JUDGMENT C.A. Vaidialingam, J. 1. On an application made under S.66(1) of the Indian Income Tax Act by the assessee, the Income Tax Appellate Tribunal, Madras Bench, in its statement of the case, has referred the following questions of law for decision by this court: (1) Whether the assessee can agitate the legality of S.34 proceedings in the appeal filed by the department, when the Appellate Assistant Commissioner has held against the assessee in the absence of a separate appeal by the assessee ; (2) Whether S.34 had been rightly invoked; (3) Whether an assessment on the Association of persons is valid in law; and (4) Whether there are materials for the Tribunal to hold that the business belonged to Chooddmani and Harihara Iyer as an Association of Persons. 2. Before going into the circumstances which has caused this reference, we may straightaway say that question No. (1) does not arise for the reasons mentioned hereunder. In paragraph 14 of the statement of the case, the Appellate Tribunal itself has stated that in disposing of the appeal filed by the Department, it heard both the assessee and the Department also on the question of the applicability of S.34 notwithstanding the fact that the assessee did not specifically take up that matter in a separate appeal. It is further stated that after hearing the contentions of the assessee and the Department, the Income Tax Appellate Tribunal has given a finding that S.34 was also rightly invoked. In view of the fact that the Appellate Tribunal itself has considered this question and has allowed the assessee to raise the same, the point covered by question No. (1) as to the right of the assessee to raise it before the Tribunal becomes purely academic and in our opinion, the reference on this point is unnecessary and does not arise. 3. Similarly, in the view that we take regarding questions Nos. 3 and 4, we think it unnecessary to consider question No. 2 as to whether S.34 proceedings have been rightly invoked. Without in any way committing ourselves about the legality or otherwise of the proceedings taken under S.34, for the purpose of answering questions Nos. 3 and 4, we will proceed on the basis that S.34 proceedings were properly invoked. We make it very clear that we express no opinion about the legality or otherwise of S.34 proceedings. 4. Without in any way committing ourselves about the legality or otherwise of the proceedings taken under S.34, for the purpose of answering questions Nos. 3 and 4, we will proceed on the basis that S.34 proceedings were properly invoked. We make it very clear that we express no opinion about the legality or otherwise of S.34 proceedings. 4. The last two questions that remain to be considered can be dealt with together, because the substantial question is whether the Tribunal was right in law in treating the assessees as an Association of Persons and whether there was sufficient legal evidence before the Tribunal to come to such a conclusion. 5. The facts leading up to this reference may now be briefly stated: In respect of a cloth business carried on Palghat under the name of N. R. Harihara Iyer, in view of Mr. Harihara Iyers letter to the Department that he had nothing to do with that business, elaborate enquiry was conducted by the Income Tax Department about the ownership of this business. After enquiry, on 27-2-1947 the Income Tax Officer, Palghat, made an assessment for the year 1943-44 on Mr. Harihara Iyer as the sole owner of the said business. The net income from this business for the period ending 31-3-1943 was estimated at Rs. 21,000/- and Harihara Iyer was assessed accordingly and was called upon to pay the tax. 6. Sri N. R. Harihara Iyer preferred an appeal against this order to the Appellate Assistant Commissioner, Coimbatore. The latter by his order dated 30-7-1947 and passed in I. T. A. 365/46-47 confirmed the order of the Income Tax Officer treating Sri N. R. Harihara Iyer as the sole proprietor of the business and dismissed the appeal. 7. It may be stated at this stage that N. R. Harihara Iyer himself had given a statement before the assessing authority on 20-10-1948. His case, according to that statement, was that the business carried on by him in the name of N. R. Harihara Iyer was really benami and on behalf of the real owners, namely, N. S. V. family and that he was not the real owner of the business and that he could not be made liable for any tax in respect of the profits of the business. 8. 8. N. R. Harihara Iyer filed an appeal to the income tax Appellate Tribunal against the order of the Appellate Assistant Commissioner dismissing 1. T. A. 365/46-47. The said appeal was heard in the first instance by the Madras Bench of the Appellate Tribunal on 28th August 1948. We find from the order of the Tribunal that N. R. Harihara Iyer contended that the business belonged to the Hindu undivided family of N. S. Venkitrama Iyer (N. S. V. family). As the Tribunal wanted certain points arising in the evidence to be clarified, on that date, the Appellate Tribunal passed an order directing the Income Tax Officer to further investigate the matters in the following words : We, however, do not feel that the materials on record would lead to a clear inference that N. R. Harihara Iyer was the owner of the business. At the same