Holding

In an income‑tax reference, a finding of pure fact by the Tribunal may be reviewed by the High Court only on the ground of no evidential support or perversity; otherwise it is not a question of law and cannot be disturbed.

Summary

Shad! Lal Sugar Mills Ltd. was assessed for the year 1958-59 with additions of Rs 48,500 for cane cost, Rs 67,500 for shortage and Rs 21,700 for out‑station staff salary. The assessee did not contest the assessment but later faced a penalty under s.274 read with s.271 of the Income‑Tax Act, 1961, after admitting that the amounts represented income. The Income‑Tax Tribunal reduced the penalty to Rs 5,000, holding that the mere admission of the amounts did not prove deliberate concealment. The Delhi High Court reversed, saying the revenue must prove concealment and that the Tribunal had ignored the timing and weight of the admissions. The Supreme Court held that a finding of pure fact by the Tribunal can be reviewed by the High Court only if there is no evidential basis or the finding is perverse, and therefore the High Court erred in interfering with the Tribunal’s factual finding. Consequently, the Court set aside the High Court’s answer to the reframed question and restored the Tribunal’s reduced penalty. The appeal was allowed and costs awarded to the assessee.

Issues considered

Whether the Tribunal's finding that the assessee did not deliberately conceal income is a question of law or fact.
Whether the High Court may interfere with a Tribunal's factual finding in an income‑tax reference under s.66.
Whether the penalty provisions of s.271 and s.274 of the Income‑Tax Act, 1961 are applicable to the case.
Whether the assessee's admission of the added amounts constitutes deliberate concealment within the meaning of s.271(2).

Legislation cited

Income Tax Act, 1922s. 66
Income Tax Act, 1961s. 256, s. 271, s. 271(1)(c), s. 271(2), s. 274

Subjects

Income TaxPenaltyConcealment of IncomeSection 271Section 274Tribunal FindingsHigh Court JurisdictionReference under Section 66Deliberate Under‑statementMixed Question of Law and Fact

Judgment

A
SIR SHAD! LAL SUGAR AND GENERAL MILLS
LTD. & ANR.
+
v.
COMMISSIONER OF INCOME TAX, DELHI.

JULY 31, 1987
B
[SABYASACHI MUKHARJI AND G.L. OZA, JJ.]

Income Tax Act, 1961' ss. 256, 271 & 274/Jncome Tax Act, 1922:
s. 66---lncome-tax Referenct7-Finding of fact by Tribunal-When

c
could be transformed into question of law and interfered with.

The assessee company, which derived its income from the
-
manufacture and sale of sugar and confectionery, was assessed for the
years 1958-59 by the Income Tax Officer under the Income Tax Act,
1922 by making additions of Rs.48,500 for cane cost, Rs.67 ,500 for
shortage in cane, and Rs.21,700 for salary of outstation staff. The asses-
D see did not challenge the said assessment order. Later in the year 1963
the Income Tax Officer issued notice under s. 274 reall withs. 271 of the Y
Income Tax Act, 1961 in respect of the assessment year 1958-59 for
imposing penalty. Before the Inspecting Assistant Commissioner the
assessee admitted that these amounts, which were not included in the
return by the company, represented income. On finding that there was
E deliberate understatement of income he imposed a penalty of
Rs.70,000. ~-

On appeal the Tribunal held that the mere fact that the amounts
were agreed to be taken into account by the assessee did not ipso facto
indicate any criminality in its action to conceal any portion of the in-
F come, and that the assessee could very well have argued against the
additions of the two sums, namely, Rs.67,500 and Rs.21,700. As re-
gards the sum of Rs.48,500 it found that the assessee had agreed to
similar addition in the earlier years and so the penalty was warranted In
similar amount for this year and taking into consideration that the sum
involved was Rs.48,500, it considered that a smaller penalty of Rs.5,000
was imposable.
G .r
The High Court took the view that the onus of proving conceal-
ment was on the Revenue because proceedings for penalty were penal in
character, and held that so far as the sum ofRs.48,500 was concerned it
was not proved that there was any deliberate concealment, that the
H Tribunal had not set aside the finding of the Assistant Inspecting Com-
692
SHAD! LAL SUGAR MILLS v. C.I.T. DELHI 693

-1'- missioner that the assessee surrendered the amount of Rs.67,500 when A
it was faced with facts which clearly established concealment, that the
assessee in fact had surrendered the amount only after the Income Tax
Officer had conclusive evidence in bis possession that the amount re-
presented its income, that acceptance by the assessee was material to
give proper weight to judge the criminality of the action which in its
opinion was not given, and that the Tribunal omitted to take into B
t account the fact that the assessee had admitted that the amount of
Rs.21, 700 represented its income.

