DELHI HOTELS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is an application under section 256(2) of the Income Tax Act, 1961 , relating to the assessment year 1973-74. The Tribunal had rejected the assessed's application to be treated as a registered firm on the ground that it was not a genuine partnership and hence was not entitled to that status. The assessed's application under section 256(1) of the Act had raised as many as 18 questions before the Tribunal. The application was rejected as per order dated February 11, 1981.

(2.) The assessed filed an application under section 256(2) claiming a reference of four questions which are set out in paragraph 12 of the application. It is submitted in the prayer that the Tribunal should be directed to state a case regarding these four questions. A preliminary objection has been raised on behalf of the Department that these questions are not the ones mentioned in the application under section 256(1) and, Therefore, the application should be rejected. It is submitted by Mr. K. K. Wadhera that not only should the questions arise out of the Tribunal's order but they must also be first sought from the Tribunal by means of an application under section 256(1). As these four questions were not asked for, it is claimed that no mandamus can issue directing the Tribunal to make a reference. There is some substance in what has been submitted in the preliminary objection. But we have some difficulty in finding out what is the procedure to be followed if different questions are asked for. Is the application to be rejected Or, is the application to be treated as one for the same questions which were agitated in the application under section 256(1) Furthermore, is the court bound by the fact that no particular questions are asked for, under section 256(1) or 256(2) There seems to be little doubt that no new questions can be raised by the assessed at the stage of an application under section 256(2) and the case is to be confined to the self-same questions that were agitated before the Tribunal at the stage of the application under section 256(1). There is a lot of difficulty in this particular case because as many as 18 questions were sought from the Tribunal which are differently framed from the four questions now sought to be raised. Learned counsel for the assessed has urged that in fact these four questions are merely a rearrangement of the 18 questions raised earlier before the Tribunal. We think that this matter is too intricate to deal with in this particular way and none of the numerous cases cited at the Bar are of any help. The principles are so well-settled that it does not need any discussion for us to hold that the application has to be confined to the case set out before the Tribunal at the stage of its application under section 256(1). However, we have not come across a single case in which a completely different set of questions were raised at the stage of an application under section 256(2). This is an unique and an unprecedented case. We can dismiss the application on this short ground, but we think, we should examine whether there is a question of law which could be referred on merits.

(3.) It so happens that the 18 questions set out in the application under section 256(1) which were raised before the Tribunal are almost all questions of fact. The only real controversy before the Income Tax authorities was whether the assessed was to be registered as a partnership under the provisions of the Income Tax Act or not. One question alone could have been raised, i.e., "did the facts and circumstances of the case justify the conclusion that the applicant was not to be granted registration."