TMI Blog1977 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... 147(a) of the Act were issued by the ITO, C-Ward, Jodhpur, with prior approval of the Commissioner with a view to club the income arising to the assessee from the source at Beawar treating the income as income of the HUF at Jodhpur. The assesses filed returns of income, under protest, in the status of HUF. During the assessment proceedings, the assessee objected to the proceedings started under s. 147(a) of the Act on the ground that the same were void as there was no concealment of the income on the part of the assessee and contended that the income at Beawar was being assessed in the status of an individual and that at jodhpur in the status of HUF and it should be continued to be so assessed. The ITO, however, overruled the objection and clubbed the income at Beawar with the income at Jodhpur earned in the status of HUF. The applicant preferred an appeal to the AAC. The AAC by his order dated August 17, 1972, while allowing the appeals of the applicant, came to the conclusion that the status of the assessee for income at Beawar has to be taken as an individual and for that at jodhpur as an HUF. As such, income of Beawar should be excluded from the income of the assessee assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, the Tribunal was legally right in holding that the property and share income of Jodhpur and Beawar were thrown into the common stock of the HUF with the intention of treating it as the income of the HUF. 7. Whether, on the facts and in the circumstances of the case, the question of the ownership of the Beawar property and share in the firm and their income for the assessment years up to and including the assessment year 1969-70 have been finally settled and could not be reopened in any of the proceedings under the Act ? " The Tribunal held that questions Nos. 1 to 3 which relate to the validity of the notice under s. 147(a) do not arise out of the order of the AAC. The Tribunal also did not permit the assessee to take up this plea. If the Tribunal does not permit an additional plea to be raised ordinarily, it is a finding of fact. Thus, questions Nos. I to 3 of the applications do not arise out of the order of the Tribunal. As regards questions Nos. 4 to 7, the Tribunal held that they were concluded by the finding of facts found by the Tribunal. Apart from it, if any question of law arises on the facts found by the Tribunal the same stood ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has refused to entertain it, is a contention which arises out of the order of the Tribunal. For this, he has relied on Harilal Harjivan v. CIT [1962] 46 ITR 1129 (Bom). Thus the question regarding the challenge to the proceedings under s. 147 of the Act on the additional ground sought to be raised by the assessee before the Tribunal also arises out of the order of the Tribunal. Mr. Lodha, counsel for the revenue, has contended that the point involved in questions Nos. I to 3 was raised at the fag end of the arguments before the Tribunal. This point was not raised before the AAC. Had the assessee argued the point of jurisdiction in respect of proceedings under s. 147(a) of the Act, there was no reason why it should not have been dealt with by the AAC. It means that the assessee did not assail the order of the ITO on the ground that he should not have initiated proceedings under s. 147(a) of the Act. If this ground was raised in the memo of appeal before the AAC, it was not sufficient. It should have been pressed at the time of hearing of the appeal and it should be deemed that the assessee had abandoned this point before the AAC. Therefore, there was no occasion for the Tribunal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this point before the AAC and the AAC failed to deal with it, the remedy available to the assessee was to make an application before the AAC to that effect, is also not tenable as the appeal was allowed by the AAC. As regards the contention of the learned counsel for the department that the discretion of the Tribunal to permit a point to be raised or not to permit would not give rise to a question of law which requires an answer, it may be said that, in this case, the objection raised by the assessee is that he, all through, was contending that the issue of the notice and the initiation of the proceedings by the ITO under s. 147(a) of the Act was invalid and without jurisdiction and the Tribunal refused to allow this point to be raised. The question is, whether the point raised (which is the subject-matter of questions Nos. 1 to 3) arises out of the order of the Tribunal and, therefore, it should be referred to this hon'ble court ? Firstly, it may be said that if a contention was raised by the assessee before the Tribunal, even if the Tribunal has refused to entertain it, it is a contention which arises out of the order of the Tribunal and, therefore, the same should be referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enge and it is open to the High Court to examine whether the Tribunal had applied the relevant legal principles correctly or not in reaching its final conclusion. In that sense, the scope of the enquiry and the extent of jurisdiction of the High Court in dealing with such points is the same as in dealing with pure questions of law. The Tribunal has, therefore, wrongly refused to refer them to this court and this court should direct the Tribunal to refer these questions. He has relied on P. N. Krishna Iyer v. CIT [1969] 73 ITR 539, wherein it has been held by their Lordships of the Supreme Court that the question whether the income was the income of the HUF or of an individual was a mixed question of law and fact and the final conclusion drawn by the Tribunal from the primary evidentiary facts were open to challenge on the plea that the relevant principles had been misapplied by the Tribunal. Mr. Lodha, on behalf of the department, has contended that none of these questions are questions of law and fact. They are pure questions of fact. The Tribunal has come to its findings on the basis of such facts found by it. It has held that the share which the assessee received from the firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g its final conclusion. It has been held in P. N. Krishna Iyer's case [1969] 73 ITR 539 (SC) that such question as to whether particular income is income of the individual or of the HUF is a mixed question of law and fact. It is true that the conclusion of the Tribunal is no doubt based upon primary evidentiary facts but the ultimate conclusion is determined by the application of relevant legal principles. Questions Nos. 4 and 5 include the challenge that the Tribunal has not applied the correct principles in drawing conclusions from proved facts. The question of the applicability of the principles of Hindu law to the facts of this case is also involved. The construction of the partnership deed of the firm, Jhabarchand Gokalchand, for arriving at the conclusion is also involved. The construction and effect of the AAC's order dated February 5, 1970, on the facts of the present case is also involved. Therefore, it has to be examined by this court whether the Tribunal has applied the relevant legal principles correctly or not in reaching its final conclusion. As regards the contention of Mr. Lodha that even if these questions are mixed questions of law and fact, they stand concluded b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cases and and refer the following questions to this court : " 1. Whether in the proceedings initiated under section 147(a), the validity of the notices and proceedings taken in pursuance thereof has been raised before the Income-tax Officer and the appeal of the assessee has been accepted on merits, the Tribunal was legally not right in not allowing the objection as to the jurisdiction of the Income-tax Officer to initiate the notice and as to the validity of the proceedings taken in pursuance thereof to be raised ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that in order to go into the question of jurisdiction, the authorities below will have to find out facts in coming to the conclusion one way or the other and thereby not going into that question ? 3. That in the face of the finding of the Tribunal that the full material on the question of jurisdiction is not available on the record, whether the Tribunal was bound to hold that conditions precedent for issuing notice under section 147(a) was not satisfied and the notice issued, and the entire proceedings taken, were bad in law ? 4. Whether, on the facts and in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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