In the appeal by special leave on the question as to how far the

- High Court in a reference could interfere with a finding of fact and
transform the same into a question oflaw on the ground that there has C
been non-consideration of all relevant facts.

Allowing the appeal,

HELD: 1.1 In an income tax reference a finding on a question of
pure fact could be reviewed by the High Court only on the ground that D
there was no evidence to support it or that it was perverse. If the
High Court found that there was no such evidence, those circum-
stances would give rise to question of law and could be agitated in a
reference. [700G-701A, 702H-703A]

1.2 When a conclusion has been reached on an appreciation of a E
number of facts established by the evidence, whether that is sound or
not must be determined not by considering the weight to be attached to
each single fact in isolation, but by assessing the cumulative effect of all
the facts in their setting as a whole. Where an ultimate finding on an
issue is an inference to be drawn from the facts found, on the applica-
tion of any principles of law, there would be a mixed question of law and F
fact, and the inference from the facts found in such a case would be a
question of law. But where the final determination of the issue equally
with the finding or ascertainment of the basic facts did not involve the
applicaton of any principle of law, an inference from the facts could
not be regarded as one of law. The proposition that an inference from
facts is one of law is, therefore, correct in its application to mixed G
questions of law and fact, but not to pure questions of fact. In the case of
pure questions of fact an inference from the facts is as much a question
of fact as the evidence of the facts. [701A-D]

In the instant ease, it is not said that the. Tribunal had acted on
material which was irrelefant to the enquiry or considered material H
694 SUPREME COURT REPORTS [ !987] 3 S.C.R.

A which was partly relevant and partly irrelevant or based its decision +·
partly on conjectures, surmises and suspicions. It took into account all
the relevant facts in a proper light in rendering a finding of fact. There-
fore, no question oflaw arises. [703BC, 701DE]

Sree Meenakshi Mills Limited v. Commissioner of Income-tax,
B Madras, 31 I.T.R. 28; Omar Salay Mohamed Sait v. Commissioner of _f
Income-tax, Madras, 37 I.T.R. 151; Udhavdas Kewalram v. Commis- \
sioner of Income-tax Bombay City I, 66 I. T.R. 462 and Remeshwar
Prasad Bag/av. Commissioner of Income-tax, U.P., 87 I.T.R. 421,
referred to.

2.1 The High Court was wrong In saying that proper weight hsd
c not been given to all the evidence and admissions made by the assessee.
-
The Tribunal had taken into con~ideration the fact that the assessee had y-
admitted the additions as its income when faced with non-disclosure In
assessment proceedings. The time when the assessee admitted the
additions was also considered. But to admit that there has been excess
D claim or disallowance is not the same thing as deliberate concealment or
furnishing inaccurate particulars. There may be hundred and one )'
reasons for such admissions, i.e., when the assessee realises the true
position it does not dispute certain disallowances hut that does
not absolve the Revenue to prove the mens rea of quasi criminal
offence. [703BC, 702AB, 701A, 702BC]
E
2.2 It is for the Income-tax authority to prove that a particular
receipt is taxable. If however, the receipt is accepted and certain ~-
amount is accepted as taxable, it could he added. But in the instant
case, it was not accepted by the assessee that it had deliberately
furnished inaccurate particulars or concealed any income. [702EF] >-
F
3. The High Court observed that the time of admission was not
noted by the Tribunal and this fact had not been properly appreciated
by the Tribunal. That is not correct. The Tribunal had made additions
during the assessment proceedings. In any event that would be apprecl-
ation of evidence in a certain way, unless in such misappreciation which
G amounted to non-appreciation no question of law would arise. Non-
appreciation may give rise to the question of law but not mere misap- >-
predation even if there be any from certain angle. Change of perspec-
tive in viewing a thing does not transform a question of fact into a
question of law. [703CD]

