TMI Blog1962 (9) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... the first question would be sufficient for the disposal of the reference in favour of the assessee. We are here concerned with the assessment year 1948-49. The assessee is a partnership firm consisting of six partners dealing in cloth and parachutes. One Milkhiram R. Goyal, who was carrying on business as the sole proprietor under the name and style of Milkhiram Brothers, was able to secure a contract for purchase of approximately 1,28,499 parachutes from Tata Aircraft Ltd., at the price of ₹ 93 lakhs on or about 1st November, 1946. On or about 13th November, 1946, Milkhiram assigned to the assessee the benefits of the said contract of purchase of the parachutes. The terms of the agreement of the aforesaid transfer between the assessee and Milkhiram are contained in a letter addressed to the assessee by Milkhiram, and it is annexed as annexure A . Now, Milkhiram assigned to the assessee the benefits of the said contract of purchase of parachutes for a consideration of ₹ 3 lakhs. The assessee paid Milkhiram the sum of ₹ 3 lakhs by passing in his favour two cheques. Milkhiram passed receipt in favour of the assessee for the said amount of ₹ 3 lakhs. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Goyal's evidence, it is suspicious, vide paragraph 8 of the Income-tax Officer's order. The appellant (the assessee) gives a forthright answer to this in paragraph 6 of his affidavit.........There is considerable force in the contentions of the appellant. In the face of the agreement of November 13, 1946, with Goyal's original receipt for ₹ 3 lakhs and his own admission of having received at least ₹ 1,87,000 in cash by adjustment, the Income-tax Officer could not brush aside the evidence adduced by the assessee and hold the entire payment as fictitious. In the light of the appellant's affidavit, this also requires re-examination by the Income-tax Officer and opportunity should also be given to the assessee firm to examine or cross-examine Milkhiram Goyal. On receiving the case on remand, an opportunity was given by the Income-tax Officer to the assessee to cross-examine Goyal, and the report made by the Income-tax Officer on this issue is in the following terms: From all these it appears that Shri Milkhiram Goyal admits having received ₹ 1,05,000 in cash, ₹ 82,000 in goods and so far as the balance of ₹ 1,13,000 is concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case in paragraph 7 thereof : At the time of further hearing on 27th November, Mr. Palkhivala, the learned counsel for the assessee, contended that ₹ 3 lakhs was a revenue expenditure and that the Tribunal had no jurisdiction to examine and determine the question of 'factum' of payment of ₹ 3 lakhs by the assessee, as the same, according to him, was not disputed by the income-tax authorities. As already stated, the Tribunal had gone into the question and held that the assessee has been able to prove only the payment of ₹ 1,87,000 out of the said amount of ₹ 3 lakhs. The application made by the assessee Under sub-section (1) of section 66 was rejected by the Tribunal. On an application made by the assessee, the aforesaid two questions have now been referred to us under section 66(2). Mr. Palkhivala contends that 1he only question raised by the assessee before the Tribunal was whether the payment of ₹ 3 lakhs held by the Appellate Assistant Commissioner to have been made by the assessee to Milkhiram was capital in nature or a revenue expenditure. The factum of payment of ₹ 3 lakhs was not in dispute before the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds decided against him. It is well settled that the expression thereon occurring in sub-section (4) of section 33 means on the subject-matter of the appeal before the Tribunal. Reading these rules together with sub-section (4) of section 33, it is clear that the subject-matter of appeal before the Tribunal is the grounds of appeal raised by the appellant in his memorandum of appeal, the grounds which the Tribunal allows him to raise under rule 12, and the contentions raised by the respondent before the Tribunal in support of the order made by the Appellate Assistant Commissioner by challenging the adverse finding against him. The scope and ambit of the provisions of sub-section (4) of section 33 and the aforesaid rules, viz., rules 12 and 27, have been considered by us recently in Income-tax Reference No. 50 of 1959 (Commissioner of Income-tax v. Hazarimal Nagji Co. [1962] 46 ITR 1162) decided on 6th October, 1961, and Income-tax Reference No. 60 of 1960 (J.B. Greaves v. Commissioner of Income-tax [1963] 49 ITR 107) decided on 17/18th July, 1962. The ratio of these two decisions, relevant for the purposes of this reference, is as stated above. It has, therefore, to be seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that that Milkhiram's appeal regarding the said sum was also pending before the Tribunal. The Tribunal, therefore, fixed the appeal of Milkhiram for hearing and that of the assessee for further hearing on 27th November, 1957. Both the appeals were heard together without objection of parties. It is not possible for us to hold from the aforesaid observations in the statement of the case that the assessee had consented that the Tribunal should go into the question of the quantum of payment in his appeal. There is no doubt in this respect at all, because the Tribunal itself in its statement of the case has stated that on 27th November Mr. Palkhivala objected to its going into the question on the ground that the Tribunal had no jurisdiction to go into the question in his appeal. Mr. Joshi wanted to refer to some departmental correspondence between the Commissioner of Income-tax and the Income-tax Officer, relating to the inquiry made by the Commissioner as to whether any issue was raised on behalf of the Income-tax Officer by the departmental representative before the Tribunal as to the quantum of payment. We did not allow Mr. Joshi to place that correspondence before us ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue, and, therefore, from the fact that the Tribunal has proceeded to deal with the issue in spite of the objection, we must assume that the Income-tax Officer had raised this question before the Tribunal. We see hardly any room to assume any fact. The Tribunal was directed to submit a statement of the case on two questions. The Tribunal has submitted the statement of the case. In the statement of the case, it is stated that an objection was raised on behalf of the assessee that the Tribunal had no jurisdiction to deal with the question as to the quantum of payment by the assessee to Milkhiram, inasmuch as it was a fact found in favour of the assessee and no objection was raised to the finding of fact of the Appellate Assistant Commissioner by the Income-tax Officer. Though the Tribunal has referred to this objection of Mr. Palkhivala in the statement of the case, it has not stated in the statement of the case that the departmental representative or the Income-tax Officer had raised any contention in respect of the quantum of payment before it. If it was the correct position, that the Income-tax Officer or the departmental representative had raised any such contention before t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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