KUDAL, J. - (1.) THE Income-tax Appellate Tribunal, Delhi Bench 'a' has submitted a statement of the case and has referred the following questions of law under Section 66 (2) of the Income Tax Act, 1922 (hereinafter referred to as the Act): - "whether on the facts and in the circumstance of the case, the Tribunal was not right in disregarding the order of the Income-Tax Officer dated 27th November, 1959 and in holding that the profit of Rs 48,024/- credited in the accounts of eleven other persons was not of the assessee " THE brief facts of the case are that the assessee was assessed for the year 1956-57, by the Income-tax Officer 'a' Ward Shri Ganganagar on 27. 11. 59 During the course of the assessment proceedings under Section 23 (3) of the Income Tax Act, 1922, it came to the notice of the Income Tax Officer that the assessee firm has concealed its income in the shape of diversion of profits and as such a notice to show cause under Section 28 (3) was served on 1st December, 1959, as to why penalty be not imposed. THE Income-tax Officer imposed a penalty of Rs. 20,000/- under Section 28 (1) (c) of the Income Tax Act, on 27. 6. 1961. THE assessee firm feeling aggrieved against this order of imposition of penalty filed an appeal before the Appellate Assistant Comm. of Income Tax, 'b' Range, Jaipur THE appeal filed by the assessee firm was dismissed on 24/3/65 by the Appellate Assistant Commissioner, Jaipur. THE assessee firm then filed an appeal before the Income Tax Appellate Tribunal, Delhi. This appeal was accepted by the appellate Tribunal, on 23/3/67, and the order of the Income Tax Officer dated 27/6/61 imposing a penalty of Rs. 20,000/- was set aside.
(2.) THE Commissioner of Income Tax Rajasthan, Jaipur made a reference application under Section 66 (1) of the Income Tax Act, 1922 before the Income Tax Appellate Tribunal, Delhi requesting it to state the case and refer the following questions of law which arise out of this order dated 23. 3. 1967 : - 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in drawing an inference that the profit of Rs. 48,024/- credited in the accounts of eleven different parties did not belong to the assessee when the assessee itself had not challenged the inclusion of this amount in its assessment ? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that there was no concealment of income on the part of the assessee in respect of the amount of Rs. 48,024/- and in setting aside the order of penalty of Rs. 20,000/ -. " The Income-tax Appellate Tribunal, Delhi rejected this application on 20-7-1968. Feeling aggrieved by this order,the Commissioner of Income Tax Rajasthan, Jaipur submitted a reference petition to this Court under Section (66) (2) of the Act. This reference petition was allowed on 29th July, 1969 by the learned Division Bench of this Court. The appellate Tribunal was directed to state the case and refer the following questions of law: - "whether on the facts and in the circumstances of the case, the Tribunal was not right in disregarding the order of Income Tax Officer dated 27th November, 1959, and in holding that the profit of Rs 48,024 credited in the account of the eleven other persons was not of the assessee ?. In compliance of this order, the Income Tax Appellate Tribunal, Delhi has stated the case, and referred the above mentioned questions of law to this Court by its order dated 8. 1. 1971. On behalf of the petitioner, it was contended that the Income Tax Appellate Tribunal was not right in disregarding the order of the Income-Tax Officer dated 27-11-1959. It was also contended that the assessee firm did not file any appeal against the said order dated 27. 11. 1959. It was also contended that no fresh or additional material was submitted before the Income Tax Officer by the assessee firm when the order of imposing penalty was passed on 27. 5. 61. It was also contended that the finding of the Income Tax Officer in his order dated 27. 11. 59 was a "good piece of evidence," and the Income Tax Appellate Tribunal acted without jurisdiction and seriously erred in disregarding that finding. It was contended that the question of law which has been referred by the Income Tax Appellate Tribunal is covered by the two questions of law, which were sought to be referred to by the applicant. It was also contended that if a different language has been used in referring this question of law, it would not amount that a totally new or different question of law has been referred which was not covered in the application under Section 66 (1) of the Income Tax Act, 1922 It was also contended that the Courts have to look to the pith and substance of the matter rather than to go to mere technicalities of law, which may not enhance the ends of justice. It was also contended that the Income Tax Appellate Tribunal, Delhi completely over-looked the evidence on record and ignored the finding of the Income Tax Officer, and as such the order of the Income Tax Appellate Tribunal was without jurisdiction. On behalf of the assessee firm it was contended that the question of law which has now been referred to, was not included in the petition under Section 66 (1) of the Act. It was also contended that the Income Tax Appellate Tribunal was fully justified in re-assessing the evidence which was led before the Income-tax Officer. It was also contended that the order of the Income Tax Appellate Tribunal suffers from no infirmity, as the evidence on record has been properly appreciated and evaluated. It was also contended that the finding of the Income-Tax Officer dated 27. 11. 59 looses all its importance when the entire evidence on the basis of which this finding has been based, has been screened and evaluated by the Income Tax Appellate Tribunal. It was further contended that under such circumstances the finding of the Income-Tax Officer ceases to be a "good piece of evidence" as contended by the learned counsel for the applicant. It was further contended that whether on the given set of circumstances a penalty should be imposed or not, on the assessee firm, is a pure question of law on which no reference could lie before this Court. It was further contended that the jurisdiction of this Court under Section 66 of the Act is very limited and the present reference does not fall within that limited jurisdiction. It was also contended that there is no bar whereby the assessee firm can challenge the findings of the Income-tax Officer with regard to imposition of penalty when the original order of assessment has not been challenged. Under such circumstances, it was contended that this Court may decline to answer the reference as no question of law arises. It was contended that if the Income Tax Appellate Tribunal could not disregard the finding of the Income-tax Officer, then it would cease to be an Appellate Tribunal, and the question as has been referred does not raise any substantive question of law. The learned counsel for the applicant has placed reliance on C. I. T. vs. Indian Molasses Co. P. Ltd. (1), wherein it has been held that, "the expression question of law arising out of such order in Section 66 (1) is not restricted to only those questions which have been expressly argued and decided by the Tribunal If a question of law is raised before the Tribunal, even if an aspect of the question is not raised, that aspect may be urged before the High Court. In Commr. of Income Tax vs. Anwar Ah (2), it was held that, proceedings under Section 280 of the Income Tax Act, 1922, are penal in character. The gist of the offence under Section 28 (1) (c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and the burden is on the department to establish that the receipt of the amount in dispute constitutes income of the assessee. If there is no evidence on the record except the explanation given by the assessee, which explanation has been found to be false, it does not follow that the receipt constitutes his taxable income. It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income. It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive. However, it is good evidence. Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. In Jethabhai Hirji & Co. vs. Commr. of Income Tax, Bombay (3), it has been held that, "it is for the High Court alone to indicate to the Tribunal what are the questions of law, and the only function of the Tribunal is, once a requisition is made upon it under Section 66 (2), to formulate proper questions which arise out of those questions of law and to state a case which is germane to the questions of law indicated by the High Court, It would then he open to the High Court either to answer the questions formulated by the Tribunal or, if the High Court feels that the questions are not properly raised, to reframe the questions or modify the questions and answer those questions as re-formulated or modified. " In Lal Chand Gopal Das vs. Commr. of Income Tax (4), it has been held that there is no essential difference between tax and penalty. The liability for payment of both is imposed as a part of the machinery of assessment and penalty is merely an additional tax imposed in certain circumstances on account of the assessee's conduct. A taxing statute itself is required to be interpreted strictly like a penal statute and a provision imposing a penalty in a taxing statute is not to be interpreted differently from any other provision.
(3.) IN G. A. Abraham vs. INcome Tax Officer (5), it has been held that the INcome Tax Act provides a complete machinery for assessment of tax and imposition of penalty and for obtaining relief in respect of any improper orders passed by the income tax authorities. The taxpayer cannot be permitted to abandon resort to that machinery and to invoice the jurisdiction of the High Court under article 226 of the Constitution when he has adequate remedy open to him by way of an appeal to the Appellate Tribunal. In Bai Velbai vs. Commr. of Income Tax (6), it was held that 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. " In Commr. of Income Tax vs. Smt. Anusuya (7), it was held that the High Court is however not bound to answer a question merely because it is raised and referred. It is well settled that the High Court may decline to answer a question of fact or a question of law which is purely academic or has no bearing on the dispute between the parties or though referred by the Tribunal does not arise out of its order. The High Court may also decline to answer a question arising out of the order of the Tribunal, if it is unnecessary or irrelevant or is not calculated to dispose of the real issue between the taxpayer and the department. There is also no ground for restricting that power when by an erroneous order the High Court has directed the Tribunal to state a case on a question which does not arise out of the order of the Tribunal. At the hearing of a reference pursuant to an order calling upon the Tribunal to state a case, the High Court is not bound to answer the question without considering whether it arises out of the order of the Tribunal, whether it is a question of law, or whether it is academic, unnecessary or it relevant. Power to re-frame a question may be exercised to clarify some obscurity in the question referred, or to pinpoint the real issue between the taxpayer and the department or for similar other reasons; it cannot be exercised for reopening an enquiry on questions of factor law which is closed by the order of the Tribunal. In Commr. of Income Tax vs. Scindia Steam Navigation (8), it has been held as under: - "before the High Court the company for the first time raised the contention that the fourth proviso to section 10 (2) (vii) did not apply to the assessment as it was not in force on April 1, 1946, and the liability of the company had to be determined as on April 1, 1946, when the Fina- nce Act, 1946 came into force. A preliminary objection was raised on behalf of the Commis- sioner of Income Tax that this question did not arise out of the order of the Tribunal within the meaning of Section 66 as it was neither raised before the Tribunal and dealt with by it nor re- ferred to the Court. 1 he High Court overruled the objection on the ground that the form in which the question was framed was sufficiently wide so take in the new contention and the com- pany was entitled to raise it even if that aspect of the question had not been argued before the Tribunal, and held that the proviso was not re- prospective in its operation, and was not in force on April 1, 1646 and, therefore, the sum of Rs. 9,26,532 was not liable to be included in the tax- able income of the company for the assessment year 1946-47. On appeal to the Supreme Court it was held that the High Court had jurisdiction to entertain the company's contention raised for the first time before it that the fourth proviso to Section 10 (2) (vii) did not apply to the assess- ment; (per Das, Kapur, Hidayatulla and Venka- trarma Aiyar, JJ,) as the contention was within the scope of the question as framed by the App- ellate Tribunal and was really implicit therein. " It was further held that - 'a question of law might be a simple one, having its impact at one point, or it may be a complex one,* trenching over an area with appro- aches leading to different points therein. Such a question might involve more than one aspect, requiring to be tackled from different standpoints. All that Section 66 (1) requires is that the ques- tion of law which is referred to the Court for decision and which the Court is to decide must be the question which was in issue before the Tribunal. Where the question itself was under issue there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal, and it will be an over-refinement of the question to hold that each aspect of a question is itself a distinct question for the purpose of section 66 (1) of the Act. In Lakshmiratan Cotton Mills Co. , Ltd. vs. Commr. of Income Tax (9), it has been held that the correctness of an order of the High Court calling for a statement of case could be challenged at the hearing of the reference and the court could decline to answer the question referred pursuant to the direction of the High Court, if it did not arise out of the order of the Tribunal or was a question of fact or was a question of fact or was academic or could not have been raised because it was not incorporated in the application, ;