H The High Court in preferring one view to another view of factual
SHAD! LAL SUGAR MILLS v. C.l.T. DELHI (MUKHARJI, J.( 695

_;J appreciation in the instant case, has therefore, transgressed the limits A
of its jurisdiction under the Income-Tax Reference in answering the
question of law. [703F]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1660
(NT) of 1974.
B
From the Judgment and Order dated 23.12.1971 of the
Allahabad High Court in Income-tax Reference No. 53 of 1968.

H.K. Puri for the Appellants.

- Miss A. Subhashini and H.B. Rao for the Respondent. c
The Judgment of the Court was delivered by

SABYASACHI MUKHARJI, J. This appeal by special leave is
from the judgment and order of the Allahabad High Court dated 23rd
December, 1971 in the Income Tax Reference. The assessee is a D
limited company under the Indian Companies Act and derived its
income from the manufacture and sale of sugar and confectionery. The
assessment for the assessment year 1958-59 was completed under the
Indian Income Tax Act, 1922. The Income Tax Officer in the said
assessment, inter alia made the following additions besides others in
respect of the following items: E

(i) For cane cost Rs.48,500/-
(ii) For shortage in cane Rs.67 ,500/-
(iii) For salary ofoutstation staff Rs.21,700/-

The assessee did not challenge the said assessment order passed F
by the Income Tax Officer in so far as the additions of the above
amounts in appeal or otherwise. It was the case of the assessee that it
did not appeal because it wanted to keep good relations with the
revenue although, according to the assessee, the above additions made
by the Income Tax Officer were totally unjustified and illegal.
G
On 14th March, 1963 the Income Tax Officer issued notice under
section 274 read with section 271 of the Income Tax Act, 1961
(hereinafter called 'the Act') in respect of the assessment year 1958-59
for imposing penalty.

The assessee company demurred. After considering the reply the H
696 SUPREME COURT REPORTS [ 1987] 3 S.C.R.

A Inspecting Assistant Commissioner on !st October, 1964 imposed a -j;...
penalty of Rs. 70,000 under section 274 read with section 271 of the Act
holding inter alia that there was concealment of income to the tune of
Rs.1;37,700 and the maximum penalty of Rs. l,06,317 was imposable
in law but a sum of Rs. 70,000 was imposed as penalty considering the
facts and circumstances of the case.
B
The assessee preferred an appeal against the said order. The
Tribunal after considering the entire matter, reduced the penalty to
Rs.5,000. The Tribunal referred the three following questions, two at
the instance of the assessee and one at the instance of the revenue, to
the High Court for determination:
c
"I. Whether, on the facts and in the circumstances of the
case, the Tribunal was. correct in holding that the provi- "(
sions of section 271 of the Income Tax Act, 1961 are applic-
able to the present case;

D 2. Whether, there is any material to warran~ the finding
that the assessee company had concealed the particulars of y
its income or deliberately furnished inaccurate particulars
thereof within the meaning of section 271(2) of the Income
Tax Act, 1961; and

E 3. Whether, on .the facts and in the circumstances of the
case, the Tribunal is correct in reducing the penalty under l _
section 271(1)(c) from Rs.70,000 to Rs.5,000?" ~

)
The High Court was of the opinion that the third question did not
clearly bring out the matter in dispute between the parties and as such
F it was reframed as follows:

"Whether, on the facts and in the circumstaces, the finding
of the Tribunal that the assessee had not concealed income
to the extent of Rs.67,500 and Rs.21,700 within the mean-
ing of section 271(1)(c) of the Indian Income Tax Act,
G 1961, is correct in law?"

