Case: Messrs Mehta Parikh &amp; Co Vs. The Commissioner Of Income-Tax,Bombay

dislodge the position taken up by the appellants, supported as it was, by the entries in the cash book and the affidavits put in by the appellants before the Appellate Commissioner.15. The Tribunal also fell into the same error. It could not negative the possibility of the appellant being in possession of a substantial number of these high denomination currency notes. It, however, considered that it was impossible for the appellants to have had 61 such notes in the cash balance in their hands on 12-1-1946 and then it applies a rule of the thumb treating 31 out of such 61 notes as within the bounds of possibility excluding 30 such notes as not covered by the explanation of the appellants. This was pure surmise and had no basis in the evidence, which was on the record of the proceedings.16. The High Court treated this finding of the Tribunal as a mere findings of fact. The position in regard to all such findings of fact, as to whether they can be questioned in appeal, is thus laid down by the House of Lords in Cameron v. Prendergast (1940) 8 ITR (Sup) 75 (81) (A)."Inference from facts stated by the Commissioners are matters of law and can be questioned on appeal. The same remark is true as to the construction of documents. If the Commissioners state the evidence and hold upon that evidence that certain results follow, it is open to the Court of differ from such a holding."To the same effect are the observations of the House of Lords in Bomford v. Osborne (1942) 10 ITR (Sup) 27 (34) (B)."No doubt there are many cases in which Commissioners, having had proved or admitted before them a series of facts, may deduce therefrom further conclusion which are themselves conclusions of pure fact. But in such cases the determination in point of law is that the facts proved or admitted provide evidence to support the Commissioners conclusions."The latest pronouncement of the House of Lords on this question it to be found in Edwards v. Bairstow (1955) 28 ITR 579 (C) Viscount Simonds observed at page 586 :-"For it is universally conceded that, though it is a pure, finding of fact, it may be set aside on grounds which have been stated in various ways but are, I think, fairly summarised by saying that the court should take that course if it appears that the Commissioners have acted without any evidence or upon a view of the facts which could not reasonably be entertained."and Lord Radcliffe expressed himself as under at page 592 :-"If the case contains anything ex facie which is bad law and which bears upon the determination, it is obviously erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting judicially and properly instructed as to the relevant law should have come to the determination under appeal. In those circumstances, too, the court must intervene."17. It follows, therefore, that facts proved or admitted may provide evidence to support further conclusion to be deduced from them, which conclusions may themselves be conclusions of fact and such inferences from facts proved or admitted could be matters of law. The court would be entitled to intervene if it appears that the fact finding authority has acted without any evidence or upon a view of the facts, which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question.18. The High Court recognised this position in effect but went wrong in applying the true principles of interference with such findings of fact to the present case. The attempt which was made by the High Court to probe into the mind of the Tribunal by trying to discard the affidavit of Govindprasad Ramjivan Ninetia in regard to the payment of Rs. 15,000 to the appellants in 15 currency notes of Rs. 1,000 each on 6-1-1946 and thus reducing the aggregate sum of Rs. 43,500 to Rs. 28,500 and justifying the figure of Rs. 31,000 arrived at by the Tribunal was really far-fetched and contrary to the terms of the Tribunals order itself, the Tribunal not having given any inkling, whatever, of what was at the back of its mind when it fixed upon the figure Rs. 31,000. Really speaking the Tribunal had not indicated upon what material it held that Rs. 30,000 should be treated as secret profit or profits from undisclosed sources and the order passed by it was bad. The appellants had furnished a reasonable explanation for the possession of the high denomination notes of the face value of Rs. 61,000 and there was no justification for having accepted it in part and discarded it in relation to a sum of Rs. 30,000. The case was analogous to the one before the Patna High Court in Chunilal Tichamchand Coal Co. Ltd. v. Commissioner of Income-tax, Bihar and Orissa, 1955 Pat. 185 (AIR V 42) (D), and should have been similarly decided in favour of the appellants.19.For the reasons indicated above, we are of the opinion that the High Court was in error in answering the first referred question in the affirmative. It ought to have answered it in the negative and held that there were no materials to justify the assessment of Rs. 30,000 from out of the sum of Rs. 61,000, for Income-tax and Excess Profits Tax and Business Profits Tax purposes representing the value of the high denomination notes which were encashed on 18-1-1946.20. In view of the above it is not necessary for us to go into the question whether the High Court ought to have answered the second referred question also. The answer to the first referred question being in the negative, the very basis for Excess Profits Tax and Business Profits Tax disappears and the second referred question becomes purely academical.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]19.For the reasons indicated above, we are of the opinion that the High Court was in error in answering the first referred question in the affirmative. It ought to have answered it in the negative and held that there were no materials to justify the assessment of Rs. 30,000 from out of the sum of Rs. 61,000, for Income-tax and Excess Profits Tax and Business Profits Tax purposes representing the value of the high denomination notes which were encashed on 18-1-1946.20. In view of the above it is not necessary for us to go into the question whether the High Court ought to have answered the second referred question also. The answer to the first referred question being in the negative, the very basis for Excess Profits Tax and Business Profits Tax disappears and the second referred question becomes purely academical.