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Sushmita Goswami | Jan 21, 2022 | Views 406987

High Court cannot revaluate the findings of fact returned by the Tribunal

High Court cannot revaluate the findings of fact returned by the Tribunal

The assessee had filed its return of income qua AY 2012-2013 under Section 139 (1) of the Act on 31.10.2013. In this return, the assessee had declared its income as Rs.6,02,85,750/-. The Assessing Officer [in short ―A.O.‖] passed an assessment order under Section 143(3) of the Act, on 24.03.2015. Via the said assessment order, the A.O. made an addition of Rs.18,50,00,000/- to the declared/returned income of the assessee on account of ―unexplained share capital and share premium‖. Resultantly, the assessed income shot up to Rs.24,52,85,750/-. Being aggrieved, the assessee preferred an appeal. The CIT(A), vide order dated 31.03.2016, deleted the aforesaid addition. Pertinently, the revenue did not carry the matter further. Consequently, the assessment proceedings vis-à-vis AY 2012-2013, stood concluded.

Thus, for the foregoing reasons, we are of the opinion that the revenue has not been able to persuade us that a substantial question(s) of law arose for our consideration.

1. The result of the appeals filed before the Tribunal was turned on appreciation of evidence placed before the Tribunal. The Tribunal is the final fact-finding authority. We have not been able to conclude that the findings returned by the Tribunal are perverse. Importantly, neither in the grounds nor in the questions of law as suggested in the appeals, the revenue has averred that the findings of the Tribunal are ―perverse‖. This fact imposes a limitation on this court while entertaining an appeal under Section 260A of the Act. In a nutshell, this court cannot revaluate the findings of fact returned by the Tribunal, except on the limited ground of perversity/complete lack of evidence. [See K. Ravindranathan Nair v. CIT, (2001) 1 SCC 1358.]

2. As has been, repeatedly, noted hereinabove, and as is also observed by the Tribunal, the A.O. shifted his position vis-à-vis the assessee. This is clearly evident if one were to compare the deviation report prepared by the A.O. (pursuant to the submission of the appraisal report by the investigation wing) with the assessment order(s) framed by him.

“7. …. A decision on fact of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there was no such question before the High Court. Unless and until a finding of fact reached by the Tribunal is canvassed before the High Court in the manner set out above, the High Court is obliged to proceed upon the findings of fact reached by the Tribunal and to give an answer in law to the question of law that is before it. 8. The only jurisdiction of the High Court in a reference application is to answer the questions of law that are placed before it. It is only when a finding of the Tribunal on fact is challenged as being perverse, in the sense set out above, that a question of law can be said to arise.”

3. It is disconcerting to note that the investigation wing directed the A.O. to frame the assessment in a manner that would protect the revenue’s interest. The A.O. performs a quasi-judicial function while framing an assessment. The revenue cannot dictate the manner, in which, the A.O. frames the assessment order. In this case, the investigation wing appears to have crossed the Rubicon, when it advised the A.O. to frame the assessment to protect the interest of the revenue. [See CIT v. Greenworld Corpn., (2009) 7 SCC 699; P. Palaniswami case10]

“53. ……. No doubt in terms of the circular letter issued by CBDT, the Commissioner or for that matter any other higher authority may have supervisory jurisdiction but it is difficult to conceive that even the merit of the decision shall be discussed and the same shall be rendered at the instance of the higher authority who, as noticed hereinbefore, is a supervisory authority. It is one thing to say that while making the orders of assessment the assessing officer shall be bound by the statutory circulars issued by CBDT but it is another thing to say that the assessing authority exercising quasi-judicial function keeping in view the scheme contained in the Act, would lose its independence to pass an independent order of assessment. xxx xxx xxx 55. When a statute provides for different hierarchies providing for forums in relation to passing of an order as also appellate or original order, by no stretch of imagination a higher authority can interfere with the independence which is the basic feature of any statutory scheme involving adjudicatory process.”

“5. The respondent then filed a Letters Patent Appeal. By this time the decision of this Court in B. Rajagopala Naidu v. State Transport Appellate Tribunal [AIR 1964 SC 1573 : (1964) 7 SCR 1 : (1964) 2 SCJ 570.] had been rendered and by that decision GO No. 1298 dated April 28, 1956, which was the previous direction issued by the State Government under Section 43-A of the Motor Vehicles Act, was set aside. It was held that it was legitimate to assume that the Legislature intended to respect the basic and elementary postulate of the rule of law that in exercising their authority and discharging their quasi-judicial functions, the tribunals constituted under the Act must be left absolutely free to deal with the matter according to their best judgment guided only by the statutory light. It was pointed out that it was of the essence of fair and objective administration of law that the decision of judges or tribunals must be absolutely unfettered by any extraneous guidance by the executive or administrative wing of the State. It was true that Section 43-A empowered the State Government to issue directions.”

Accordingly, for the aforesaid reasons, the appeals are dismissed.

Pending applications shall also stand closed.

There shall be, however, no order as to costs.

To Read Official Judgement Download PDF Given Below:

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