time, in view of some of the letters referred to which may on further investigation be construed adversely to the assessee, we are not prepared to allow the Appeal. It seems to us that the only just course to adopt in this case is to remit the matter to the Income Tax Officer for him to further investigate the matters that have been set out above and submit a report. In consequence of this order of the Tribunal, the Income Tax Officer appears to have made some further enquiries and sent up a report. Finally, by its order dated 28-2-1949, the Tribunal after considering the evidence on record, and the report of the Income Tax Officer, allowed the appeal of Mr. N. R. Harihara Iyer and set aside the orders of the two subordinate officers. The concluding portions of that order runs as follows : "It seems to us that this is clearly a case in which the helplessness and inexperience of N. R. Harihara Iyer have been taken advantage of by the other and the business, which, in truth and in fact, did not belong to him, is attempted to be foisted on him." As stated earlier, the whole controversy in those proceedings was only as to whether the business belonged to N. R. Harihara Iyer. N. R. Harihara Iyer set up a case that it belonged to the N. S. V. family and that he was only a name-lender. N. R. Harihara Iyer set up a case that it belonged to the N. S. V. family and that he was only a name-lender. The ultimate finding of the Tribunal, as we could gather, is that N. R. Harihara Iyer was not the owner of the business. It may also be mentioned that N. S. Choodamani Iyer, the assessee before us, gave evidence on behalf of the N. S. V. family in the proceedings relating to Harihara Iyer. But it is also seen in the records that the N. S. V. family was not permitted to cross examine N. R. Harihara Iyer. But it is clear that Choodamani Iyer gave evidence in these proceedings on behalf of the family only to meet the case of N. R Harihara Iyer and to establish the fact that the family had nothing to do with the business of N. R. Harihara Iyer. There is no dispute that in those proceedings either the N. S. V. family or Choodamani Iyer was ever called upon to meet the present case of the Department namely that N. R. Harihara Iyer and Choodamani Iyer were carrying on the said business as an Association of Persons. In fact, such a point could not have arisen in those proceedings because even N. R. Harihara Iyer did not take up such a stand. That N. R. Harihara Iyer could not have taken such a stand is also clear from the notices that passed between Harihara Iyer on the one hand and N. S. Venkitarama Iyer representing the N. S. V. family on the other in the year 1945. In the lawyers notice dated 21-2-1945 issued on behalf of Harihara Iyer to Venkitarama Iyer, it is stated that the cloth business in the name and style of N. R. Harihara Iyer was conducted, managed and supervised only by the N. S. V. family and the notice calls upon N. S. Venkitarama Iyer to return certain passbooks etc. and also to give a written voucher freeing Harihara Iyer from all financial liabilities. 9. These allegations were promptly refuted by N. S. Venkitarama Iyer by his reply notice dated 27-2-1945. In this it was stated that the N. S. V. family were only giving Harihara Iyer advice in business matters and that the N. S, Y. family has nothing to do either with the actual conduct of the business or for any account. 9. These allegations were promptly refuted by N. S. Venkitarama Iyer by his reply notice dated 27-2-1945. In this it was stated that the N. S. V. family were only giving Harihara Iyer advice in business matters and that the N. S, Y. family has nothing to do either with the actual conduct of the business or for any account. There was a further notice on 11-3-1945 sent to N. S. Venkitarama Iyer on behalf of Harihara Iyer reiterating his old demands and threatening court proceedings and this was also very curtly and promptly met by a reply notice dated 16-3-1945 informing Harihara Iyer that his threatened action is awaited by the N. S. V. family. We have mentioned about these notices only to show that it was at no time the case of Harihara Iyer that he and Choodamani Iyer were conducting the business jointly as an Association of Persons or otherwise. 10. Consequent on the order of the Appellate Tribunal on 28-2-1949 allowing the appeal of Harihara Iyer, the Income Tax Department started fresh proceedings under S.34, on 17-3-1950, in respect of the assessment already made on the N. S. V. family, for the assessment year 1943-44. In these proceedings, the Income Tax Officer included the profits of the business of N. R. Harihara Iyer which was originally assessed without success on Harihara Iyer. In response to the notice issued under S.34 of the Act, N. S. Venkatarama Iyer filed objections challenging the legality of the proceedings under S.34 and also on the merits. In his objections, he stated that the business conducted by N. R. Harihara Iyer in the name of N. R. Harihara Iyer never belonged to the N. S. V. family and that they never got any profits from and out of the business nor have they suffered any loss in that business. It is further set out in the said objections that in view of the fact that N. R. Harihara Iyer belonged to that village and was known to