The High Court noted that the Income Tax Officer had made
certain additions and disallowed certain expenses and of the various
amounts disallowed only three amounts were required to be consi-
dered by the High Court namely; (i) inflation in price of sugar-cane of
H an amount of Rs.48,500, (ii) excess shortage claimed for cane
SHAD! LAL SUGAR MILLS v. C.I.T. DELHI [MUKHARJI. J.] 697

-l Rs.67,500 and (iii) salary of out-station staff of loading contractors of A
Rs.21,700, So far as the first question is concerned the High Court
held in favour of revenue and answered the question in the negative.
The answer to this question is no longer in dispute here. So far as the
second question is concerned the High Court answered the question in
the nagative and in favour of the assessee. There is no dispute about
that question too, in so far as there is no appeal by the revenue. As B
t regards the third question reframed its mentioned hereinbefore, it was
answered by the High Court in the affirmative and in favour of the
'T" revenue. The assessee has come up in appeal.to this Gourt challenging
the correctness of that answer. In this appeal we are concerned with

- the correctness or otherwise of the answer given to this question and
the appeal must be confined to the correctness of the answer given to
the third question as reframed.
c
y
The Income Tax Officer in his assessment order out of which this
penalty proceedings arose noted that there were several disallowances
in various accounts and he mentioned altogether 19 items totalling
Rs.3,01,787. All these were on account of disallowances. Main item D
~ was shortage in cane and the amount was Rs.67 ,500. Another items
was salary of out-station staff and the amount was Rs.21,700. There
was also addition of Rs.48,500 on account of inflation in the price of
sugarcane.

-·
The Inspecting Assistant Commissioner in his order noted, inter E
alia three items, namely, (i) inflation in price of sugar cane Rs.48,500
(ii) excess shortage claimed for cane Rs.67,500 and (iii) salary of out-
station staff of loading contractors Rs.21,700. It was found so far as the
last item was ·concerned that the amount was disallowed being a false
debit. It was found that the assessee attempted to understate the in-
come by debiting a false expenditure of Rs.48,500. The Inspecting F
Assistant Commissioner noted that actual shortage was 21, 143 Mds.
valuing Rs.26,429 while the assessee had claimed Rs.1,34,661 for
shortage at 2%. The excess claim was also indicative of the real posi-
tion that the shortage was fictitiously claimed at a high figure. Faced
with these facts the assessee eventually surrendered Rs.67,500. There-
..-{ fore, the Inspecting Assistant Commisioner held that the assessee was G
certainly reducing the income by debiting false claims for excess
shortage and the action amounted to intentional concealment. Salary
amounting to Rs.21,700 paid by the contractors to their staff working
at out-centres was debited in the books and while it was claimed that
the staff working at these centres were actually employed by the com-
pany, on investigation the claim was found to be false. In this connec- H
698 SUPREME COURT REPORTS [1987] 3 S.C.R.

A tion a reference was made to the statement of one Shri Kedar Nath
Kanodia. He had stated that he had employed five persons at the
out-centres and there was no employee of the mill working at the
centres. The mill had kept there neither any clerk riot any chowkidar.
He confirmed that he had paid the employees out of his own funds and
B had categorically denied that they were the employees of the mill or
that they were paid by it. In his statement he further stated that
although the staff was actually paid by him yet the company's
accountant had obtained their signatures on salary sheets and thus
inflated the expenses by raising false debit in the salary account. This
procedure was followed in respect of other contractors also. The salary
bill was thereby inflated by Rs.21,700. The Inspecting Assistant Com-
e missioner therefore, held that the assessee had concealed income to
the extent of Rs.21,700. He had also come to the conclusion that the
-
cane purchases noted against these last entries were false and fictitious y
and the quantity covered by these entries was 31, 561 Mds. valuing at
Rs.48,500. This was a false debit. The assessee debited the three items
of Rs.48,500, Rs.67,500 and Rs.21.700. The assessee admitted that
D these items represented income. It was also borne out by records that
the amounts were not included in the return by the company. The
offence of deliberate under-statement of income was, thus clearly
established according to the Inspecting Assistant Commissioner. He,
therefore, found that the tax sought to be evaded came to Rs.70,914
and the maximum penalty worked out to Rs. l,06,371. Having regard
E to the facts and circumstances of the case, he imposed a penalty of
Rs.70,000.

