Shah Trading Co. vs Commissioner of Income Tax

B.N. Kirpal, J.—The petitioner seeks reference of the following questions of law to this Court:

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessment had validly been reopened by invoking the provisions of section 147(b) of the income tax Act, 1961?

Whether, on the facts and in the circumstances of the case, the alleged incriminating statements on oath given by the three creditors could be said to constitute ''information'' so as to justify the invoking of the provisions of section 147(b) of the Act, particularly so in view of the confirmations given earlier by the said creditors?

Whether, on the facts and in the circumstances of the case, it could be said that there was a mere change of opinion relating to the genuineness of certain credits not sufficient to justify the invoking of the provisions of section 147(b) of the Act?

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the genuineness of credits in the account of the three creditors had not been proved?

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the onus for proving the genuineness of the said credits was on the assessee and not on the revenue?

Whether, on the facts and in the circumstances of the case, the subsequent incriminating statements of the said creditors could be said to outweigh the documentary evidence in the shape of confirmatory letters furnished earlier, so as to once again cast the onus of proving the genuineness of the said credits on the assessee?

Whether on the facts and in the circumstances of the case, the finding of the Tribunal that the genuineness of the said credits has not been established is vitiated by non-consideration of the facts that the assessment framed on one of the said creditors, duly accounting for the funds advanced to the assessee, had been approved by the Commissioner?

Whether in view of the fact that the ITO had abdicated his functions in favour of the IAC without making a reference u/s 144A, the Tribunal was correct in holding that the order of the ITO was sustainable?

Whether the findings and the order of the Tribunal stand vitiated by the incorrect presumption relied upon by it that formal proceedings u/s 144A had been conducted in relation to the determination of the genuineness of such credits, whether in fact no such proceedings had been so conducted, and the functions of the ITO had simply been usurped by the IAC?

The aforesaid questions essentially arise out of reassessment which has been made pursuant to the notices issued u/s 147(b) of the Act. At the time of the original assessment for the assessment year 1971-72 three cash credits standing in the names of the three standing persons were accepted by the department. It appears that thereafter statements of those three persons were recorded by the ITO and pursuant thereto notice was issued to the petitioner seeking to reopen the assessment. Having failed before the income tax authorities, including the Tribunal, an application u/s 256(1) was filed, which was dismissed by the Tribunal holding that the conditions precedent to the reopening of the assessment existed. The Tribunal concluded that question Nos. 1 to 3 were the questions of fact and no question of law arose. Question No. 5 was not referred because the Tribunal held that the answer to the said question was obvious as it has been consistently held by the High Courts and the Supreme Court that the onus was on the assessee to prove the genuineness of the cash credits. Dealing with question Nos. 4,6 and 7 the Tribunal again came to the conclusion that these were questions of fact and no question of law arose. Question Nos. 8 and 9 were not referred because the Tribunal came to the conclusion that the said questions did not arise from its order because neither any arguments were raised nor did the Tribunal touch upon these questions in their order.

We find that the aforesaid conclusion of the Tribunal in rejecting the application u/s 256(1) is valid. As question Nos. 8 and 9 were never argued nor considered, the same could not be regarded as having arisen out of the order. Question No. 5 was academic and the other questions proposed cannot be regarded as questions of law as they are based on the finding arrived at by the Tribunal. We, therefore, find no merit in this petition. The same is dismissed. There will be no order as to costs.