JUDGMENT R.K. Gulati, J.
1. These two applications under Section 256(2) of the Income-tax Act, 1961 (for short, "the Act"), have been filed at the instance of the Commissioner of Income-tax, Allahabad, against a common order of the Income-tax Appellate Tribunal. Income-tax Application No. 269 of 1991 is in respect of the assessment year 1977-78 in which the following question has been proposed :
"Whether, on the basis of the material on record, the Income-tax Appellate Tribunal was correct in law in holding that there was no evidence to support the cost of construction taken at Rs. 3,80,000 in the assessment year 1977-78 and Rs. 5,70,000 in the assessment year 1978-79 by the Assessing Officer and thereby deleting the addition made in the assessment year 1977-78 ?"
2. In the other Application No. 270 of 1991, which is in respect of the assessment year 1978-79, the question proposed is :
"Whether on the basis of the material on the record, the Tribunal was correct in law in holding that there was change in the opinion in initiating proceedings under Section 147 for the assessment year 1978-79, when on the basis of the same material, the validity of proceedings under Section 147 for the assessment year 1977-78 has been upheld by the Income-tax Appellate Tribunal."
3. The respondent (hereinafter referred to as "the assessee") is a partnership concern. It constructed a cinema hall known as Messrs. Vindraban Chitra Mandir, Civil Lines, Pratapgarh. The cost of construction as per the balance-sheet and account books of the assessee, was to the tune of Rs. 4,37,769 for which the assessee had maintained complete accounts in its account books supported by bills and vouchers, etc. The question about the cost of construction for the first time came to be considered in the assessment year 1979-80. During the course of the assessment proceedings for that year, the assessee filed a report of an approved valuer who had estimated the cost of construction to be Rs. 4,45,000. The Income-tax Officer got the cost of construction assessed by the Departmental valuer also who determined the same at Rs. 5,07,200. The valuation report submitted by the Departmental valuer was not approved by the Income-tax Officer. He accordingly added Rs. 7,233 as unexplained investment to the income of the assessee being the difference in the cost of construction estimated by the approved valuer and that disclosed by the assessee. The assessee appealed to the Appellate Assistant Commissioner who deleted the entire addition. The matter was allowed to rest there and the Department did not pursue it further.
4. Subsequently, the Income-tax Officer took proceedings under Section 148 of the Income-tax Act for the immediately preceding two assessment years, namely, 1977-78 and 1978-79. The assessments for these two years were reopened on the consideration that taking the calendar year as the previous year, a part of the cost of construction of the cinema hall was liable to be considered in the assessment year 1977-78 and the other part in the assessment year 1978-79. In the reasons recorded for reopening the assessment for the assessment year 1977-78, the Income-tax Officer set out two more reasons, namely, that one of the partners of the assessee-firm had filed a statement sworn on affidavit in a civil suit in which it was stated that the probable cost of construction of the cinema building was rupees seven lakhs and, secondly, the Nagar Mahapalika, Pratapgarh, had assessed house tax/water tax, etc., payable by the assessee-firm in respect of the cinema building in question by valuing its cost at rupees ten lakhs. Proceeding on these lines, the Income-tax Officer determined the cost of construction of the cinema building at Rs. 9,50,000 by saying that he had personally inspected the cinema building and, in his opinion, it would be reasonable to hold that the cost of construction was to the extent of Rs. 9,50,000. On this basis, he added Rs. 5,12,243 to the income of the assessee as unexplained investment and brought it to tax at Rs. 2,04,983 in the assessment year 1977-78 and at Rs. 3,07,340 in the assessment year 1978-79.
5. The assessee preferred two appeals before the Commissioner of Income-tax (Appeals) in respect of the two assessment years in question. It challenged the additions on the merits besides questioning the validity of reassessment proceedings taken under Section 148 of the Act. The appellate authority by a common order upheld the action under Section 148 of the Act, in so far as it concerned the assessment year 1977-78, but deleted the entire addition on the merits. With regard to the other year, the action under Section 148 of the Act was annulled. The Department took the matter to the Income-tax Appellate Tribunal where the order passed by the Commissioner of Income-tax (Appeals) was upheld. In due course, the applications filed by the Revenue for making a reference to this court under Section 256(1) of the Act were also dismissed by the Income-tax Appellate Tribunal. It is in this background that these two applications have been made with a prayer that the Income-tax Appellate Tribunal may be directed to draw up a statement of the case and refer the questions of law set out therein for the opinion of this court.
