SURTI, J. - (1.) THE following questions of law are referred to us by the Gujarat Sales Tax Tribunal, Ahmedabad : " (1) Whether, on the facts and in the circumstances of these two cases, the Tribunal was right in law in holding that the business done by the abovenamed Chimanlal was really the business of the applicant and whether that finding was vitiated by taking into account irrelevant evidence and by ignoring the relevant evidence as alleged ? (2) If yes, whether, on the facts and in the circumstances of these two cases, the Tribunal was right in law in confirming the levy of tax upon the applicant's turnover of sales as worked out from the purchases of Rs. 2,40,067 of M/s. Anil and Co. so far as Samvat Year 2024 was concerned and purchases of Rs. 1,37,824 of M/s. Anil and Co. so far as Samvat Year 2025 was concerned ? (3) Whether, on the facts and in the circumstances of these two cases, the Tribunal was right in law in confirming the penalties imposed under section 36 (3a) of the Bombay Sales Tax Act, 1959, in respect of Samvat Years 2024 and 2025 ?"
(2.) WHEN we read the aforesaid questions of law referred to us by the Sales Tax Tribunal, it was not possible for us to agree that the Sales Tax Tribunal has referred to us a question of law, which is set out at point No. (1) hereinabove. From the very question as formulated by the Sales Tax Tribunal, it is clear to us that question No. (1) which is referred by the Tribunal to us, is not a question of law. The very question shows that the Tribunal did take into consideration irrelevant evidence on the record of the case and that the Tribunal did know the relevant evidence as alleged. Under the aforesaid circumstances, it is difficult for us to come the conclusion that question No. (1) as formulated by the Tribunal is a question of law. At this state, we may usefully refer to the reported decision of the Supreme Court in the case of Commissioner of Income-Tax, Bihar and Orissa v. S. P. Jain [1973] 87 ITR 370 (SC ). At page 381 of the judgment, the Supreme Court has observed as follows : " In our view, the High Court and this Court have always the jurisdiction to intervene if it appears that either the Tribunal has misunderstood the statutory language, because the proper construction of the statutory language is a matter of law, or it has arrived at a finding based on no evidence or where the finding is inconsistent with the evidence or contradictory of it, or it has acted on material partly relevant and partly irrelevant or where the Tribunal draws upon its own imagination, imports facts and circumstances not apparent from the record, or bases its conclusions on mere conjectures or surmises, or where no person judicially acting and properly instructed as to the relevant law could have come to the determination reached. In all such cases the findings arrived at are vitiated. " In the case of Dhirajlal Girdharlal v. Commissioner of Income-tax, Bombay [1954] 26 ITR 736 (SC) the Supreme Court in terms has accepted in principle that, "when a court of fact acts on material, partly relevant and partly irrelevant it is impossible to say to what extent the mind of the court was affected by the irrelevant material used by it is arriving at its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises".
(3.) IN G. Venkataswami Naidu and Co. v. Commissioner of INcome-tax [1959] 35 ITR 594 (SC) the Supreme Court has observed as follows : " If, however, such a finding of fact is based on an inference drawn from primary evidentiary facts proved in the case, its correctness or validity is open to challenge in reference proceedings within narrow limits. The assessee or the revenue can contend that the inference has been drawn on considering inadmissible evidence or after excluding admissible and relevant evidence; and, if the High Court is satisfied that the inference is the result of improper admission or exclusion of evidence, it would be justified in examining the correctness of the conclusion. It may also be open to the party to challenge a conclusion of fact drawn by the Tribunal on the ground that it is not supported by any legal evidence; or that the impugned conclusion drawn from the relevant facts is not rationally possible; and if such a plea is established, the court may consider whether the conclusion is not perverse and should not, therefore, be set aside. It is within these narrow limits that the conclusions of fact recorded by the Tribunal can be challenged. . . . . . . . . . . . Such conclusions can never be challenged on the ground that they are based on misappreciation of evidence. A conclusion reached by the Tribunal on the ground that it is a conclusion on a question of mixed law and fact, is no doubt based upon that primary evidentiary facts, but its ultimate form is determined by the application of relevant legal principles. The need to apply the relevant legal principles tends to confer upon the final conclusion its character of a legal conclusion. IN dealing with findings on questions of mixed law and fact the High Court would no doubt have to accept the findings of the Tribunal on the primary questions of fact; but it is open to the High Court to examine whether the Tribunal had applied the relevant legal principles correctly or not; and in that sense, the scope of enquiry and the extent of the jurisdiction of the High Court in dealing with such points is the same as in dealing with pure points of law. " In Bai Velbai v. Commissioner of Income-tax, Bombay City [1963] 49 ITR 130 (SC) the Supreme Court has observed as follows : " A finding of fact does not alter its character as one of fact merely because it is itself an inference from other basic facts; but a finding on a question of fact is open to attack under section 66 of the Indian Income-tax Act, 1922, as erroneous in law when there is no evidence to support it or if it is perverse or has been reached without due consideration of the several matters relevant for such a determination. ";