Factual findings based on conjecture and ignored evidence can be set aside and sent back for reconsideration.

A factual finding is vulnerable to judicial review when it is reached by ignoring relevant evidence, relying on irrelevant material, or mixing proof with conjecture and suspicion. The Supreme Court note states that the Tribunal's conclusion treating cash credits as undisclosed income could not stand because it narrowly read the assessee's explanation, discounted later enquiries and statements, and drew adverse inferences without properly testing the material. The proper approach requires a fair consideration of all circumstances for and against the assessee, and a finding so reached may raise a question of law. The matter was therefore to be reconsidered on the entire relevant record, with liberty to adduce further evidence.

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Issues: Whether the Income-tax Appellate Tribunal's finding that the cash credits represented the assessee's undisclosed income was vitiated by reliance on conjectures, surmises and suspicions, and by improper rejection of relevant evidence, so as to warrant interference and remand.

Analysis: A finding of fact is final only when it is reached on a fair consideration of the entire material on record. Where the fact-finding authority acts on irrelevant considerations, ignores relevant evidence, or bases its conclusion partly on evidence and partly on suspicion or conjecture, a question of law arises. The record showed that the Tribunal had treated the assessee's explanation as incredible by reading the earlier affidavit narrowly, discounting subsequent enquiries and statements, and drawing adverse inferences from matters that had not been properly investigated or put to the assessee for explanation. A factual conclusion reached in this manner is vulnerable to judicial review, because the Tribunal must consider all circumstances for and against the assessee with due care and must not decide on mere suspicion.

Conclusion: The Tribunal's finding was not allowed to stand; the matter had to be reconsidered after taking into account the entire relevant material and any further evidence the parties wished to produce.

Ratio Decidendi: A factual finding becomes a question of law and is liable to be set aside when it is based on no evidence, on irrelevant material, or on a mix of evidence and conjecture, or when material evidence is improperly excluded from consideration.

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