GOSWAMI - (1.) THESE two appeals by special leave are directed against the common judgment of 14/03/1969, of the Patna High Court in the matter of two references under S.66 (1) of the Indian Income-tax Act, 1922, relating to assessment years 1953-54 and 1954-55 of the respondent (hereinafter to be referred to as the company).
(2.) THE case has a rather chequered history as will appear from the facts narrated below :- THE company at the material time was a private limited company and at the end of the relevant previous years, namely, 31/08/1952 and Au 31/08/1953, the shareholding was as follows :- JUDGEMENT_510_2_1976Html1.htm Of these shareholders Rama Jain is the wife of S.P. Jain and Alok Prakash Jain and Ashok Kumar Jain are the sons of S. P. Jain and Rama Jain. Ashok Kumar Jain (briefly A. K. Jain), the Managing Director, attained majority on 5/03/1952, while Alok Prakash Jain was a minor during both the accounting years. THE three companies, namely, Rishabh Investment Ltd. Dalmia Jain Co. Ltd. and Universal Bank of India Ltd., are companies to which the provisions of Section 23A of the Income-tax Act, 1922 (briefly the Act) prior to its amendment by the Finance Act 1955, applied S.P. Jain was the principal shareholder of the Universal Bank of India Ltd. holding 980 shares. Ashoka Agencies Ltd. with 2000 shares was a company to which admittedly Section 23A did not apply. R. Sharma and N. C. Jain holding 10 shares each were employees, N. C. Jain being the Secretary of S. P. Jain. The Income-tax Officer by his order of 25/09/1957 and 30/10/1957, held that Section 23A was attracted in the case of the company for both the years. On appeal, the Appellate Assistant Commissioner remanded the matter back to the Income-tax Officer for a finding on certain additional facts. The Income-tax Officer in his remand report submitted certain additional facts to the Appellate Assistant Commissioner who in due course affirmed the orders of the Income-tax Officer. The company appealed to the Income-tax Appellate Tribunal, Bihar, at Patna. The Tribunal allowed the appeal by its order of 26/01/1961 (?) and held that Section 23A was not applicable to the company in respect of both the assessment years. At the instance of the Commissioner Income tax, Bihar, the following question was referred by the Tribunal to the High Court. "Whether on the facts and circumstances of the case the Tribunal was justified in holding that the provisions of Section 34A of the Income-tax Act were not applicable to the assessee company for the assessment years 1953-54 and 1954-55"? The High Court by its order of 9/12/1965, in view of two decisions of this Court, namely, Raghuvanshi Mills Ltd. v. Commr. of Income-tax Bombay decided on 7-12-1960, reported in 1961-2 SCR 978 and Commr. of Income-tax Bombay v. Jubilee Mills Ltd., Bombay, (1963) Supp (1) SCR 83 decided on 1/09/1962, directed the Tribunal to submit a supplementary statement of case to it: "Whether bearing in mind the principles laid down by the Supreme Court in Raghuvanshi Mills Ltd. v. Commr. of Income-tax 41 ITR 613 and Commr. of Income-tax Bombay City v. Jubilee Mills Ltd., (1963-48 ITR 9 (SC) Srimati Rama Jain and Sri Ashok Kumar Jain, or either of them could be safely taken to have acted in concert with Shri S.P. Jain during the years in question in respect of the affairs of the assessee company?" The High Court also directed that "the Tribunal may take additional evidence, if it considers it necessary to enable it to state the supplementary case as directed above." The Tribunal thereafter, after hearing the parties, submitted a supplementary statement of case to the High Court on 30/09/1966. A controversy arose before the Tribunal with regard to entertainment of additional evidence which the Revenue wanted to adduce before it, particularly in view of the direction of the High Court, but the Tribunal did not accede to the request and additional evidence was not received. The matter then came up before the High Court resulting in the impugned order against the Revenue. Hence these two appeals by special leave.
(3.) THE Revenue reiterated its grievance before the High Court about the Tribunal's refusal to entertain additional evidence without success and the matter is no longer in controversy in view of a decision of seven Judges of this Court in Keshav Mills Co. Ltd. v. Commr. of Income-tax Bombay North, (1965) 2 SCR 908 affirming the earlier decisions of this Court in the case of New Jehangir Vakil Mills Ltd. v. Commr. of Income-tax, Bombay North, (1960) 1 SCR 249 and the Petlad Turkey Red Dye Works Co. Ltd. v. Commr. of Income-tax, Bombay, Ahmedabad, 1963 Supp (1) SCR 871 . It is now well settled that when the Tribunal has disposed of the matter and is preparing a statement of the case either under Section 66(1) or under Section 66 (2), there is no scope for any further or additional evidence and the power of the High Court under Section 66(4) can be exercised only in respect of material and evidence which has already been brought on the record. It was contended on behalf of the Revenue before the High Court that the finding of the Tribunal was perverse. Mr. Sen appearing on behalf of the Revenue before us has fairly and, in our opinion, rightly not pressed this submission before us. Similarly on behalf of the company also it was contended before the High Court that there was no principle of law involved in drawing any inference in the cases in answer to the plea of the Revenue that the finding whether Section 23A was not attracted was a mixed question of law and fact. It is not possible to hold that the question referred to the High Court is not a question of law as undoubtedly on the statement of case an important question of law does arise and the composite reference was competent.;