them for a number of years, the family used to give advice on business matters whenever Harihara Iyer approached them. In fact the N. S. V. family was itself having a fairly extensive cloth business and there was absolutely no necessity for it to associate itself with another cloth business run by Harihara Iyer. In fact the N. S. V. family was itself having a fairly extensive cloth business and there was absolutely no necessity for it to associate itself with another cloth business run by Harihara Iyer. The attitude of Harihara Iyer is because of the frustration caused to him by the loss caused in the business because of the control over textiles enforced by the Government. After his textiles were sold at his request at Coimbatore, Harihara Iyer went to Bombay and other places for getting some employment which he did not get. Later on, he wanted some assistance from the N. S. V. family for restarting his business which was not granted by the N. S. V. family. 11. It is further pointedly stated in the said objections that during the enquiry of Harihara Iyers assessment proceedings, some of the members of the N. S. V. family were summoned to give evidence. Notices had already passed between Harihara Iyer and the N. S. V. family by which the attempt of Harihara Iyer to foist the business on the N. S. V. family became apparent and the N. S. V. family sought to intervene in that enquiry with the assistance of an advocate so that the whole fact may be placed before the Income Tax Officer. But this attempt was opposed by Harihara Iyer and this resulted in denial of opportunity to the N. S. V. family to put forth their real case in those proceedings. 12. Notwithstanding these objections, on 30th November 1950, the Income Tax Officer, Palghat, assessed N. S. Venkatarama Iyer, Piece Goods Merchant, Palghat, as a Hindu undivided family for the year of assessment 1943-44. In the said order it is observed : The question about the real ownership of that business i. e., whether it belongs to the person in whose name it was being carried on or to the assessee who had actual control over the business was considered at great length and the highest fact finding authority under the law has found that the business did in fact belong to the assessee. Thereupon S.34 proceedings were initiated in the assessees case. Thereupon S.34 proceedings were initiated in the assessees case. Further in paragraph 3 of the order it is stated: Accordingly, the assessees were given the opportunity to adduce any evidence that they may have in support of their stand that the business did not belong to them but actually belong to the person in whose name it was being run. The assessees could not produce any evidence of a substantial nature. Ultimately, the said officer wound up his conclusion on the question of ownership of the business of N. R. Harihara Iyer as follows: Doing so, one finds overwhelming evidence in support of the theory that the business run in the name of Harihara Iyer in the premises taken on lease by a member of the assessee family with funds obtained on the guarantee of the members of assessee family, employing servants in the control and influence of the member of the assessee family, did in fact and substance belong to the assessee family and that Harihara Iyer was only a name-lender to this business to quote the Appellate Tribunal which in truth and in fact did not belong to him, is attempted to be foisted on him. After having found like that, the Income Tax Officer fixed the income from the business of N. R. Harihara Iyer for the assessment year 1943-44 at Rs. 30,000/- and added it to the original assessment of the N. S. V. family and called upon them to pay the balance tax. 13. It will be seen that the Income Tax Officer has not really applied his mind independently when he arrived at the conclusion that he did in this assessment order about the ownership of the business. The extracts quoted above from his order clearly shows that he was carried away with the observations contained in the Tribunals order in N. R. Harihara Iyers appeal. The Income Tax Officer is not certainly correct when he stated that the highest fact finding authority has found that the business did in fact belong to the assessee namely, N. S. V. family. Nowhere do we find such a finding in the appellate order of the Tribunal in N. R. Harihara Iyers appeal. 14. The Income Tax Officer is not certainly correct when he stated that the highest fact finding authority has found that the business did in fact belong to the assessee namely, N. S. V. family. Nowhere do we find such a finding in the appellate order of the Tribunal in N. R. Harihara Iyers appeal. 14. Though it is on record that the N. S. V. family adduced independent evidence in these proceedings, the officer has simply brushed aside that evidence on the ground that the assessee could not produce any evidence of a substantial nature. He has not cared to find out whether the evidence adduced by the family in these proceedings was acceptable or not. Further, we do not find any basis for the observation in the order : One finds overwhelming evidence in support of the theory that the business run in the name of N. R. Harihara Iyer........did in fact and substance belong to the assessees family. If this is a reference to the evidence adduced in N. R. Harihara Iyers case behind the family, it is not certainly legal evidence in the proceedings against the N. S. V. family as such. Inasmuch as the officer himself has not stated as to what is the nature of the overwhelming evidence, we leave the matter there for the present. 