(1.) THE Income -tax Appellate Tribunal, Cochin Bench, has referred the following three questions of law for decision by this court :
'1. Whether, on the facts and in the circumstances of the case and after having found that 'there was failure on the part of the assessee to disclose the cash balance of Rs. 80,000 as agricultural income even for rate purposes' the Tribunal is right in law and fact in holding that there is nothing wrong in accepting the cash balance shown by the assessee ? 2. Whether, on the facts and in the circumstances of the case and considering the human conduct and human nature being what it is, if the amount added according to the assessee is agricultural income will not the assessee be over enthusiastic in showing the same in the return for rate purposes and should not the Tribunal have taken such a human conduct into consideration before accepting the cash balance as agricultural income and is not the finding and acceptance of the submission illogical and against common sense ? 3. Whether, on the facts and in the circumstances of the case should not the Tribunal have, in view of the submission/explanation made/ given for the first time before the Tribunal, remanded the case to the assessing authority for consideration and is not the order and acceptance of the submission without giving an opportunity to the Revenue wrong and illegal ?'
(2.) THE brief facts are as follows :
The respondent -assessee is the finance manager of Travancore Cements Limited, Nattakam, Kottayam, and is an assessee to tax under the Income -tax Act, 1961, for short, 'the Act'. The assessment year concerned is 1984 -85, the previous year ended March 31,1984. The assessee had filed a return under the Act for the year showing a total income of Rs. 23,790. This was accepted under Section 143(1) of the Act. The assessment was taken for subsequent scrutiny. The assessee had submitted the statement of total wealth showing an amount of Rs. 80,000 as cash balance available with him. The assessee was asked to explain the source of this cash balance. Since the explanation was not satisfactory, the assessment was reopened under Section 147(a) of the Act and the reassessment was completed on March 20, 1989, on a total income of Rs. 1,03,790 which included a cash balance of Rs. 80,000 as unexplained income. The contention of the assessee before the Assessing Officer was that the said sum of Rs. 80,000 represents his savings and agricultural income. However, the assessee has later taken the stand that the sum of Rs. 80,000 represented the agricultural income alone. In the appeal filed by the assessee, the Commissioner of Income -tax (Appeals) did not accept the said contention in toto. He granted relief to the extent of Rs. 20,000 which according to him would have been agricultural income from approximately an extent of 4 acres and 81 cents, of agricultural property owned by the assessee. In further appeal filed by the assessee, the Tribunal accepted the explanation offered by the assessee in respect of the balance Rs. 60,000 also and had directed the Assessing Officer to deduct the entire sum of Rs. 80,000 from the assessment.
Sri George K. George, learned standing counsel appearing for the applicant submits that the assessee had different explanations in respect of the sum of Rs. 80,000 before the assessing authority itself, that the assessee had initially stated that the said sum of Rs. 80,000 represents his savings from the salary and also agricultural income and later the assessee had stated that it represented the agricultural income. Standing counsel also submitted that the assessee had not disclosed any agricultural income in the return fifed for this year under the Act and also in the returns filed for the earlier and subsequent two years. Standing counsel submitted that the assessee had a statutory duty to disclose agricultural income, if any obtained by him in the income -tax return which is required for rate purpose. Standing counsel further submitted that there was no material before the first appellate authority except the fact that the assessee owned an approximate extent of 4.81 acres of land and that the Tribunal at any rate was not justified in granting relief to the assessee in respect of the entire Rs. 80,000.
(3.) SRI John Ramesh, learned counsel appearing for the assessee, on the other hand, submits that the reference itself is incompetent in view of the Circular No. 1903, dated October 28, 1992, and Instruction No. 1777 dated November 4, 1987, as per which no reference application can be filed by the Department where the pecuniary limit was below Rs. 50,000. Counsel submits that in the instant case, as per the order of the Assessing Officer giving effect to the first appellate authority's order, the tax liability is only Rs. 46,079. Counsel on the merits of the case submitted that the Tribunal had found as a fact that the assessee had agricultural income from 4 acres and 81 cents of land owned by him and that in the absence of a challenge to the said finding of fact as perverse, this court in reference will not interfere with the findings of fact entered by the Tribunal. Counsel in support of the said proposition has relied on the three judges' Bench decision of the Supreme Court in K. Ravindranathan Nair v. CIT  247 ITR 178. Counsel submits that the Tribunal had considered all the materials placed before it and came to the conclusion that the cash flow statement in regard to the sum of Rs. 80,000 was found to be acceptable, which finding has not been specifically challenged as perverse.;