The following observations of the Supreme Court in the case of Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 set a rule of law that strictly governs the functioning of a fact finding authority viz., the Assessing Officer, Commissioner of Income-tax (Appeals) and Income-tax Appellate Tribunal:-
“We are aware that the Income-tax Appellate Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it this court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it. The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, its findings, even though on questions of fact, will be liable to be set aside by the court.”
Keeping fingers crossed, these shall also have equal reckoning in the discharge of all functions by the CBDT/income tax department as they are primarily fact finding authorities.
Hence any or one of the following acts by a fact finding authority will warrant a quash action:
- Not dealing with a fact or evidence;
- Compromising a fact or evidence;
- Acting on suspicions, conjectures or surmises;
- Not extending opportunity to taxpayer before using a fact or evidence against him;
- rejection of material;
- rejection of relevant evidence;
- to act on no evidence etc.
This judgment hold much relevance to a case of transfer pricing assessment which is entirely a fact based Indigra Exps Pvt. Ltd Vs. DCIT Circle – 3 (1) (1)] (2018) (7) TMI 70.