1990 (8) TMI 45 - HC - Income Tax

Supreme Court Directs Tribunal to High Court for Reconsideration of Evidence

The Supreme Court directed the Tribunal to send a statement of case to the High Court based on eight questions of law arising from the Revenue's proposed ... Vitiation of appellate findings for ignoring relevant and admissible evidence - right to reasonable opportunity to rebut statements recorded under section 131 of the Incometax Act - remand for fresh consideration by the Tribunal and Assessing Officer - limits of advisory jurisdiction in deciding disputed questions of factVitiation of appellate findings for ignoring relevant and admissible evidence - Findings of the Incometax Appellate Tribunal were vitiated in law insofar as they ignored relevant and admissible evidence and relied on incorrect or mis-stated facts. - HELD THAT: - The High Court held that the Tribunal had not considered the evidence in its proper perspective and, accordingly, its findings of fact were vitiated in law. Although answers on the extracted questions could be indicated, they would be inconclusive because the Tribunal's factfinding was rendered unreliable by its failure to give proper weight to material evidence. The Court emphasised that it is not desirable in its advisory jurisdiction to record definitive findings of fact where the final factfinding forum (the Tribunal) has itself erred in considering the evidence.The Tribunal's factual findings are vitiated for failure to consider evidence properly and cannot stand.Right to reasonable opportunity to rebut statements recorded under section 131 of the Incometax Act - remand for fresh consideration by the Tribunal and Assessing Officer - The Tribunal's finding that the assessee was not afforded a reasonable opportunity to rebut statements recorded under section 131 and to explain certain materials remains undisturbed, and the matter must be reconsidered after such opportunity is afforded. - HELD THAT: - Both parties conceded, and the Court found, that the assessee had not been given reasonable opportunity to rebut ex parte statements under section 131 and that the Assessing Officer failed to call for explanations on some points. In view of this, the High Court refrained from entering final factual conclusions and directed that the Tribunal, as the final factfinding forum, must reconsider the matter. The Court observed that after the assessee is given a proper opportunity, fresh facts or explanations may emerge which could materially affect the findings; accordingly the Assessing Officer should afford the opportunity and the Tribunal must pass consequential orders on reappraisal.Matter remitted for fresh consideration after the assessee is given reasonable opportunity to rebut and explain; Assessing Officer to afford such opportunity and Tribunal to rehear/appreciate evidence afresh.Limits of advisory jurisdiction in deciding disputed questions of fact - The High Court will not, in its advisory jurisdiction, express conclusive opinions on disputed questions of fact which require fresh consideration after procedural defects (lack of opportunity) are remedied. - HELD THAT: - The Court declined to answer the substantive extracted questions finally because doing so in the advisory reference would be inappropriate where the Tribunal recorded that the assessee was not given reasonable opportunity. The Supreme Court had earlier indicated that it was neither necessary nor proper at the statementofcase stage to express opinions on findings of fact. Thus, any answers on facts would be academic and vulnerable; a definitive finding must await reexamination by the Tribunal and Assessing Officer after the assessee has been afforded opportunity to rebut and explain.No definitive answers to the factual questions are given in advisory jurisdiction; they are to be reconsidered on remand.Final Conclusion: Reference disposed: the Court holds that the Tribunal's findings are vitiated for failure to consider evidence properly and for not affording the assessee a reasonable opportunity to rebut section 131 statements; the matters are remitted to the Tribunal (with direction that the Assessing Officer afford opportunity and the Tribunal reconsider and pass consequential orders). No order as to costs. Issues involved: Assessment years 1962-63, 1963-64, and 1964-65; validity of findings by the Income-tax Appellate Tribunal; exclusion of certain investments and income from assessments; questions of law arising from the Tribunal's decision.Summary:The High Court of Orissa addressed references concerning the assessments for the mentioned years of the same individual assessee. The Appellate Assistant Commissioner set aside the assessments with directions for a fresh assessment allowing the appellant to cross-examine witnesses. The Income-tax Appellate Tribunal held that statements obtained u/s 131 cannot be used against the assessee without providing an opportunity for rebuttal. The Tribunal directed the exclusion of investments and income related to Kalinga Foundation Trust from the assessments. The Revenue filed applications u/s 256(1) for stating a case to the High Court, which were initially refused by the Tribunal.The Supreme Court identified eight questions of law arising from the Revenue's proposed questions, including the Tribunal's handling of evidence, the existence of the Kalinga Foundation Trust, and ownership of certain assets. The Supreme Court directed the Tribunal to send a statement of case to the High Court based on these questions.During the hearing, it was acknowledged that the Tribunal's findings regarding the assessee's opportunity to rebut statements and the consideration of evidence remained undisturbed. The High Court found that the Tribunal's findings were flawed as they did not give due weight to relevant evidence and were vulnerable, necessitating reconsideration.The High Court emphasized the importance of providing the assessee with a reasonable opportunity to present evidence and explanations. It was concluded that a final decision could only be made after such an opportunity was granted. The Tribunal was instructed to reconsider the evidence and make decisions accordingly.The reference applications were disposed of, leaving it to the Tribunal to take further action based on the High Court's guidance. No costs were awarded in the matter. J. M. Mahapatra agreed with the decision.