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Income‑tax Case No. 37 of 1972, decided on 31st March, 1982.

(a) Income‑tax Act (XI of 1922)‑

S. 66‑Reference‑Questions of fact‑Question referred: whether on facts and in circumstances of case Tribunal justified in holding accounts of assessee in respect of assessment of a certain year liable to be accepted‑Relates to a question of fact‑High Court could not upon such reference examine assessee's books of accounts and come to finding of fact contrary to those arrived at by authorities concerned Even otherwise, statement of facts contained in application. held, absolutely insufficient to answer question raised. [Question of fact].

Commissioner of Income‑tax Rawalpindi v. Messrs Zamindara Flour Mills, Lyallpur 1970 S C M R 530; Blnjraj Hukumchand v. C. L T. 5 I T C 303 (312) and I L R 58 Cal. 1446 ref.

Nasarullah Awan for Applicant.

Ali Athar for Respondents.

Date of hearing: 31st March, 1982.

NAIMUDDIN,

J.‑This is a reference under section 66(1) of the Income‑tax Act, 1922, filed by the Commissioner of Incometax (Investigation), Karachi,. referring to this Court the following question said to be of law and said to arise out of the order of the Tribunal dated 21st October, 1970:

"Whether on the facts and in the circumstances of the case ‑the learned Tribunal was justified in holding that the accounts of the assessee in respect of the. assessment year 1960‑61 ‑should be accepted "

The facts giving rise to this application as stated therein, are that the respondent filed his returns of income, for the years 1959‑60 and 1960‑61 before the Income‑tax Officer, 'H' Division, Karachi, and produced the books of accounts which were examined by the Income‑tax Officer. He rejected the books of account inter alia on the‑ ground that the sales were' cash and unverifiable and purchases were supported by self‑issued receipts.

Aggrieved by the aforesaid orders the respondent filed two separate appeals which were dismissed by a consolidated order passed by the Appellate Assistant Commissioner of Incometax., D' Range, Karachi.

The respondent, therefore, filed two separate appeals against the consoli dated order of the Assistant Commissioner of Income‑tax before the Income. tax Tribunal (Karachi Bench), Karachi.

The Tribunal by a consolidated order dated 21‑10‑1971, dismissed the appeal relating to the year 1959‑60 and allowed the appeal for the year 1960‑61. '

In respect of the accounts for the assessment year 1960‑61, the findings of the Tribunal which are contained in paragraph 4 of the order are as follows:‑

"The position of the accounts in the following assessment year 1960‑61 appears to be different. The assessee's purchases and sales this year have rightly been claimed to be vouched and verifiable. Most of the purchases were made from well‑known dealers and supported by proper vouchers. Cash memos produced before us in support of the sales have recorded customers names and addresses with their signatures alongwith the quantity of bullion sold: In fact, these quantitative details were submitted before the Income‑tax Officer in the statement of trading account filed. As the Assessee had no manufacturing business, there was no question of any melting or wastage. The turnover shown had registered a considerable increase during the year from that of the preceding year. In the circumstances prevailing in the year of account in the wake of promulgation of Martial Law the assessee could little afford to manipulate the accounts. Then again the application of the rate of gross profit at 1 % by the Department in a case in G. I. R. No. 3354 of the same circle on an estimated turnover of Rs. 10,50,000 in the combined bullion, and silver account, as referred to by the assessee's. representative, is also relevant. In the circumstances of the case we do not. find any justification for the rejection of the accounts for the assessment year 1960‑61. "

On these findings the Tribunal accepted the accounts for the year of 1960‑61.

A perusal of the above findings shows that the Tribunal accepted the accounts on the findings of fact correctness whereof has not been questioned in any manner on any grounds and, therefore, the question, as framed, cannot be said to be a question of law arising out of the order of the Tribunal.

We may' here refer to some precedents to illustrate whether a question raised in a given case is a question of law or fact.

In the Commissioner of Income‑tax v. Messrs Pakistan Refrigeration Ltd., Peshawar P L D 1966 Lah‑513

, the question raised‑was:

"Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the businesses of refrigeration and that of supply of vegetables and fresh fruits to the Army were the same within the meaning of section 24(2) of the Income‑tax Act"

The learned Judges opined that on the findings of the Tribunal that the question of law as contemplated in section 66(1) of the Income‑tax Act, 1922,

did not arise In this case they reasoned:

"The question whether the activities of the assessee constitute the same business is, thus, one of fact and there was evidence on which the Tribunal had come to their decision. It was said that as a matter of law the two activities of the assessee were separate business, but such a conclusion will depend on the facts of the case. There is no provision in law according to which the two activities may be held to be separate business."

In the Commissioner of Income‑tax Rawalpindi v. Messrs Zamindara Flour Mills, Lyallpur 1970 5 C M R 530, the question raised was:

"whether on the facts and circumstances of the case, the Income‑tax Appellate Tribunal was justified in allowing registration to the firm for assessment year 1964‑65 on the basis of partnership deed 'dated 1‑3‑1963." .

In this case the High Court of West Pakistan, Lahore had dismissed the application on the ground that the question whether the partnership existed before 1‑3‑1963 i. e. prior to the date 'of execution of the partnership, was the question of fact and had been decided by the Income‑tax Appellate Tribunal on consideration of all the relevant circumstances in favour of the respondent firm. On appeal the Supreme Court held:‑

"The view of the Tribunal that the partnership was created by the deed itself and the firm was, therefore, entitled to registration under sec tion 26‑A of the Income‑tax Act for the charge year in question, there being no pre‑existing partnership as a matter of fact, did not present any legal question to be brought in the High Court for examination and decision under subsection (2) of, section 66 of the Income‑tax Act."

We may also here refer to Binjraj Hukumchand v. C. I. T. 51 T C 303 pp=158, Cal. 1446, wherein it was ruled by a Full, Beach of Calcutta High Court that it was no open‑ to an assessee to ask the Court upon a reference under section 66 of the Income‑tax Act, 1922, to examine' his books of account and to come to ' findings of fact contrary to those arrived at in the case stated. This, is perhaps, that the applicant seeks in effect by the .present reference as in the instant case Tribunal, on evidence before them have accepted the otherwise the statement of facts contained in the application is accounts. Even , absolutely insufficient to answer the question raised.

We; 'therefore, cannot answer the question referred and accordingly dismiss. this application with costs.

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