Full Judgment Text
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CASE NO.:
Appeal (civil) 2716 of 2007
PETITIONER:
Commissioner of Agricultural Income Tax
RESPONDENT:
M.N. Moni
DATE OF JUDGMENT: 18/05/2007
BENCH:
Dr. ARIJIT PASAYAT, P.K. BALASURRAMANYAN & D.K. JAIN
JUDGMENT:
J U D G M E N T
CIVIL APPEAL NO. 2716 OF 2007
(Arising out of S.L.P. (C) No. 5859 of 2006)
Dr. ARIJIT PASAYAT, J.
1. Leave granted.
2. Challenge in this appeal is to the order passed by a
Division Bench of the Kerala High Court answering the
reference made to it under the Kerala Agricultural Income Tax
Act, 1952 (in short the ’Act’) in favour of the respondent
(hereinafter referred to as the "assessee").
3. Background facts in a nutshell are as follows:
4. For the assessment years 1982-83 and 1983-84, M/s.
E.K. Vijayan and others, Kozhikode was an assessee under the
Act. Shri M.N. Moni was the executor of the estates of the
assessee. The assessee owned an estate, namely, "Woodland
Estate". Assessee derived agricultural income from coffee,
pepper, arecanut, coconut, cardamom and coco. For the
assessment years i.e. 1982-83 and 1983-84 the assessee filed
returns disclosing agricultural income of Rs.1,22,520/- and
Rs.2,88,996/- respectively. The Assessing Officer was of the
view that the returns filed did not reflect the correct and
complete picture as the assessee had not disclosed the income
from coffee during 1982-83 season and income disclosed of
pepper was low and, in fact no income was disclosed from
orange, arecanuts, coconuts, cardamom, and coco and many
inadmissible expenses were claimed as deductions. Notices
were issued on 2.3.1987 and 17.10.1987 proposing to make
best judgment assessments. Assessee filed its reply to the
notices. After consideration of the objections filed, the
Inspecting Assistant Commissioner of Agricultural Income Tax
completed the assessments determining the income at
Rs.7,97,380/- and Rs.5,06,641/- respectively for the two
assessment years. It was noted that the E.B. 2 register in
respect of 60.79 acres of new registered area was not
produced. The production details of the said area were also
not disclosed. Accordingly, the income of coffee from 60.79
acres was estimated and included in the taxable income.
Appeals were preferred by the assessee before the Deputy
Commissioner (Appeals), who confirmed the findings of the
Assessing Officer on the issue relating to 60.79 acres of new
registered area and the income therefrom. However, the
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Appellate Authority directed that the cultivation expenses were
to be allowed @ Rs.2,000/- per acre. Assessee preferred the
Second Appeals before the Kerala Agricultural Income Tax
Appellate Tribunal, Additional Bench, Kozhikode (in short
’Tribunal’). The Tribunal found that the accounts produced by
the assessee were only in respect of the 218 acres of land and
the activities relating to 60.79 acres of land were not disclosed.
Accordingly, the Tribunal confirmed the estimate of income
from the aforesaid 60.79 acres of land.
5. An application for reference in terms of Section 60 of the
Act was filed. It was rejected by the Tribunal. Original
petitions were filed before the High Court which by order dated
April 1, 1996, directed the Tribunal to refer one of the
questions formulated by the assessee and to refer the question
no.1 along with the statement of facts:
6. Accordingly, the reference was made which was disposed
of by the impugned order.
7. The question that was referred reads as follows:
"Whether on the facts and circumstances of
the case, is the finding of the Tribunal that
income from 60.79 acres of unregistered coffee
area is not included in the accounts of the
assessee supported by any material or
evidence?"
8. By the impugned order, the High Court held that the
orders of the Tribunal were not correct and the question was
to be decided in favour of the assessee.
9. In support of the appeal, learned counsel for the
appellant submitted that the Original Authority and the
Appellate Authority considered the factual position in detail
and recorded findings of fact that in relation to 60.79 acres of
land incomes were not disclosed. The High Court without
discussing the factual position, in a summary manner, set
aside the findings recorded by the authorities. The order of
the High Court, it was therefore submitted, cannot be
maintained.
10. Per contra, learned counsel for the assessee submitted
that the High Court has taken note of relevant factors and,
therefore, no interference is called for.
11. We find that after making a brief reference to the
controversy, the High Court disposed of the reference with the
following observations:
"The contention of the assessee was that so far
as they are concerned, they have returned the
entire agricultural income from the property.
Further, it was submitted that with regard to
coffee, they cannot sell coffee to outsider, but it
can be sold through M/s. Pierce Leslie. In the
above view of the fact, the contention of the
assessee is that conclusion by the authorities
is not correct. The Tribunal, after considering
the case, came into the conclusion that the
assessee had not shown the return from 60.79
acres. According to us, this view is not correct.
In so far as the coffee can be sold only through
M/S. Pierce Leslie, there is no basis for the
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Department to state that the entire income has
not been returned."
12. No reason which weighed with the High Court to upset
the orders of the Assessing Authority and the Appellate
Authorities is discernible. Findings of facts were recorded by
the said authorities. In a reference there is no scope for
interference with the factual findings, unless the findings are
per se without reason or basis, perverse and/or contrary to
materials on record. Merely because different view on facts
may be available to be drawn, that cannot be a ground to
interfere with the findings of fact recorded by the authorities.
13. In cases of reference, only a question of law can be
answered. Where the determination of an issue depends upon
the appreciation of evidence or materials resulting in
ascertainment of basic facts without application of law, the
issue raises a mere question of fact. An inference from certain
facts is also a question of fact. A conclusion based on
appreciation of facts does not give rise to any question of law.
If a finding of fact is arrived at by the Tribunal after improperly
rejecting evidence, a question of law arises. Where the
Tribunal acts on materials partly relevant and partly
irrelevant, a question of law arises because it is impossible to
say to what extent the mind of the Tribunal was affected by
the irrelevant material used by it in arriving at the finding.
14. A question of fact becomes a question of law if the finding
is either without any evidence or material.
15. In the instant case, the High Court has not even
indicated as to why it considered the conclusions of the
Assessing Authority and the Appellate Authority to be
unsustainable. It is to be noted that even after the reference is
made by the Tribunal directly or on the basis of a direction
given by the High Court, it is open to the High Court not to
answer the reference if no question of law is involved.
16. Therefore, without expressing any opinion on the merits,
we set aside the order of the High Court and remit the matter
to it for fresh consideration. The appeal is accordingly
disposed of. No costs.