it
As the question on which the parties were at issue which was referred to the court under section 661 and decided by it under section 665 is whether the sum of Rs926532 is liable to be included in the taxable income of the respondents the ground on which the respondents contested their liability before the High Court was one which was within the scope of the question and the High Court rightly entertained it
10 It is argued for the appellant that this view would have the effect of doing away with limitations which the Legislature has advisedly imposed on the right of a litigant to require references under section 661 as the question might be framed in such general manner as to admit of new questions not argued being raised
It is no doubt true  that sometimes the questions are framed in such general terms that construed literally they might take in questions which were never in issue
In such cases the true scope of the reference will have to be ascertained and limited by what appears on the statement of the case
In this connec tion it is necessary to emphasise that in flaming ques tions the Tribunal should be precise and indicate the grounds on which the questions of law are raised
Where however the question is sufficiently specific we are unable to see any ground for holding that only those conten tions can be argued in support of it which had been raised before the Tribunal
In our opinion it is competent to the court in such a case to allow a new contention to be ad vanced provided it is within the framework of the question as referred Mr Venugopal appearing for the petitioner drew our attention to the observations of Justice Shah as the learned Chief Justice then was at p 617 which are to the following effect The source of the question must be the order of the Tribu nal but of the question it is not predicated that the Tribunal must have been asked to decide it at the hearing of the appeal
It may very well happen and frequently cases arise in which the question of law arises for the first time out of the order of the Tribunal
The Tribunal may wrongly apply the law may call in aid a statutory provision which has no application may even misconceive the question to be decided or ignore a statutory provision which expressly applies to the facts found
These are only illustrative case analogous cases may easily be multiplied
It would indeed be perpetrating gross injustice in such cases to restrict the assessee or the Commissioner to the questions which have been raised and argued before the Tribunal and to refuse to take cognisance of question which arise out of the order of the Tribunal but which were not argued because they could not in the absence of any indication as to what the 11 Tribunal was going to decide be argued As mentioned hereinbefore this is an application for leave to appeal from the decisions of the tribunal and the High Court under Article 136 of the Constitution
The real and substantial question posed and canvassed before the tribunal in its appellate order and in the appeal as is manifest from the facts stated before was whether a sum of Rs20 lakhs could in the facts and the circumstances be considered as part of the income of the assessee and as such suffer taxation
Now the question sought to be raised is whether in view of the decision of this Court in Piara Singh s case supra the amount of Rs20 lakhs could be treated as legitimate business loss of the assessee
It is possible to take the view that this is substan tially a different question namely whether an amount is a business loss even assuming that it was the income
It is possible and conceivable to consider two different ques tions namely whether a certain sum of money is the income of the assessee and secondly whether even assuming that such was the income was that income liable to be deducted in view of the provisions of the Act
It is possible to take the view that these are substantially different questions and not merely different aspects of the same question
Considerations which go into determination of whether an amount should be treated as income and the considerations which are relevant to determine whether even assuming that that was the income the amount was deductible are differ ent
The question in this form was not canvassed before the tribunal at any point of time in the alternative
It may be reiterated that the Central Excise Officers at Valayar check post seized gold weighing 16000 gms
from Car No MYX 9432 which was being driven by the petitioner along with the documents and took the petitioner into custody
The Collector of Central Excise Madras had confiscated the gold in question and found that the petitioner was in possession of the gold
The assessment of the petitioner for the year in question was originally completed at a total income of Rs 1571
Subsequent to the completion of the original assessment the petitioner filed a return declaring a total income of Rs957 1
The Income Tax Officer issued notice under section 148 of the Act
The Tribunal ultimately had accepted the revenue s contention restored the addition of Rs20 lakhs made by the assessing authority inter alia holding that the onus was on the petitioner to prove that the 12 gold was not owned by him which onus the petitioner had failed to discharge
The Tribunal had gone into and adjudi cated the question substantially raised by the petitioner that the confiscated gold could not be treated as the income of the petitioner
The Tribunal rejected the application of the petitioner on the ground that the claim of loss on account of the confiscation of the gold was not the subject matter of the appeal
The principles of law have been discussed by this Court in Scindia Steam Navigation Co Ltd s case supra
In the facts and the circumstances of the case the Tribunal and the High Courts have taken the view that wheth er certain sum of money can be treated as the income of an assessee and whether that sum of money could be deducted as loss are different question of law and not different aspects of the same question
The Tribunal and the High Court have taken a particular view
They have borne in mind the correct principles that are applicable in the light of the law laid down by this Court in Scindia Steam Navigation s case supra
In the background of the facts and the circumstances of the case as mentioned hereinbefore if the aforesaid view of the Tribunal and the High Courts is a possible view we are not inclined to interfere with that view under Article 136 of the Constitution in the light of the facts and the circumstances of this case
We are not prepared to say that injustice has been done to the petitioner
The view taken by the Tribunal and the High Courts is a possible view
The Tribunal and the High Courts have borne in mind the princi ples of law laid down by this Court
In the aforesaid view of the matter  in the facts and the circumstances of the case this application is rejected and accordingly dismissed
RNJ Petition dismissed


Summary:
Clause b of sub rule 11 rule 3 of the Karnataka Excise Sale of Indian and Foreign Liquors Rules 1968 as amended by the Amendment Rules 1989 requires the State Government to issue distributor licence only to such company owned or controlled by it as may be specified
The petitioner assailed the constitutional validity of clause b on the ground that the policy of prohibition was not being implemented as enjoined by Article 47 of the Constitution inasmuch as the State of Karnataka instead of bringing total prohibition in the State had evinced inter est in taking up the responsibility of selling liquors to the general public and sought a direction to the Union and other State Governments to enforce the policy of total prohibition
Dismissing the writ petition the Court HELD 1
There is no direct or casual violation of any fundamental right of which the petitioner can legitimately claim enforcement
Article 47 is in Part IV of the Constitution which contains Directive Principles of State Policy
Article 37 enjoins that the provisions of this part shall not be en forceable by any court
Article 32 gives the Supreme Court the power to enforce rights which are fundamental rights
Fundamental rights are justifiable Directive Principles are not
2 Directive Principles are aimed at securing certain values or enforcing certain attitudes in the law making and in the administration of law
Directive Principles cannot in the very nature of things be enforced in a court of law
Akhil Bharatiya Soshit Karamchari Sangh vs Union of India   referred to
Whether a law should be made embodying the principles of Directive Principles depends on the legislative will of the legislature
In the instant case what the petitioner sought to achieve by his application was to inject a sense of priority and urgency in that legislative will
Determin ing the choice of priorities and formulating perspective thereof is a matter of policy
Article 32 is not the ma chinery through which policy preferences or priorities are determined
It is not the nest for all the bees in the bonnet of public spirited persons 
Rustom Cavasjee Cooper vs Union of India  referred to