Case: Commissioner of Income Tax, West Bengal-II Calcutta Vs. M/s. Radha Kishan Nandlal

m, M/s. Radha Kishan Nandlal, which is respondent to this appeal consists of three partners. Subhkaran Jhunjhunwalla having anshare and two others having each a 4anna share therein. In the course of the assessment for the years52 theOfficer found that another firm, M/s. Radhakissen Nandlal Arhatwalla, was a branch of the assesses firm. Accordingly, he included the income of that firm in the hands of thefor those Years.2. During the assessment proceedings for the yearthe year under reference, theOfficer on the basis of the nest records intended to include the income of the branch firm in the income of theThe account books of the branch firm were not produced by theon the ground that the business was closed and therefore the books were not easily available. But Subhkaran Jhunjhunwalla had returned an income of Rs. 55,416 as his share in the profits of the branch firm on the basis that he had ashare therein, TheOfficer estimated the income of the branch firm at sixteen times the income which was returned by Subhkaran Jhunjhunwalla. Deducting a sum of Rs. 40.000 for expenses inclusive of payments made to the working partners of the branch firm, theOfficer added back a sum of Rs, 8.60.000 to theincome for the relevant year. The order of assessment was confirmed in appeal by the Appellate Assistant Commissioner.3. On further appeal, the Tribunal examined Subhkaran Jhunjhunwalla in order to determine the income of the branch firm. Jhunjhunwalla stated in his evidence that the sum of Rs. 55,416 which was shown by him as his share in the income of the branch firm was really the entire profit earned by that firm. Evidently the Tribunal disbelieved this but it held that Jhunihunwalla had anshare in the income of the branch firm. The income of the branch firm was on that basis estimated by the Tribunal at Rs. 1,10,000 odd. Deducting therefrom a sum of Rs. 25,000 for expenses inclusive of amounts payable to the working partners, the Tribunal held that the total income of the branch firm which could be included in the assessees income would come to a sum of Rs. 75,000 only.4. The appellant the Commissioner ofI, Calcutta, thereafter filed an application under Section 66 (1) of theAct, 1922 asking the Tribunal to refer to the High Court two questions of law said to arise out of its judgment. The Tribunal rejected that application.5. The appellant thereafter filed an application in the High Court of Calcutta under Section 66 (2) of the Act praying that the Tribunal be asked to refer the two questions to the High Court. The High Court granted a Rule on that application but discharged it without a speaking order. This Court gave to the appellant special leave to appea1 from the order of the High Court.

Reasoning:
7. The Tribunal accepted the contention of the Department that M/s. Radhakissen Nandlal Arhatwalla wag not an independent firm consisting of the partners of theand certain outsiders but that it was a branch of theThe Tribunal, however. found that theOfficer had estimated the income of the branch firm on a fallacious" basis, In coming to this conclusion the Tribunal thought that Subhkaran Jhunjhunwalla had anshare in the branch firm and therefore the income of that firm could only be estimated at two times the income shown by him, namely, at Rs. 1,10.000. We are unable to find the basis on which the Tribunal concluded that Jhunihunwalla had anshare in the profits of the branch firm.In The Commr. ofPunjab v. Indian Woollen Textile Mills (1964) 5 SCR 427   = (AIR 1964 SC 735  ) it was held that though the finding of fact recorded by the Tribunal is binding on the High Court. it must appear that the Tribunal had considered evidence covering all the essential matters before arriving at its conclusion and there hag to be some evidence to support the finding of the Tribunal. The finding of the Tribunal that Jhunihunwalla had anshare in the profits of the branch firm seems to be based on no evidence while its attempted estimate of the income of the branch firm on the basis of advances made to it by theseems prima facie conjectural and opposed to the evidence on record.The judgment of the Tribunal thus raises the questions whether it misdirected itself in law in basing, its conclusion on some evidence ignoring the other essential matters on record and whether the conclusion to which it came is such as no reasonable person could have come to. It is necessary that these questions should be decided by the High Court. We might mention that the High Court was not right in discharging the Rule without giving any reasons.(See Commr of(Central), Calcutta v, Daulatram Rawatmall. (1970) 78 ITR 318 (SC).