Case: Commissioner Of Income-Tax West Bengal,Calcutta Vs. Smt. Anusuya Devi

evidence cannot be assailed before the High Court on the ground that departmental authorities had violated the basic rules of natural justice without raising that question before the Tribunal.12. Counsel for Anusuya Devi requested that in any event the question which has been referred by the Tribunal in pursuance of the order of the High Court may be reframed and a supplementary statement may be ordered to be submitted by the Tribunal.But power to reframe a question may be exercised to clarify some obscurity in the question referred, or to pinpoint the real issue between the tax-payer and the department or for similar other reasons, it cannot be exercised for reopening an enquiry on questions of fact or law which is closed by the order of the Tribunal. Again a supplementary statement may be ordered only on the question arising out of the order of the Tribunal, and if the Court is satisfied that the statements are not sufficient to enable the Court to determine the question raised thereby, and when directed may be only on such material and evidence as may already be on the record but which has not been included in the statement initially made:Keshav Mills Ltd v. Commissioner of Income-tax, Bombay North, Ahmedabad 1965-56 ITR 365 = (AIR 1965 SC 1636 ). We do not think that the judgment of this Court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profit Tax, (1954) 28 ITR 765 = (AIR 1955 SC 176 ) lays down my general proposition that the High Court hearing a reference is entitled to amend or reframe a question and call for a supplementary statement so as to enable a party to lead evidence which has not been led before the Tribunal or the departmental authorities. In Narain Swadeshi Weaving Mills case, (1954) 26 ITR 765 = (AIR 1955 SC 176 ) this Court merely reframed the question so as to bring out the real issue between the parties.13. Finally counsel for Anusuya Devi submitted that the Tribunal was bound to state a case on the following question which was set out in the application under Section 66 (1) :6. "Whether there is any material before the Tribunal to hold that the said sum of Rs. 5,84,000 representing the value of the encashed high denomination notes was the income of the deceased Amritial Ojha of the period of the year 1944-45 prior to his death?"Counsel submitted that since the Tribunal had failed to raise and state a case on that question, and the High Court had also in directing that a statement of case be submitted, ignored that question, in the interest of justice and for a final and satisfactory disposal of the case this Court may order a statement on that question. Counsel said that merely because on the findings of the Tribunal Amritlal was on April 30, 1944, possessed of a large sum of money it could not be assumed that the whole amount was earned after April 1, 1944, and was on that account taxable in its entirety in the year of assessment 1945-46.14. The question whether the amount of Rs. 5,84,000 was taxable in the proceeding for assessment for the year 1945-46 was considered by the Income-tax Officer and by the Appellate Assistant Commissioner. The Income-tax Officer observed that by the explanation submitted on behalf of Anusuya Devi before him contrary to what was stated at the time of encashment of the high denomination notes, it was attempted as an after thought, to spread over the amount over a number of years". The contention that the amount of Rs. 5,84,000 was not taxable in the year of assessment 1945-46 was rejected. The Appellate Assistant Commissioner observed that on the statement made by Anusuya Devi that she had received the amount from her husband in the year of account 1944-45 and that it was unfortunate that there was no complete record of the "earnings and withdrawals" of Amritlal from the various businesses in which he was interested, and that in the absence of such a record all that was to be done was to examine whether the explanation was credible. He observed that"the accounting year was very favourable for all types of business, and in all probability the sum represented some income earned by the deceased in some ventures which were not known to the Department and therefore the sum could be treated as income of Amritlal from undisclosed sources"The Tribunal observed that they were unable to believe the version of Anusuya Devi that the amount was accumulated by her husband during a long period and since the assessee and his legal representatives had failed to prove the source of the fund, it "must be considered as of income character" Apparently no argument was raised before the Tribunal that the amount though taxable was not income of the year of account 1944-45 and could obviously not be referred.15. The High Court may answer only those questions which are actually referred to it. New questions which have not been referred cannot be raised and answered by the High Court. If the Tribunal refuses to refer a case under Section 66 (1) which arises out of its order, the proper course is for the aggrieved party to move the High Court to require the Tribunal under Section 66 (2) to refer the same. The question whether Rs. 5,84,000 represented income of the year of account 1944-45 was not submitted by the Tribunal to the High Court.Even if it be assumed that the High Court was moved to direct the Tribunal to state a case on the sixth question which was set out in the application filed before the Tribunal under Section 66 (1), the application must be deemed to have been rejected, and the order of rejection has become final. We have no power, without an appeal by the assessee, to set aside that order of the High Court and to direct the Tribunal to state a case on that question.