In appeal the Income Tax Tribunal was of the view that not much
turned upon the fact that the assessee agreed to the additions of the
amounts in the assessment. So far as the reliance placed upon
F Kanodia's statement by the Inspecting Assistant Commissioner was
concernecll, it had no relevance or bearing to the facts of the assess-
ment year in question. He was not the contractor employed by the
assessee in the year of account. He came in only for a later year. One
Avinash Chand was the contractor in the year in question. He had
specifically stated that he was responsible for shortages. He had also
G admitted that there was staff maintained by the mill at the centre at
which he was the loading contractor. In fact he had gone to the extent
of and stated as to what staff was maintained in that centre; there was a
man in charge of the centre, a weighment clerk, a cane clerk and three
to four chowkidars. He had also stated that they were not his emp-
H loyees. According to the Tribunal in these circumstances the assessee
could very well have argued against the addition of the two sums,
I
SHAD! LAL SUGAR MILLS v. C.l.T. DELHI [MUKHARJI. J.] 699

namely, Rs.67,500 and Rs.21,700. But the assessee as we have noted A
had agreed to the amounts being included. The Tribunal was of the
view that the mere fact that the amounts were agreed to be taken into
account by the assessee did not ipso facto indicate any criminality in its
action to conceal any portion of the income. The Tribunal found that
so far as Rs.48,500 was concerned in the inflation in the price of
sugar-cane, the previous "history was against the assessee. It had B
agreed to the similar additions in the earlier years 1955-56 and 1956-57
the Tribunal noted. From the above facts, it was seen that the penalty
was warranted in similar amount for this year also, the Tribunal noted.
Taking into consideration that the sum involved against this year was
• Rs.48,500 the tribunal considered that a smaller penalty was impos-
able. The Tribunal accordingly imposed a total penalty of Rs.5,000. C

The High Court reiterated that the onus of proving concealment
was on the revenue because the proceedings for penalty were penal in
character. In that view of the matter the High Court was of the opinion
that so far as Rs.48,500 was concerned it was not proved that there was
any deliberate concealment. So far as the other two amounts of D
Rs.67,500 and Rs.21,700 were concerned, it was contended that the
High Court noted the history of the order of the Inspecting Assistant
Commissioner and the circumstances of the case and the High Court
was of the view that the Tribunal had not at all considered th7 fact that
the value of the shortage was only Rs.26,429. According to the High
Court, the Tribunal had brushed aside the fact that the assessee had E
agreed to the addition of this amount. According to the High Court,
the Tribunal had not set aside the finding of the Inspecting Assistant
Commissioner that the assessee surrendered the amount of Rs.67 ,500,
when it was faced with facts which clearly established concealment.
The assessee according to the Inspecting Assistant Commissioner had
surrendered the amount only after the Income Tax Officer had conclu- F
sive evidence in his possession that the amount represented its income.
In other words, what the High Court sought to state was that accept-
ance by the assessee was material to give proper weight to judge the
criminality of the action which according to the High Court was not
given. The High Court highlighted that so far as Rs.67 ,500 was con-
-I cerned only on being faced with facts from which there could possibly G
be no escape from the inference that the amount represented his in-
come, that the assessee agreed to its inclusion. The High Court was of
the view that the Tribunal was in error in brushing aside consideration
of these aspects while considering the question of concealment.

In respect of the addition of Rs.21,700 the Inspecting Assistant H
700 SUPRE~E COURT REPORTS [1987] 3 S.C.R.

A Commissioner had relied upon the statement of Kedar Nath Kanodia
as also the fact that the assessee admitted that this item represented its
income. The Tribunal did not place reliance upon the statement of
Kedar Nath Kanodia. It, however, omitted to take into account the
fact that the assessee had admitted that these items represented its
income. The High Court was of the view that such admissions were
B made by the assessee but the Tribunal had not properly appreciated
that aspect. Therefore in respect of these two items the High Court
was of the view that the Tribunal was not right in holding that the
assessee was not guilty of any concealment. So far as question No. 2
was concerned which dealt with Rs.48,500 the High Court confined
itself to the disallowance in respect of purchase of cane. So far as this
C question was answered in favour of the assessee and there is no
challenge by the revenue, it is not material any more. The High Court
came to the conclusion that the finding of the Tribunal in respect of the
concealment of Rs.48,500 was not justified in law. It was urged before
us that as the second question which was in general form has been
answered in favour of the assessee, the ihird question as reframed
D could not have been answered otherwise. We are unable to accept this
contention. As evident from the discussion by the High Court, the
High Court confined to second question with regard to disallowance in
respect of purchase of cane that amounted to Rs.48,500. So, therefore
it canno\ be said that in view of the answer given to the second ques-
tion, the third question was no longer open. The second question was
E confined to only Rs.48,500.