15. The N. S. V. family filed an appeal to the Appellate Assistant Commissioner of Income Tax, I. T. A. 948/50-51 -- 1943-44. They have taken specific objections in their memorandum of grounds that the Income Tax Officer had no legal evidence to come to the conclusion that the ownership of the business styled as N. R. Harihara Iyer belongs to the N. S. V. family. It is also contended that the officer committed grave illegality and irregularity in not having been adverted to much less considering the actual evidence adduced by the N. S. V. family in these proceedings. The order was also challenged on several other grounds. 16. The Appellate Assistant Commissioner, Coimbatore, by his order dated 8th January 1953, set aside the order of the Income Tax Officer, Palghat, assessing the N. S. V. family regarding the profits of the business of N. R. Harihara Iyer. The order was also challenged on several other grounds. 16. The Appellate Assistant Commissioner, Coimbatore, by his order dated 8th January 1953, set aside the order of the Income Tax Officer, Palghat, assessing the N. S. V. family regarding the profits of the business of N. R. Harihara Iyer. The Appellate Authority has commented about the Income Tax Officer not considering at all the actual evidence produced before him by the N. S. V. family which evidence was fairly large consisting of oral evidence, statements, correspondence and other documents. The Appellate Authority has also held that the N. S. V. family were not in possession of the evidence adduced in the assessment proceedings of N. R. Harihara Iyer and as such, that evidence could not be put against the family. The position of Choodamani Iyer giving evidence on behalf of the N. S. V. family in the original proceedings against Harihara Iyer can be best described in the words of the Appellate Assistant Commissioner as contained in paragraph 4 of his order as follows : When N. S. Choodamani was summoned to give evidence, he was accompanied by his advocate Mr. T. K. Ramaswami Iyer who filed a vakalath and stated that he was appearing on a watching brief.. The advocate representing Harihara Iyer however raised objection to such a procedure and the Income Tax Officer upheld the objection stating that the enquiry was a purely confidential one and the provisions of S.37 did not empower him to admit a watching brief. Hence Choodamani had only to answer the questions put to him and he had no opportunity to elicit any information from Harihara Iyer or to cross examine him. In these circumstances, I do not consider that the finding given by the Appellate Tribunal in the case of Harihara Iyer can be binding either on Choodamani or the appellant family. Therefore, it is very clear that Choodamani Iyer, who gave evidence in the proceedings relating to Harihara Iyer, had no opportunity to state that he had to say independently, nor had he the opportunity to cross examine Harihara Iyer. 17. Having found that the evidence recorded in the original proceedings relating to Harihara Iyer cannot be used against N. S. V. family in these proceedings, the Appellate Assistant Commissioner independently considered the evidence adduced by N. S. V. family. 17. Having found that the evidence recorded in the original proceedings relating to Harihara Iyer cannot be used against N. S. V. family in these proceedings, the Appellate Assistant Commissioner independently considered the evidence adduced by N. S. V. family. After considering the evidence adduced by the family the Appellate Assistant Commissioner came to the conclusion that Harihara Iyer was not a stranger to business or business methods. Regarding the insurance of the stocks in-trade of Harihara Iyer by Choodamani Iyer it was found that it must have been done with the knowledge of Harihara Iyer as is clear from the note made on the Policy by Harihara Iyer himself. The original agreement with the Melarkode Bank who furnished the overdraft for the business of Harihara Iyer was signed only by Harihara Iyer and no written guarantee was given by either the N. S. V. family or any member of that family. The Officer further found that at the time when Harihara Iyer started his business in November 1942, there was no control which came in only in June 1943 and therefore, the plea of Harihara Iyer that his position as a refugee was utilised by the N. S. V. family to secure a cloth licence in his name for their benefit cannot be accepted. Finally, the Appellate Assistant Commissioner held that there is no evidence on record which in his opinion can justify the finding that it belonged to the N. S. V. family as such. In this view, the Appellate Assistant Commissioner set aside the order of the Income Tax Officer, Palghat, and cancelled the assessment made on the N. S. V. family regarding the business of Harihara Iyer. 18. Against this order of the Appellate Assistant Commissioner the Department namely, the Income Tax Officer Palghat, filed an appeal before the Income Tax Appellate