Case: Kanhaiyalal Lohia (Deceased) (By His Legal Representatives) Mahabir Prasad Khemka &amp; Others Vs. Commissioner of Income Tax, West Bengal

natural justice, and that was held sufficient to entitle an aggrieved party to come to this Court against the appellate order of the Tribunal under Art. 136. In Baldev Singhs case, AIR 1961 SC 736 , this Court entertained an appeal against the appellate order of the Tribunal, because limitation to take other remedies was barred without any fault of the assessee concerned. The ratio in each of these cases is that a circumstance which cannot be corrected by the procedure of a stated question of law on a statement of the case may afford a ground for invoking the jurisdiction of this Court under Art. 136. That ratio does not apply, where a question of law can be raised and is capable of being answered by the High Court or on appeal, by this Court. An appeal against an order of the High Court deciding a question referred or against a refusal to call for a statement can be brought before this Court under S. 66A, if the High Court decides the question referred and under Art. 136, if the High Court refuses to call for a statement.7. In the present case, the order of the High Court on the question referred was not brought before this Court by the ordinary mode indicated in the Indian Income-tax Act, presumably because of the concession of counsel that he could not claim that the question be answered infavour of the assessee and the attitude of the Department that the assessment of "Brijlal Nandkishore" would be cancelled. The order refusing to call for a statement on questions other than the one referred is also not questioned before us. The attempt is to bring this case within the ratio of Dakheswari Cotton Mills case, 1955-1 SCR 941 : ((S) AIR 1955 SC 65 ), and in support, it has been pointed out mainly that the examination of Sri A. L. Mazumdar in the absence of Kanhaiyalal Lohia was against the principles of natural justice. The statement of Sri A. L. Mazumdar was taken on March 28, 1950, and it is recorded as follows :"Mr. Mazumdar is questioned by me as to what he knows regarding the alleged gift as recorded in the books of Kanailal Lohia in favour of BrijLal and NandKishore. He says that I dont remember things very distinctly but I can say that the gifts to BrijLal or NandKishore were not made in my presence as alleged. Mr. Kanhaiyalal Lohia used to tell me that his brother and nephew are idling away their time hence I shall give them a gift and make them work by that money.The partnership deed was most probably drawn up by me. The gift was reported to have been made to BrijLal and NandKishore before I should have taken up the drafting of the deed. Kanhaiyalal told me several times that he wanted to separate his brother and nephew. When the firm was started then Brijlalji came to me and asked me if father and sons partnership deed could be drawn up.I dont know anything else than this in the matter."8. The lie given by Sri Mazumdar to the statement of Kanhaiyalal Lohia has affected its credibility. The order sheet shows that Mr. B. Sen Gupta took a copy of Sri Mazumdars statement and expressed a desire to cross-examine him; but when the opportunity was given, he failed to appear. It is impossible to think in these circumstances that there has been any breach of the principles of natural justice. The order sheets of March 29 and 30, 1950 clearly record the absence of Mr. B. Sen Gupta. In our opinion, there is no breach of the principles of natural justice in this case to entitle the appellants to invoke the ruling in Dakheswari Cotton Mills case, 1955-1 SCR 941 : ((S) AIR 1955 SC 65 ).9. It was contended before us that the finding of the Tribunal was perverse, and that on an examination of the total circumstances, it is quite clear that the gifts were not only real, but were acted upon. This was a matter within the jurisdiction of the Appellate Tribunal as the final fact-finding authority. The Tribunal acted within, its powers in refusing to accept the evidence tendered, and looking at the circumstances of the case we cannot say that the finding has been perversely reached. For a number of years, the brother and the nephew were supported by Kanhaiyalal Lohia, and it does not appear that a gift of even a small sum was made to them to put them on their legs. Suddenly in the year 1943 Kanhaiyalal Lohia made up his mind to put them in business with a gift of the order of Rs. 7,60,000 odd. For this purpose, he had to overdraw his accounts with the Bank and to pay interest to the Bank. It does not appear why he felt that the establishment of his brother and nephew in business should be made on such a grand scale, which invoked him in debt. This circumstance, taken with the fact that Mr. Mazumdar stated that he had always complained that they were good for nothing and were idlers, makes the transactions suspicious.It was presumably done with a view to reduce the assessable profits in the hands of Kanhaiyalal Lohia, and on the evidence, the Tribunal was entitled to hold, as it did, that this was a sham transaction. In our opinion, no special circumstances exist, on which the appellants can claim to come to this Court against the decision of the Tribunal, by passing the decision of the High Court on the question referred and the refusal of the High Court to call for a statement of the case from the Tribunal on questions which the Tribunal refused to refer to the High Court. The appeals are, therefore, within the rulings of this Court in AIR 1961 SC 1708 and Civil Appeal No. 176 of 1959, D/- 24-4-1961 (SC) and must be regarded as incompetent.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]7. In the present case, the order of the High Court on the question referred was not brought before this Court by the ordinary mode indicated in the Indian Income-tax Act, presumably because of the concession of counsel that he could not claim that the question be answered infavour of the assessee and the attitude of the Department that the assessment of "Brijlal Nandkishore" would be cancelled. The order refusing to call for a statement on questions other than the one referred is also not questioned beforewas a matter within the jurisdiction of the Appellate Tribunal as the final fact-finding authority. The Tribunal acted within, its powers in refusing to accept the evidence tendered, and looking at the circumstances of the case we cannot say that the finding has been perversely reached. For a number of years, the brother and the nephew were supported by Kanhaiyalal Lohia, and it does not appear that a gift of even a small sum was made to them to put them on their legs. Suddenly in the year 1943 Kanhaiyalal Lohia made up his mind to put them in business with a gift of the order of Rs. 7,60,000 odd. For this purpose, he had to overdraw his accounts with the Bank and to pay interest to the Bank. It does not appear why he felt that the establishment of his brother and nephew in business should be made on such a grand scale, which invoked him in debt. This circumstance, taken with the fact that Mr. Mazumdar stated that he had always complained that they were good for nothing and were idlers, makes the transactions suspicious.It was presumably done with a view to reduce the assessable profits in the hands of Kanhaiyalal Lohia, and on the evidence, the Tribunal was entitled to hold, as it did, that this was a sham transaction. In our opinion, no special circumstances exist, on which the appellants can claim to come to this Court against the decision of the Tribunal, by passing the decision of the High Court on the question referred and the refusal of the High Court to call for a statement of the case from the Tribunal on questions which the Tribunal refused to refer to the High Court. The appeals are, therefore, within the rulings of this Court in AIR 1961 SC 1708  and Civil Appeal No. 176 of 1959, D/- 24-4-1961 (SC) and must be regarded as incompetent.