TaxTMI 
TaxTMI 
TaxTMI 
2007 (9) TMI 264
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....served that a question of fact becomes a question of law if the findings are without any evidence or material or the finding is contrary to the evidence or perverse or there is no direct nexus between the conclusion of fact and the primary fact upon which that conclusion is based. It was further held in that decision that even though the words "substantial question of law" have not been defined, usually five tests are accepted for determining whether a substantial question of law is involved. These five steps, as enumerated by this court, are as under (page 300) : "1. whether, directly or indirectly, it affects substantial rights of the parties, or 2. the question is of general public importance, or 3. whether it is an open question in the sense that the issue has not been settled by pronouncement of the Supreme Court or the Privy Council or by the Federal Court, or 4. the issue is not free from difficulty, and 5. it calls for a discussion for alternative view." 4. We have kept the above dictum in mind, with which there is, of course, no quarrel. We have also kept in mind that in so far as the present case is concerned, the order of the Tribunal is an order passed by the firs....
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....fore us as many as ten questions of law but because of what we have stated above, we are framing only two questions of law since we are of the opinion that some of the other questions of law framed by the Revenue do not arise, and the questions of law framed by us take care of other issues that have been raised by the Revenue. 8. The two substantial questions of law are as follows : "(i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in deleting the addition of Rs. 19,45,000 made by the assessee on account of investment in property bearing number B-222, Okhla, New Delhi ? (ii) Whether the order passed by the Tribunal is perverse in law as it has been passed on the basis of estimates made by the Income-tax Appellate Tribunal without indicating the basis on which it has arrived at those estimated figures ?" 9. Filing of paper books is dispensed with. 10. The facts, in so far as the first question is concerned, are that the Assessing Officer had made a reference under section 131 of the Income-tax Act, 1961 ("the Act"), for ascertaining the cost of construction of the property in question to the Departmental Valuat....
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....ld that the asses-see was carrying on business under seven different names and the income in respect of four entities had been disclosed by the assessee while in respect of the three abovementioned entities, the income was not disclosed. 19. The Assessing Officer found that the assessee did not maintain any account books and so, on the basis of the bank accounts maintained by the assessee, he calculated the turnover of these three entities at Rs. 14.81 crores. Before the Tribunal, it was contended by learned counsel for the assessee that certain amounts which had been credited but subsequently reversed due to return of goods and some credits reflecting transfer entries and credit involving sale consideration should be excluded from the total turnover. The Departmental representative had no objection to this. The assessee contended that on the basis of these deductions, the total turnover should be calculated as Rs. 10.24 crores. However, the Tribunal estimated the total turnover at Rs. 11.50 crores. How the Tribunal has arrived at this figure is not very clear. Learned counsel for the assessee took us through the paper book filed before the Tribunal, and that paper book makes a re....
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....mated turnover of Rs. 11.50 crores and similarly, the basis for estimating the net profit rate at 0.6 per cent. is also not discernible. Even if the net profit rate is correctly arrived at, the total addition would change when the total turnover changes. 25. The view expressed by the Tribunal is to be found in paragraph 59 of its order, which reads as follows : "59. We also find that the Assessing Officer has applied the net profit rate at 6 per cent. of the total turnover. We find that the asses-see has been carrying on these activities in his own name as well as the various concerns of the assessee were also engaged in the same business. In these concerns, the net profit rate ranging between 0.30 per cent. to 0.80 per cent. have been declared. The same have been accepted even in the past. Keeping these facts in view, we adopt the average of the two and hold that the assessee has earned the net profit at the rate of 0.6 per cent. on the turnover of Rs. 11.50 crores. On this basis, the profit from the benami business will come to Rs.6.90 lakhs. The total addition under this head will, therefore, come to Rs. 12.90 lakhs. As the assessee has declared the undisclosed income at Rs. 8....
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....egularly, it was not a case of self-service. The income from such lucky draw has to be treated as undisclosed income. However, we adopt the income from such activity at Rs. 1 lakh and as the assessee was doing this business with his brother, the addition of Rs. 50,000 only is confirmed in the hands of the assessee as undisclosed income. The addition of the balance amount is deleted." 28. We have mentioned these four matters only by way of examples to show that it is not possible to appreciate, from a bare reading of the order of the Tribunal, the basis on which it has come to certain conclusions. As already mentioned above, being the first appellate authority, and in this case also the final fact determining authority, we would have expected the Tribunal to at least give the basis for coming to these conclusions. Even though the conclusions are based on estimates, it is not necessary to know the basis on which the estimates are made. The estimates cannot be totally arbitrary. The Tribunal has not given the basis and, therefore, we have no alternative but to conclude that the findings of the Tribunal are perverse in law and to remand the matter back to the Tribunal for reconsidera....