Holding

A High Court, in a reference under Section 256(1), may not overturn a Tribunal’s factual findings as perverse unless those findings are unreasonable on the record before the Tribunal, and without a signed assessment order the assessment on the HUF for AY 1955‑56 was invalid.

Summary

The appellants, members of a Hindu Undivided Family (HUF), contended that no valid assessment order had been issued for the HUF for assessment year 1955-56 because the order was unsigned, and that they never received statutory notices. The Income Tax Officer proceeded under Section 147(a) and later under Sections 148 and 139, leading to assessments for later years, which the HUF challenged. The Tribunal held that the assessment for 1955-56 was invalid and that the Tribunal’s factual findings were not perverse. The Revenue appealed, and the High Court, in a reference under Section 256(1), reversed the Tribunal, calling its findings perverse. The Supreme Court held that a High Court in a reference can only overturn Tribunal findings if they are unreasonable on the record before the Tribunal and cannot go behind those facts; moreover, without a signed assessment order, no valid assessment existed, so the Tribunal was correct. The appeal was allowed, the High Court’s order set aside, and the Tribunal’s decision restored.

Issues considered

Whether a valid assessment order was made on the HUF for assessment year 1955-56 in the absence of a signed assessment order.
Whether the Tribunal’s factual findings were perverse, permitting the High Court to overturn them under Section 256(1).
Scope of the High Court’s advisory jurisdiction in reference proceedings under the Income Tax Act.

Legislation cited

Income Tax Act, 1922s. 22
Income Tax Act, 1961s. 139, s. 143(3), s. 147(a), s. 148, s. 256(1), s. 25A

Subjects

Income TaxHUF assessmentassessment orderperverse conclusionSection 256reference jurisdictionHigh CourtTribunalsigned assessmentassessment validity

Judgment

SMT. KILASHO DEVI BURMAN AND OTHERS A
v.
COMMISSIONER OF INCOME-TAX WEST BENGAL, CALCUTTA

FEBRUARY 8, 1996

[S.P. BHARUCHA ANDS. SAGHIR AHMAD, JJ.) B

Income Ta.'C Act, 1961: Section 143(3).

Income Tax-HUF-Assessment of-Signed assessment order or f onn
for relevant assessment yew~Absence of-Held : there was no valid assess- C
ment.

Section 256 (1)

Income Tax-Referenc~Jwisdiction of High Cowt-Scope of-Held:
.~
High Cowt could not go behind facts found by T1ibunal. D
Words and Phrases :

"Pe1verse Conclusion''-Meaning of in the context of Section 256( 1) of
the Income Tax Act, 1961.
E
The appellant - assessee had submitted a return for the relevant
assessment year as the karta of his H.U.F. The assessment order on the
record of the Revenue bore no signature. There was no signed copy of the
assessment form. There was a demand notice with some initial or signature
on it. On the record there was an acknowledgement slip signed by some
person. There was no material to show that the demand raised in the F
demand notice had been paid by the appellant-assessee.

The Income Tax Officer took proceedings under Section 147 (a) of
the Income Tax Act, 1961 and concluded that the appellant's H.U.F. had
escaped assessment. The appellant filed 'nil' returns under protest. The G
I.T.O. rejected the appellant's contention and made assessment on the
H.U.F. Whereupon the appellants appealed to the Income Tax Appellate
Tribunal. The Tribunal allowed the appeal. The Revenue sought reference
to the Tribunal and it made a reference to the High Court which answered
it in favour of the Revenue on the ground that the conclusion arrived at
by the Tribunal was perverse. Aggrieved by the High Court's Judgment the H
301
302 SUPREME COURT REPORTS [1996] 2 S.C.R.

A appellant had preferred this appeal.
On behalf of the appellant it was contended that neither the statutory
notices nor the demand notice nor the assessment order was received by
him; and that no person had any authority to receive any notice on his
behalf.
B
Allowing the appeal, this Court

HELD : 1.1. The High Court, in a reference under the taxation
statutes exercises advisory jurisdiction in regard to questions of law. It is
C only when it has before it a question that asks whether the Tribunal has,
upon the evidence on record before it, come to a co,nclusion which is
perverse that it may go into facts for this is a question of law. A conclusion
is perverse only if it is such that no person, duly instructed, could, upon
the record before him, have reasonably come to it. [305-G-H; 306-A]

D 1.2. The High Court, in reference proceedings, cannot go behind the
facts found. It cannot look at evidence that was not before Tribunal when
it reached the impugned findings to hold that these findings are perverse.
[306-D; E]
2. The statement of"admitted" facts was placed by the Revenue before
E the Tribunal as an annexure to its reference application. That the Statement
of Case does not state that any person had received earlier notices o.n behalf
of the assessee shows that the Tribunal had not so found; that there is no
mention of this at all suggests that the Revenue did not place this argument
and the supporting material before the Tribunal. The High Court could
F have required the Tribunal to ascertain whether any person had received
earlier notices on behalf of the assessee and prepare a Supplemental State-
ment of Case, but the High Court could not, upon these "admitted" facts,
have reached the conclusion that the Tribunal's findings of fact were per-
verse. The High Court did not give due importance to the fact that upon the
G record produced by the Revenue before the Tribunal there was no signed
assessment order nor a signed assessment form. [306-F-G; 307-B]

Kalyanlaunar Ray v. Commissioner of Income-Tax, 191 1.T.R. 634,
relied on. --
H Ellis Reid v. C.J. T., 5 I.T.C. 100, cited.
• K.D. BURMANv. C.l.T. [BHARUCHA,J.]

