TMI Blog1992 (5) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... eciding these two reference applications are that for the assessment years 1967-68 and 1968- 69, the assessee was assessed on March 31, 1969, and April 11, 1969, on a total income of Rs. 12,32,429 and Rs. 9,69,936, respectively. A notice under section 147(a) was issued on March 30, 1976, in respect of the assessment year 1967-68. The assessee filed his return under protest. On March 27, 1980, assessment was completed on a total income of Rs. 12,82,429 by making an addition of a sum of Rs. 50,000 under section 69 of the Income-tax Act. This order was challenged by the assessee in appeal. The Commissioner of Income-tax (Appeals) set aside this order on June 11, 1980. A second notice under section 147(a) was issued on February 10, 1981, and was served on the assessee on February 12, 1981. The assessment based on the second notice was made on February 28, 1985. In the meanwhile, on an appeal filed by the assessee before the Tribunal against the order dated June 11, 1980, the matter was remanded to the Commissioner of Income-tax (Appeals) by the Tribunal, vide its order dated July 22, 1981. The Commissioner of Income-tax (Appeals), reheard the matter and the addition of Rs. 50,000 in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strict law of evidence is not applicable to proceedings before the Income-tax Officer. He submitted that the findings recorded by the Tribunal are wholly perverse and are contradictory. The Tribunal has failed to consider extremely important documents which are available on the record. He argued that the absence of initiation of F.E.R.A. proceedings against the assessee is no ground for holding that the reassessment proceedings are bad. He invited the court's attention to paragraph 11 of the assessment order dated February 28, 1985, and submitted that the Tribunal has ignored this important aspect to which reference has been made by the Income-tax Officer. He made reference to the various documents filed before the Income-tax Officer and the Tribunal and submitted that the Appellate Tribunal has misread those documents and, therefore, its conclusions are perverse. The Tribunal has ignored the contents of the traveller's cheque and the telegram available on record and has ignored the impact of the consignment bill. He argued that the findings recorded by the Tribunal cannot be treated as findings of fact. Learned counsel for the Revenue submitted that from the suit filed by one Joh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been relied upon for the purpose of passing the impugned orders dated February 28, 1985, because John Ashlyn was not made available to the assessee for cross-examination. They placed reliance on the decisions of the Supreme Court in State of Kerala v. K. T. Shaduli Yusuff [1977] 39 STC 478 ; Sona Electric Co. v. CIT [1985] 152 ITR 507 (Delhi) ; Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) ; Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC) ; Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC) ; Sree Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28 (SC) ; Sovachand Baid v. CIT [1958] 34 ITR 650 (SC); Rameshwar Prasad Bagla v. CIT [1973] 87 ITR 421 (SC); Jiyajeerao Cotton Mills Ltd. v. CIT [1958] 34 ITR 888 (SC) ; CIT v. Karam Chand Thapar and Brothers (P.) Ltd. [1989] 176 ITR 535 (SC). Learned counsel also argued that reassessment proceedings for the year 1967-68 were commenced, vide notice dated February 10, 1981. On that day, the assessment proceedings were pending before the Income-tax Officer on being set aside by the Commissioner of Income-tax (Appeals), vide his order dated June 11, 1980, and since the assessment proceedings were pending, issue of notice un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the facts found is, in such a case, a question of law. But, where the final determination of the issue equally with the finding or ascertainment of the basic facts does not involve the application of any principle of law, an inference from the facts cannot be regarded as one of law. The proposition that an inference from facts is one of law is, therefore, correct in its application to mixed questions of law and fact, but not to pure questions of fact. In the case of pure questions of fact an inference from the facts is as much a question of fact as the evidence of the facts. " The same principle has by and large been followed in almost all cases. In a recent decision in CIT v. Karam Chand Thapar and Bros. P. Ltd. [1989] 176 ITR 535 (SC), their Lordships observed : " It is equally settled that the decision of the Tribunal has not to be scrutinised sentence by sentence merely to find out whether all facts have been set out in detail by the Tribunal or whether some incidental fact which appears on the record, has not been noticed by the Tribunal in its judgment. If the court, on a fair reading of the judgment of the Tribunal, finds that it has taken into account all relevant mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuing of a fresh notice and proceedings with the reassessment was valid or not, as according to the assessee, the reassessment was void ab initio in view of the Supreme Court's decision in the case of Y. Narayana Chetty v. ITO [1959] 35 ITR 388 ; CIT v. Thayaballi Mulla Jeevaji Kapasi [1967] 66 ITR 147 (SC) ; CIT v. Kurban Hussain Ibrahimji Mithiborwala [1971] 82 ITR 821 (SC) and Ghanshyamdas v. Regional Asst. CST [1964] 51 ITR 557 (SC). The Tribunal then referred to the decision of the Supreme Court in Ghanshyamdas v. Regional Asst. CST [1964] 51 ITR 557 and observed that, if an assessment proceeding could be said to be pending, no notice for reassessment could be issued and if it is so then it would be a invalid notice. The Tribunal then referred to CIT v. Ranchhoddas Karsondas [1959] 36 ITR 569 (SC) and also to the case of CIT v. Kurban Hussain [1971] 82 ITR 821 (SC) and held that the reassessment proceedings for the year 1967-68 are invalid because of the pendency of the earlier reassessment proceedings at the time of issue of the notice to the assessee. The Tribunal then examined the facts which were brought on record and observed : " Coming to the facts of the case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a matter of fact that the goods received on its being returned by Salas, and their subsequent export was at its value and that there is no underinvoicing whatsoever. " The Tribunal then referred to the fact that the invoices raised by the assessee on Salas bear the Switzerland Customs Stamp and also a letter from MEIE R. Switzerland and observed that the Swiss authorities required that the full value of the goods imported needs declaration with the Swiss custom authorities. The Tribunal took notice of the fact that the name of Veronica was suggested by Salas so that other dealers are not in the know of who was the customer. The Tribunal also took notice of the fact that Salas had no agreement with the assessee for allegedly re-exporting the goods for and on behalf of the assessee to the two New York parties. The Tribunal observed that the Revenue came to believe about the existence of such agreement only on the basis of the statement of Salas, but no documentary proof has been provided by Salas to show that such agreement at all existed. John Ashlyn tried to support his allegation by providing copies of invoices allegedly raised by him on two parties of New York, but again withh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1989, the Tribunal has clearly observed that the finding recorded by it on the basis of evaluation of evidence is a pure finding of fact and no question of law arises warranting reference to the court. We have carefully looked into the orders passed by the Income-tax Officer, the Commissioner of Income-tax (Appeals) and the Tribunal and, in our opinion, the Tribunal has not committed any error of law warranting interference by this court. Some of the most important aspects of the case which have been taken note of by the Tribunal are that John Ashlyn made this statement involving the assessee after a period of 12 years. He did not produce any document showing the modus operandi of the assessee in the export of the goods. John Ashlyn has not produced anything on record to show that the assessee was connected with Gemmes Du Monde. The assessee made a categorical denial before the Assessing Officer that he did not know the firm named Gemmes Du Monde and had no dealings with it. John Ashlyn in his statement has alleged that the arrangement with the assessee was recorded by him in a confidential index card stated to be legalised Document No. 116. The so-called index card is stated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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