2007 (9) TMI 267 - HC - Income Tax

We have considered each of the issues asked for reference; however taking note of the fact that all the issues are based on facts and essentially require re-appreciation which is not permissible for reference to this court. It is not a case where either material available on record was ignored or the Tribunal recorded its finding without considering the material rather perusal of the order reveals that each and every material was properly considered to arrive at the finding - In view of the facts discussed above we are not in agreement with the Revenue to accept this reference application so as to call for reference for its answer under the provisions of section 256(2) of the Income-tax Act. Hence this reference application preferred by the Revenue is not accepted; the same is hereby dismissed.

Issues:
1. Refusal to make reference under section 256(2) of the Income-tax Act, 1961 by the Income-tax Appellate Tribunal.
2. Determination of various questions sought for reference regarding undisclosed income, unexplained investments, surrender of stock, sale of land, construction of house, undeclared payments, telescoping, and estimated additions on account of unrecorded household expenses.

Analysis:

1. The Income-tax Appellate Tribunal refused to make a reference under section 256(2) of the Income-tax Act, 1961, based on the order dated February 17, 1999, which was related to the block period of 1986-87 to 1996-97. The Tribunal found that the questions sought for reference were based on findings of fact and not on questions of law, as they were decided after proper appreciation of evidence.

2. The questions raised for reference covered various issues such as the deletion of undisclosed income related to investments in gold ornaments and silver articles, surrender of stock, sale of land, construction of a house, undeclared payments for immovable properties, telescoping of assessments, and estimated additions on account of unrecorded household expenses.

3. The Tribunal's decision on each question was based on a thorough consideration of the facts and evidence available on record. For instance, the deletion of additions related to gold ornaments and silver articles was justified based on wealth-tax returns. The Tribunal also addressed issues regarding surrender of stock, location of agricultural land, sale of land, construction of a house, undeclared payments, and estimated additions on factual grounds.

4. The Tribunal's refusal to refer the questions to the High Court was supported by the fact that the issues primarily required re-appreciation of evidence, which is not permissible under the scope of reference. The Tribunal's findings were based on a proper consideration of all material available on record, and no legal questions arose from the decisions made.

5. The High Court, after considering the arguments presented by both parties, concluded that the reference application by the Revenue was not acceptable. The Court found that the Tribunal's order was based on a proper evaluation of facts and evidence, and there was no legal basis for referring the questions raised for further consideration.

6. Ultimately, the High Court dismissed the reference application by the Revenue, emphasizing that the issues raised did not involve questions of law but were primarily based on factual determinations made by the Tribunal after due consideration of all relevant material. The Court upheld the Tribunal's decision and found no grounds for accepting the reference application under section 256(2) of the Income-tax Act.

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