Law:

Section:

Section 4, read with section 256, of the Income-tax Act, 1961 [Corresponding to section 3, read with section 66, of the Indian Income-tax Act, 1922] - Income - Chargeable as - Assessment year 1945-46 - Tribunal set aside assessments made on assessee, association of persons, on ground that assessee had not made any illegal profits, but illegal profits were made by two of three members of that association - Whether finding of Tribunal being finding of fact, no question of law arose for decision - Held, yes FACTS The partners of certain firm were, under an agreement entered into by them with the State Government, appointed as agent for procuring paddy and rice and supplying it to the Government. The Commission appointed to enquire into the malpractices in the procurement and supply of paddy and rice came to the conclusion that the procurers purchased paddy from the agriculturists at a rate lower that what was shown in their vouchers but all the same charged the Governments at the rates disclosed in those vouchers. The question arose for consideration was whether in making such illegal profits, the assessee, association of persons, also participated. The Tribunal found that two persons, 'H.S'. and 'K.B', although being partners of the assessee, had established their separate firms also and had become licensed dealers; that the assessee got all its procurement through those firms and therefore, it was not the assessee which made the profits, but it was the partners individually who did so. The Tribunal further found that this was indicated by the huge cash credits, which had been found by the ITO in the account books of the separate firms constituted by the partners of the assessee along with others. The Tribunal, therefore, held that the assessee could not be assessed in respect of the profits earned by someone else. The application filed by the revenue for reference was dismissed by the Tribunal. The application under section 66(2) of the 1922 Act was also dismissed by the High Court. On appeal to the Supreme Court: HELD The finding reached by the Tribunal was a finding of fact and was fully supported by the evidence on record. Whether that finding was correct or…

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