Case: Commissioner of Income Tax, Bihar and Orissa Vs. Ashoka Marketing Limited

M/s : Ashoka Marketing Ltd. carries on the business of selling agent for various companies and in stocks and shares, jute and speculation. In the account year ending August 31, 1951, the company earned a profit of Rs. 59, 91, 721 in certain jute transactions. In the proceeding for assessment of income under thex Act, 1922, for the assessment year, the company claimed that out of the profits received, the amount of Rs. 14, 30, 561 was not taxable because the company had acted in purchasing and selling jute as agent of Dalmia Cement Paper Marketing Company Ltd., hereinafter referred to for the sake of brevity as D.C.P.M. Ltd.. This contention was rejected by thex Officer and by the Assistant Commissioner of Income tax. The order was confirmed by thex Appellate Tribunal. The Tribunal found that the claim of the company would not be accepted, because : (1) there was no evidence, documentary or otherwise contemporaneous with the transactions requiring the assessee to undertake transactions of sale and purchase on behalf of D C.P.M. Ltd. ; (2) that no entries had been made in the books of the assesse as pertaining to D.C.P.M. Ltd. either immediately or periodically after the transactions ; (3) that no money was advanced by the D.C.P.M. Ltd, nor was any debit raised of any interest payable by D.C.P.M. Ltd. in respect of the various purchases till the completion of the corresponding sales ; and (4) that the books of the company did not contain any record of brokerage, commission or any benefit accruing to the assessee for the services rendered as the alleged agent of D.C.P.M. Ltd The finding of the Tribunal that the transactions in jute were of the company and not on behalf of D.C.P.M.. Ltd. was clearly a finding on a question of fact. The Tribunal was, however, persuaded to submit to the High Court of Patna a statement of case under section 66(1) of the Indianx Act, 1922, the following question Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the profit of Rs. 14, 30, 561 on jute transactions were the profits of they liable to be included in its total income ?The High Court recorded a finding in the negative and in favour of the company. The learned judges of the High Court were in reaching their conclusion impressed by two circumstances : (1) that the amount of Rs. 14, 30, 561 sought to be assessed in the hands of the company had previously been assessed to tax in the hands of the D.C.P.M. Ltd. ; and (2) that there was on the record of the court a credit advice dated August 31, 1951, sent by the D.C.P.M. Ltd. This appeal has been filed before us with certificate granted by the High Court, observing that the appeal raised substantial questions of law of

Reasoning: But in so observing, the High Court, in our judgment, assumed jurisdiction which it did not possess. The Tribunal rejected the explanation of the, because of complete absence of contemporaneous entries in the books of account, and other corroborative documentary evidence. It was not open to the High Court to discard the finding relying upon a practice of the business which was not proved by the companyThe High Court then observed that the purchases were financed by the Albion Jute Company to the extent of Rs. 38 lakhs odd and by the New Central Jute Company to the extent of Rs. 30 lakhs odd and there was a credit balance of the D.C.P.M. Ltd. to the extent of Rs. 7, 48, 396. The transactions which fetched a profit of Rs. 14 lakhs could certainly not have been financed out of the credit balance to the extent of Rs. 7 lakhs odd. In any event, the books of account of the D.C.P.M. Ltd. were not before thex authorities or before the Tribunal. Assuming that the Albion Jute Company and the New Central Jute Company had financed the transactions no inference of law arose that the transactions in jute of theThe High Court observed that some indication of the explanation with regard to grounds (3) and (4) was given before thex Officer. Assuming that it was so, if the Tribunal having regard to the circumstances attendant upon the transactions, refused to accept the explanation, we do not think that any case was made out for the High Court to interfere with the findings recorded by the Tribunal. The jurisdiction of the High Court under section 66 of the Indianx Act is advisory. The High Court must accept the findings of fact recorded by the Tribunal and render advice only on questions of law arising out of the order of the Tribunal. In this case the High Court in effect sat in appeal over the judgment of the Tribunal, and attempted to reappreciate evidence. In doing so it assumed jurisdiction which it is not invested withWe discharge the answer recorded by the High Court and record an answer in the affirmative on the question submitted to the Tribunal.