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

Reasoning from the judgment:
1[ds]7. In our judgment the order of the High Court cannot be sustained. The statement that out of 584 high denomination notes disclosed by Anusuya Devi 494 notes were received in realization of a cheque drawn by Bhupatray at Rajkot was made for the first time in a petition under Section 66 (2):it did Dot find place in the statement before the Income-tax Officer, not in the grounds of objection raised before the Appellate Assistant Commissioner, and not even in the affidavit filed before the Tribunal. The Tribunal was never apprised of that part of the case, and had no opportunity to test the correctness of that statement. On the statements made before the Income-tax Officer and in the affidavit there can be no doubt that it was the case of Anusuya Devi that she had encashed high denomination notes which she had received from her husband. No fault can therefore be found with the observations of the Tribunal that it was a peculiar fact that all the money stated to have been received and found in the cupboard was all in high denomination note and the entire amount had to be exchanged under the High Denomination Bank Notes (Denomination) Ordinance.We find it difficult to uphold the view of the Calcutta High Court that if an order is passed by the High Court calling upon the Tribunal to state a case on a question which does not arise out of the order of the Tribunal, the High Court is bound to advise the Tribunal on that question even if the question does not arise out of the order of the Tribunal. The High Court may only answer a question referred to it by the Tribunal the High Court is however not bound to answer a question merely because it is raised and referred. It is well settled that the High Court may decline to answer a question of fact or a question of law which is purely academic, or has no bearing on the dispute between the parties or though referred by the Tribunal does not arise out of its order. The High Court may also decline to answer a question arising out of the order of the Tribunal, if it is unnecessary or irrelevant or is not calculated to dispose of the real issue between the tax-payer and the department. If the power of the High Court to refuse to answer questions other than those which are questions of law directly related to the dispute between the tax-payer and the department, and which when answered would determine qua that question the dispute, be granted, we fail to see any ground for restricting that power when by an erroneous order the High Court has directed the Tribunal to state a case on a question which did not arise out of the order of the Tribunal. We are unable therefore to hold that at the hearing of a reference pursuant to an order calling upon the Tribunal to state a case, the High Court must proceed to answer the question without considering whether it arises out of the order of the Tribunal, whether it is a question of law or whether it is academic, unnecessary or irrelevant.11. We are of the opinion that the very basis of the question on which the Tribunal was called upon to submit a statement of the case did not exist. The Tribunal cannot in this case be charged with recording its decision without considering all the evidence on the record: the decision of the Tribunal was clearly based on appreciation of evidence on the record before it, and the High Court was, in our view, incompetent to direct the Tribunal to state the case on the question which was directed to be referred and dealt with by the High Court. We are also unable to agree with the observation of the High Court that the explanation which the Assistant Commissioner says was made by Anusuya Devi was not made by her or by her attorney. No such plea was apparently raised before the Tribunal. There is also no ground for believing that Anusuya Devi was not given an opportunity to "clear up the discrepancies " between the statements made by her or on her behalf from time to time in connection with the encashment of the high denomination notes. That plea was not raised before the Tribunal, and the validity of the conclusion of the Tribunal on appreciation of evidence cannot be assailed before the High Court on the ground that departmental authorities had violated the basic rules of natural justice without raising that question before thepower to reframe a question may be exercised to clarify some obscurity in the question referred, or to pinpoint the real issue between the tax-payer and the department or for similar other reasons, it cannot be exercised for reopening an enquiry on questions of fact or law which is closed by the order of the Tribunal. Again a supplementary statement may be ordered only on the question arising out of the order of the Tribunal, and if the Court is satisfied that the statements are not sufficient to enable the Court to determine the question raised thereby, and when directed may be only on such material and evidence as may already be on the record but which has not been included in the statement initiallydo not think that the judgment of this Court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profit Tax, (1954) 28 ITR 765 = (AIR 1955 SC 176  ) lays down my general proposition that the High Court hearing a reference is entitled to amend or reframe a question and call for a supplementary statement so as to enable a party to lead evidence which has not been led before the Tribunal or the departmental authorities.The question whether the amount of Rs. 5,84,000 was taxable in the proceeding for assessment for the year 1945-46 was considered by the Income-tax Officer and by the Appellate Assistant Commissioner.The High Court may answer only those questions which are actually referred to it. New questions which have not been referred cannot be raised and answered by the High Court. If the Tribunal refuses to refer a case under Section 66 (1) which arises out of its order, the proper course is for the aggrieved party to move the High Court to require the Tribunal under Section 66 (2) to refer the same. The question whether Rs. 5,84,000 represented income of the year of account 1944-45 was not submitted by the Tribunal to the High Court.Even if it be assumed that the High Court was moved to direct the Tribunal to state a case on the sixth question which was set out in the application filed before the Tribunal under Section 66 (1), the application must be deemed to have been rejected, and the order of rejection has become final. We have no power, without an appeal by the assessee, to set aside that order of the High Court and to direct the Tribunal to state a case on that question.