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2242-
2246 of 1978.
303

A

From the Judgment and Order dated 14.7.77 of th~ Calcutta High
Court in LT. Reference No. 90 of 1968.

K.B. Rohtagi, Anup Sharma and Ms. Aparna Rohtagi for the appel- B
lants.

R.R. Mishra, R. Satish and S.N. Terdol for the Respondents.

The Judgment of the Court was delivered by
c
BHARUCHA, J. This is an appeal by special leave. The order that is
impugned was passed by the High Court at Calcutta in an income-tax
reference. The questions that the High Court was called upon to answer
were:

"l. Whether on the facts and in the circumstances of the case, there D
was a valid assessment on an H.U.F. for the assessment year
1955-56?

2. If the answer to question no. 1 is in the affirmative, then, whether
on the facts and in the circumstances of the case, the assessments E
for 1958-59 to 1962-63 in the status of H.U.F. are valid?"

The reference related to Assessment Years 1958-59 to 1962-63, the
relevant previous years whereof were B.S. Years 1364 to 1368. The assessee
was Rash Behari Das Burman, who was governed by the Mitakashara
school of Hindu law. It is unnecessary for the purposes of this decision to F
go into his family history, which is referred to both in the Statement of Case
placed before the High Court by the Income Tax Appellate Tribunal and
the judgment of the High Court. What we now set out is what is relevant
and it is taken from the Statement of Case. For the Assessment Year
1955-56 the assessee submitted a return dated 14th November, 1957,
describing himself as the Karta of his H.U.F. An assessment was said to G
have been made on the H.U.F. The assessment order on the record of the
Revenue bears no signature. There is no signed copy of the assessment
form. There is a demand notice dated 10th April, 1958 with some initial or
signature on it. According to the assessee, neither the statutory notices nor
the demand notice nor the assessment order had been received. On the H
304 SUPREME COURT REPORTS [1996] 2 S.C.R.

A record there is an acknowledgment slip bearing the date 25th April, 1958
signed by one Phool Singh. According to the assessee, there was no such
person who had any authority to receive any notice on his behalf. There
was no material to show that the demand raised in the demand notice had
. been paid by the assessee.
B The assessee filed a partition suit (bearing no. 665 of 1955 in the
Calcutta High Court). A settlement was arrived at. The properties were to
be divided by metes and bounds, but that remained to be done when the
Statement of Case was drawn by the Tribunal.

C For the Assessment Years 1956-57 to 1961-62, no notices were issued
to the H.U.F. under Section 22 of the Income Tax Act, 1922. Similarly, for
the Assessment Year 1962-63, no notice was issued to the H.U.F. under
Section 139 of the Income Tax Act, 1961. The income from the properties
which were covered by the partition suit were returned by and assessed in
the hands of the erstwhile members of the H.U.F.
D
The Income Tax Officer thereafter took proceedings under Section
147(a) of the Income Tax Act, 1961 and concluded that the assessee's
H.U.F. had escaped assessment; this was on the basis that no genuine
partition had taken place and that the assessee had made a return which
E misrepresented the facts. The l.T.O. started proceedings under Section 148
for the Assessment Years 1958-59 to 1961-62 and under Section 139(2) for
the Assessment Year 1962-63. The assessee filed 'nil' returns under protest.
The I.T.O. rejected the assessee's contention and made assessments on the
H.U.F. The assessee appealed but, except for certain reductions in the
quantum, the orders of the l.T.O. were affirmed.
F
The assessee appealed to the Tribunal. The assessee urged that
during the relevant assessment years there was no H.U.F. and no valid
proceedings thereagainst could be taken. It was also urged that the H.U.F.
had never been assessed and that, therefore, there was no reason to make
G an application under Section 25A of the 1922 Act. On behalf of the
Revenue it was submitted that there was an assessment on the H.U.F. as
was clear from the order for A.Y. 1955-56 and that, so long as that
assessment stood, it was permissible to proceed against the H.U.F. for the
H.U.F. was presumed to exist until an order ~nder Section 25A of the 1922
H Act was passed. The Tribunal went into the question as to whether there
K.D. BURMANv. C.I.T. [BHARUCHA,J.] 305

was an assessment on the H. U.F. for the Assessment Year 1955-56. Its A
conclusions were :

"(i) There was no signed assessment order;

(ii) even if a demand notice is taken to exist in this case, the
assessment is invalid as, in spite of there being a positive demand B
thereunder, it had not been served on the assessee;

(iii) if there was no assessment on the H.U.F. (for 1955-56), there
was no need on the part of the assessee to come forward with an
application under Section 25A as that section contemplated an
application being made thereunder only when there was already
c
an assessment on the H.U.F.;

(iv) the absence of an application under section 25A could not,
under these circumstances, give the Income-tax authorities any
jurisdiction to proceed against the family as such; D
(v) section 25A(3) had no operation because there was no assess-
ment on the family, the disputed H.U.F. being in the same position
as a dead assessee whose income until Section 24B was enacted
could not be subjected to tax (see Ellis Reid v. C.I. T., 5 l.T.C. 100)
and E
(vi) the assessment in the status of an H.U.F. when the family had
ceased to exist had to be set aside as it was not valid."