So far as whether there was justification for the answer given to
the refrarned third question or was proper or not has to be judged on
the basis as to how far the High Court in a reference could interfere
with a finding of fact and transform the same into a question of law on
F the ground that there has been non-consideration of all relevant facts.
The law on this point is quite settled.

The question was considered by this Court exhaustively in Sree
Meenakshi Mills Limited v. Commissioner of Income-tax, Madras, 31
I.T.R. 28 where this Court reiterated that findings on q~estions of
G pure fact arrived at by the Tribunal were not to be disturbed l}y the r
High Court on a reference unless it appeared that there was no evi-
dence before the Tribunal upon which they, as reasonable men, could
come to the conclusion to which they have come; and this was so, even
though the High Court would on the evidence have come to a conclu-
sion entirely different from that of the Tribunal. In other words, such a
H finding could be reviewed on!~ on the ground that there was no evi-
SHAD! LAL SUGAR MILLS v. C.I.T. DELHI [MUKHARJI, J.] 701

dence to support it.or that it was perverse. A

When a conclusion had been reached on an appreciation of a
number of facts established by the evidence, whether that was sound
or not must be determined, not by considering the weight to be at-
tached to each single fact in isolation, but by assessing the cumulative
I · effect of all the facts in their setting as a whole. Where an ultimate B
finding on an issue was an inference to be drawn from the facts found,
on the application of any principles of law, there would be a mixed
question of law and fact, and the inference from the facts found was in

- such a case, a question of law. But where the final determination of the
issue equally with the finding or ascertainment of the basic facts did
not involve the application of any principle of law, an inference from
the facts could not be regarded as one of law. The proposition that an
c
inference from facts was one of law was, therefore, correct in its appli-
cation to mixed questions of law and fact, but not to pure questions of
fact. In the case of pure questions of fact an inference from the facts
was as much a question of fact as the evidence of the facts. In the
instant case there is a finding of fact and unless it could be said that all D
the relevant facts had not been considered in a proper light, no ques-
tion of law arises. In our opinion, the Tribunal took into account all
the relevant facts. The Tribunal had been accused by the High Court
of not taking into consideration the fact that the assessee had admitted
these amounts in the assessment. To admit that there has been excess
claim or disallowance is not the same. thing as deliberate concealment E
or furnishing inaccurate particulars. At least in the background of the
law as it stood at the relevant time that was the position. There have
been some changes subsequently which we have not noticed for the
present purpose.

In Omar Salay Mohamed Sait v. Commissioner of Income-tax, F
Madras, 371.T.R. 151, this Court held that the Income-tax Appellate
Tribunal was a fact finding tribunal and if it arrived at its own conclu-
sions of fact after due consideration of the evidence before it the court
could not interf~re. It was necessary, however, that every fact for and
against the assessee must have been considered with due care and the
-( Tribunal must have given its finding in a manner which would clearly G
indicate what were the questions which arose for determination, what
was the evidence pro and contra in regard to each one of them and
what were the findings reached on the evidence on record before it.
The conclusions reached by the Tribunal should not be coloured by
any irrelevant considerations or matters of prejudice and if there were
any circumstances which required to be explained by the assessee, the H
702 SUPREME COURT REPORTS [1987] 3 S.C.R.