6. We have heard learned counsel for the parties at length and, in our opinion, the applications made by the Revenue are liable to be dismissed, inasmuch as the order of the Income-tax Appellate Tribunal does not give rise to any question of law. The basic questions that came up for consideration before the appellate authorities were to determine the probable cost of construction and the amount that the assessee may have invested in raising to the cinema building. The Commissioner of Income-tax (Appeals) has considered the matter exhaustively and threadbare dealing with each point and the material relied upon by the Income-tax Officer. The appellate authority has found that the value shown in the affidavit filed in the civil suit was inclusive of the machinery, furniture, etc., and if the cost of the extra items entered in the account books of the assessee is taken into account, the recorded investment was in excess of rupees seven lakhs. Regarding the value assessed by the municipal authorities, the appellate authority opined that it was determined not on the cost of construction but on the basis of yield or income. As regards the inspection of the cinema building by the Income-tax Officer and the cost of construction estimated by him, the appellate authority held that the same cannot be a reliable basis as the Income-tax Officer was not an expert on the subject. There was no material to determine the cost of construction at a different figure, particularly when the property had already been the subject of valuation by two experts, namely, the approved valuer and the Departmental valuer. It was further held that the assessee had maintained complete and correct accounts of expenditure in construction, supported by vouchers, etc., which were filed for inspection of the Departmental valuer and no discrepancy was noticed. The matter had also been examined in detail by the Appellate Assistant Commissioner of Income-tax in the assessment year 1978-79 whose decision has been accepted by the Revenue. For all these reasons, the Commissioner of Income-tax (Appeals) held that there was no basis for sustaining any part of the impugned addition made by the Income-tax Officer. The entire addition was, accordingly, deleted. The order of the Commissioner of Income-tax (Appeals), as observed earlier, has been upheld by the Income-tax Appellate Tribunal.
7. On going through the order of the Income-tax Appellate Tribunal, there is no doubt left in our mind that the Appellate Tribunal has considered all the material aspects fairly and with due care in reaching the final conclusion. It is settled that where the point of issue is a finding of fact and when that finding is found to be rational and reasonable based on evidence, in the sense that all relevant material has been taken into account and no irrelevant material has influenced the decision and the decision is one which any reasonably-minded person, acting on such evidence, would have come to, then judicial review is exhausted even though the finding may not necessarily be what the court would have come to as a trier of fact. In CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC), it was observed (headnote) :
"Findings on questions of pure fact arrived at by the Tribunal are not to be disturbed by the High Court on a reference unless it appears that there was no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they have come; and this is so, even though the High Court would on the evidence have come to a conclusion entirely different from that of the Tribunal."
8. Learned standing counsel was unable to point out any material to us on which the additions made by the Income-tax Officer could have been sustained. As already stated, the material on which the additions were based was either factually found to be wrong or not relevant for the purpose it was relied upon. That being the position, in our opinion, the Tribunal was perfectly justified in taking the view that there existed no evidence on record on which the additions in dispute could be sustained. The question posed in Income-tax Appeal No. 269 of 1991, in our opinion, is purely a question of fact. In this connection, we may refer to a Division Bench decision of this court in CIT v. Sheikhar Chand and Sons [1990] 186 ITR 269 in which one of us (R. K. Gulati J.) was a party, where this court held that the finding of the Tribunal that there was no unexplained investment in the construction of the building complex was a finding of fact and did not give rise to any question of law. Now, coming to the question posed in Income-tax Appeal No. 270 of 1991 in respect of the assessment year 1978-79, plainly speaking, this question has become academic, for, the entire addition made on account of unexplained investment concerning the cost of construction has been deleted. That application is liable to be rejected on this ground alone. The Income-tax Tribunal has annulled the initiation of reassessment proceedings for the assessment year 1978-79 on the view that there was no material available to the Income-tax Officer on which he could have reason to believe that any income of the assessment year 1978-79 had escaped assessment. In this regard, the Income-tax Appellate Tribunal has compared the two sets of reasons recorded by the Income-tax Officer for the two years in question and has pointed out that the material relied upon by him in his reasons recorded for the assessment year 1977-78 had not been referred to and relied upon in the reasons recorded for the assessment year 1978-79. In our opinion, the question under discussion is also concluded by findings of fact. In any view of the matter, as already noticed earlier, on the merits, the entire addition made in the two years in question has been deleted. No useful purpose would be served even if we were to direct a reference about the correctness of the decision of the Tribunal concerning the validity of the proceedings under Section 147 of the Act for the assessment year 1978-79.
9. For what has been stated above, both the applications are rejected with costs which we assess at Rs. 250.