The Revenue sought a reference to the High Court contending,
among other things, that the factual findings of the Tribunal were "unsup- F
ported by any evidence and is unreasonable and perverse". The Tribunal
modified the questions suggested and framed the two questions which are
quoted above. Having regard to the frame of the questions that the
Revenue wanted the Tribunal to refer to the High Court, it was, in our
view, open to the High Court to consider the record before the Tribunal G
to determine whether the Tribunal's factual conclusions were perverse.

The High Court in a reference under the taxation statutes exercises
advisory jurisdiction in regard to questions of law. It is only when it has
before it a question that asks whether the Tribunal has, upon the evidence
on record before it, come to a conclusion which is perverse that it may go H
I
306 SUPREME COURT REPORTS [1996] 2 S.C.R.

A into facts for this is a question of law. A conclusion is perverse only if it is
such that no person, duly instructed, could, upon the record before him,
have reasonably come to it.

In the instant case, the High Court placed reliance upon the acknow-
ledgement slip dated 25th April, 1968 signed by Phool Singh. It said,
B "Records shqw this Phool Singh to have received a number of notices on
behalf of the assessee on widely separated dates". The "records" which the
High Court referred to was a statement of "Facts which are admitted
and/or found by the Tribunal and which are necessary for drawing up a
statement of the case (vide para 3 of the Reference application)" which
C was annexed to the Revenue's reference application. This statement said,
"Records show this Phool Singh to have received a number of notices on
behalf of the assessee on widely separated dates". The Statement of Case
does not says this about Phool Singh.

It is the Tribunal that finds facts. It sets these out in the Statement
D of Case whereby it refers questions of law to the High Court. The High
Court, in reference proceedings, cannot go behind the facts found. Where
the High Court is of the view that it is requisite that facts other than those
found need to be ascertained it must call upon the Tribunal to submit a
Supplemental Statement of Case. Even when, as here, the High Court is
required to decide whether the findings of fact reached by the Tribunal are
E perverse, the High Court is confined to the evidence that was before the
Tribunal. The High Court cannot look at evidence that was not before the
Tribunal when it reached the impugned findings to hold that these findings
are perverse.

The statement of "admitted" facts was placed by the Revenue before
F the Tribunal as an annexure to its reference application. That the State-
ment of Case does not state that Phool Singh had received earlier notices
on behalf of the assessee shows that the Tribunal had not so found; that
there is no meri:tion of this at all suggests that the Revenue did not place
this argument and the supporting material before the Tribunal. The High
G Court could have required the Tribunal to ascertain whether Phool Singh
had received earlier notices on behalf of the assessee and prepare a
Supplemental Statement of Case, but the High Court could not, upon these
"admitted" facts, have reached the conclusion that the Tribunal's findings
of fact were perverse.

H· The High Court based itself upon the demand notice and the ac-
K.D. BURMAN v. C.I.T. (BHARUCHA, J.] 307

knowledgement slip signed by Phool Singh and observed, "Unless an assess- A
ment order was passed under or in pursuance of the Act question of a
notice of demand in the prescribed form specifying the sum payable by the
assessee could not arise". The High Court did not give due importance to
the fact that upon the record produced by the Revenue before the Tribunal
there was no signed assessment order nor a signed assessment form.
B
That an assessment order has to be signed is established by the
judgment of this Court in Kalyankwnar Ray v. Commissioner of Income-tax,
191 l.T.R. 634. It said :

"If, therefore, the Income-tax Officer first draws up an order
assessing the total income and indicating the adjustments to be c
made, directs the office to compute the tax payable on that basis
dnd then approves of it, either immediately or some time later, no
fault can be found with the process, though it is only when both
the computation sheets are signed or initialled by the Income-tax
Officer that the process described in section 143(3) will be com- D
plete.

xxx xxx xxx

All these decisions emphasise that all that is needed is that there
must be some writing initialled or singed by the Income-tax Officer E
before the period of limitation prescribed for completion of the
assessment has expired in which the tax payable is determined and
not that the forrn usually styled as the "assessment o:der" should
itself contain the computation of tax as well."

A valid assessment upon the H.U.F. for the Assessment Year 1955- F
56 was central to the case of the Revenue. Since it was unable to establish,
by the production of a signed assessment order for that year, that there
was such valid assessment, its case fell and the Tribunal was right in so
holding. The High Court was in error in concluding that the findings of the
Tribunal on the record were perverse.
G
The appeal is allowed. The judgment and order under appeal is set
aside. The judgment and order of the Tribunal is restored.

The respondents shall pay to the appellants the costs of the appeal.

v.s.s. Appeal allowed.