A assessec should be given an opportunity of doing so. In this case, the
I Tribunal had taken into consideration the fact that the assessee had
admitted the additions as its income when faced with non-disclosure in
assessment proceedings. The High Court accused the Tribunal of not
considering the time when the assessee admitted the additions. We
find that it was duly considered by the Tribunal. We find that the
B assessee admitted that these were the income of the assessee but that · -1
was not an admission that there was deliberate concealment. From
agreeing to additions it does not follow that the amount agreed to be
added was concealed. There may be hundred and one reasons for such
admissions, i.e., when the assessee realises the true position it does not
dispute certain disallowances but that does not absolve the revenue to
C prove the mens rea of quasi criminal offence. In Udhavdas Kewalram
v. Commissioner of Income-tax, Bombay City I, 66 I.T.R. 462, the
Court held that the Income-taic Appellate Tribunal performed a judi-
cial function under the Income-tax Act and it was invested with autho-
rity to determine finally all questions of fact. The Tribunal must, in
deciding an appeal, consider with due care all the material facts and
D record its findings on all contentions raised by the assessee and the
Commissioner in the light of the evidence and the relevant law. The
Tribunal was undoubtedly competent to disagree with the view of the
Appellate Assistant Commissioner, but in proceeding to do so, it had
to act judicially i.e. to consider all the evidence in favour of and
against the assessee. An order recorded on a review of only a part of
E the evidence and ignoring the remaining evidence could not be re-
garded as conclusively determinative of the question of fact raised
before the Tribunal. It is for the Income-tax authority to prove that a
particular receipt is taxable. If, however, the receipt is accepted and
certain amount is accepted as taxable, it could be added but it was not
accepted by the assessee, however, that it had deliberately furnished
F inaccurate particulars or concealed any income. In our opinion, the
Tribunal has properly considered all the evidence in the instant case..
In Rameshwar Prasad Bagla v. Commissioner of Income-tax, U.P., 87
I.T.R. 421, this Court again reiterated that it was for the Tribunal to
decide questions of fact, and the High Court in a reference under
section 66 of the Act as at that time could not go behind the Tribunal's
G findings of fact. The High Court could only lay down the law appli- 'r
cable to the facts found by the Tribunal. The High Court in a reference
under section 66 of the Act, as at that time could, however, go into the
question as to whether the conclusion of the Tribunal on a question of
fact was based upon relevant evidence. If the High Court found that
there was no such evidence to support the finding of fact of the Tri-
fi bunal, those circumstances would give rise to a question of law and
SHAD! LAL SUGAR MILLS v. C.i.T. DELHI [MUKHARJI, J.] 703

~
could be agitated in a reference. Here in the instant case that is not the A
position. This Court again reiterated that it was also well-established
that when a Tribunal acted on material which was irrelevant to the
enquiry or considered material which was partly relevant and partly
irrelevant or based on conjectures, surmises and suspicions and partly

~ finding
.
on evidence, then in. such a situation an issue of law arose and the
of the Tribunal could be interfered with. That is not the posi- B
tion here. In the instant case, it is not said that the Tribunal had acted
y on material which was irrelevant to the enquiry or considered material
which was partly relevant and partly irrelevant or based its decision
partly on conjectures, surmises and suspicions. The High Court was

- wrong in saying that proper weight had not been given to all the
evidence and admissions made by the assessee. The High Court c
further observed that the time of admission was not noted by the
y Tribunal and this fact had not been properly. appreciated by the
Tribunal. That is also not correct. The Tribunal had made additions
during the assessment proceedings. In any event that would be ap-
preciation of evidence in a certain way, unless in such misappreciation
which amounted to non-appreciation no question of law would arise. D
~ Non-appreciation may give rise to the question of law but not mere
misappreciation even if there be any from certain angle. Change of
perspective in viewing a thing does not transform a question of fact
into a question of law.

In the instant case we are of the opinion that in preferring one E
-.;- view to another view of factual appreciation, the High Court transgres-
sed the limits of its jurisdiction under the Income-tax reference in
answering the question of law .
._.
In the premises, we are of the opinion that the High Court was in
error in so far as it held that theTribunal had acted incorrectly. We are F
further of the opinion that the reframed question must be answered in
the affirmative and in fa tour of the assessee.

The appeal is allowed and the judgment and order of the High
Court in so far as answer to the question No. 3 is concerned is set
~aside. The assessee is entitled to the costs of this appeal. G

P.S.S. Appeal allowed.