COMMISSIONER OF INCOME TAX, BIHAR AND ORISSA, PATNA versus S. P. JAIN

Citation: [1973] 2 S.C.R. 334 · Decided: 19-09-1972 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Appeal(s) allowed

Judgment (excerpt)

334 
COMMISSIONER OF INCOME TAX, 
BIHAR AND ORISSA, PATNA 
v. 
S. P. JAIN 
A 
September 19, 1972 
B 
[K. S. HEGDE, P. JAGANMOHAN REDDY AND H. R. K1JANNA, JJ.] 
Income rax--Tribunal-Findings >f 
fact-Circwnsrances 
justifying 
imerference. 
The Income Tax Officer included 'II sum of Rs. 10,80,000/- found in-
vested in shares in the name of R as rtie assessee's income from updis-
closed sources.. The income tax offic.er had· informed the asse see tba~ 
on the basis of information available with him he had reason to believe 
thnt R ms the assessee's benamidar. 
The assessce took no r-teps to 
produce R for examination by the Income Tax Officer. 
The source not 
having beetn explained the income tax officer assessed the sum as tho 
assessee's income from unoisc1osed sources. 
The Appellate Assistant 
Commissioner confirmed this order. 
In the appeal the Tribwial declined 
to consider cenain dociunents on record. After rejecting these documents, 
the Tribunal fowid that the purchase of shares was :not a benami trans-
action and was legally valid. 
The High Court confirmed the Tribunal's 
conclusions.. In this Court it wac contended on behalf of the Revenue 
that Tribunal based its conclusions on inadmissible evidence and on wrong 
facts, gave no cogent reasons for rejecting the findings of the inoome tax 
Officer, failed to take into account the relevant material or record and based 
its conclusions on mere conjectures and surmises. 
Allowing the appeal, 
HELD : (i) Before rejecting the findings of the tribwial the Court 
must be satisfied that there are ground· recognised by law which em-
power the court to interfere with those findings. 
' (ii) The High Court and this Court have always the jurisdiction to 
intervene if it appears that either the Tribwial has misUinderstood the 
statutory language or it has 'llrrived at a finding 
based 011 no evidenc.e, 
or where the finding is inconsistent with the evioonce or contradictory 
of it or it bas acted on 'l!aterial partly releva:i;t and partly irrelevant, 
or where the Tribwial draws updn its own imagination, imports facts 
and circumstances n6t 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 deter-
mination reached. In all nuch cases the findings arrived at are vitiated. 
Unless the Tribunal has been asked to refer a question im?Ugoir>g the 
validity of the findings sustainable or any principle of law, 
the facts 
stated in the statement of the case would form the basis on which th. 
legality or otherwise of the assessment would alone require to be con· 
sidered by the High Coun. · What has to be safeguarded ugainst is that 
'lllY erystallizz.tion of the views of this Court and its reluctance to inter-
fere with the findings of fa~! should not make the tribunals or the Incorne-
tax authori•ies smug in the belief that a
0 the courts do not interfere with 
the findings which form the bed-rock upon which the law will be based, 
they can act on that assumption in finding facts, or, by their mere ipsi dixit 
that they are findings of 'fact, wish it to be so assumed irrespective 
,C 
I> 
E 
F 
G 
H 
• 
A 
B 
c 
I) 
E 
F 
G 
H 
c.J.T. v. s. P. JAIN (Jaganmohan Reddy, J.) 
335 
of whether they are sustainable in law or on the materials on record. 
In number of case3 t'1is Court has set out the principles upon which 
it will interfere with the findings of fact arrived at by the Tribunal. [344G, 
3460] 
Korna11i P1•operties Ltd. v. C.I.T. West Bengal, 82 I.T.R. 547 at 554, 
Edwards (Inspector of Taxes) v. Birstow, 28 I.T.R. 579 at 594, Mehta 
Parikh & Co. v. Commission<V" of Income-tax, Bombay,, 30 I.T.R. 181, 
Omar Sa/av Mohamad Sail v. Commissioner of Income-tax, Madra8, 37 
I.T.R. 151 at 170, Lalchand Bhagat Ambica Ram v. 
Commissioner of 
Income-tax, Bihar and Orissa, 37 I.T.R. 288 at 295 and Meenakshi Mills, 
Madurai v. Commissioner of Income-tax, 31 J.T.R. 28 at 50, referred to. 
(iii) Jn the present case the Tribunal failed to take into account the 
relevant material on record in arriving at its findi:ng, 
Further it acted 
on inadmissible evidence, based its conclusions on conjectures, surmises 
and wrong facts, and failed to consider the probabilities of the c- on 
which the lncome-taic Officer and the Appellate Assistant Commissioner 
placed a great deal of emphasis. On the basis of the material on record 
the lricome·taic Officer 

Excerpt shown. Read the full judgment & AI analysis in Lexace.