Tribunal, Madras, Bench being I. T. A. No. 7555/1952-53 assessment year 1943-44. The Appellate Tribunal by its order dated 9-3-1956 confirmed the order of the Appellate Assistant Commissioner in the following words : This is a Departmental Appeal. There is no evidence in the case to fix the ownership of the business in question on the assessee family. We accordingly upheld the Appellate Assistant Commissioners order and dismiss the appeal. The Appellate Tribunal by its order dated 9-3-1956 confirmed the order of the Appellate Assistant Commissioner in the following words : This is a Departmental Appeal. There is no evidence in the case to fix the ownership of the business in question on the assessee family. We accordingly upheld the Appellate Assistant Commissioners order and dismiss the appeal. Therefore it will be seen that the Appellate Tribunal fully endorses all the reasons of the Appellate Assistant Commissioner and comes to the conclusion that there is no evidence to fix the ownership of the business on the assessees family.. 19. This order of the Appellate Tribunal assumes some importance because it will be seen that the circumstances which are put against the present assessee N. S. Choodamani Iyer and other, were relied upon by the Department for establishing its contention that the business of Harihara Iyer belonged to the N. S. V. family. Those circumstances were held by the Appellate Assistant Commissioner as in no way proving the ownership to vest in the N. S. V. family and his conclusions on this point have been accepted by the Appellate Tribunal. 20. When the appeal of the N. S. V. family was pending before the Appellate Assistant Commissioner, Coimbatore, the Income Tax Officer, Palghat, applied on 28-2-1952 to the Commissioner of Income Tax for taking proceedings under S.34 of the Act for assessing Messrs. N. S. Choodamani Iyer and others as an Association of Persons for the assessment year 1943-44 in respect of the cloth business run in the name of N. R. Harihara Iyer of Palghat. In that report, reference is made to the proceedings which culminated before the Appellate Tribunal regarding N. R. Harihara Iyer and also to the order of the Income Tax Officer, Palghat, holding the ownership of the business of N. R. Harihara Iyer to vest in the N. S. V. family. It is further stated that the assessee N. S. V. family was contending that the evidence taken in the proceedings against N. R. Harihara Iyer cannot be used in the proceedings against them and that the Income Tax Officer has not considered the evidence adduced by them. 21. It is further stated that the assessee N. S. V. family was contending that the evidence taken in the proceedings against N. R. Harihara Iyer cannot be used in the proceedings against them and that the Income Tax Officer has not considered the evidence adduced by them. 21. It is further stated in the report that there is a likelihood of the Appellate Assistant Commissioner or even the Appellate Tribunal accepting the contentions of the N. S. V. family that the business does not belong to the N. S. V. family. It is stated that there are materials to suggest that in fact the business did belong to N. S. Choodamani Iyer, one of the members of the N. S. V. family and N. R. Harihara Iyer together as a firm or an Association of Persons. In due course, the Income Tax Officer issued notice to Choodamani Iyer and other, Palghat, on 15-3-1952 under S.34 of the Act asking them to furnish a return within the time specified. This notice was served on Choodamani Iyer on 18-3-1952 and he wrote a letter on 21-4-1952 to the Income Tax Officer seeking clarification of the term other mentioned in the notice issued to him under S.34. To this, the Income Tax Officer sent a reply on 26th April 1952 stating that it was very strange that Choodamani Iyer should be ignorant of the other person with whom he was carrying on the business. He wound up the reply as follows : You are called upon to file a return relating to such business or enterprise carried on by either yourself or the family of which you are a member along with the said N. R. Harihara Iyer. The family is evidently mentioned because by that time the order of the Appellate Assistant Commissioner and that of the Tribunal have not been passed in the appeals filed by the N. S. V. family. 22. There is no dispute that no notice was issued to N. R. Harihara Iyer who was admittedly alive at the time when S.34 notice was issued to Choodamani Iyer. 22. There is no dispute that no notice was issued to N. R. Harihara Iyer who was admittedly alive at the time when S.34 notice was issued to Choodamani Iyer. When the definite case of the Department is that there was an Association of Persons consisting of N. S. Choodamani Iyer and N. R. Harihara Iyer regarding the business run in the name of N. R. Harihara Iyer it is rather surprising that the Department did not choose to issue a similar notice N. R. Harihara Iyer also. It is admitted that N. R. Harihara Iyer died only in December 1952. When it was not the case of Harihara Iyer himself as mentioned in the earlier portions of this judgment, that there was any such partnership or Association of persons between himself and N. S. Choodamani Iyer and when the Department now wants to create a liability and establish the existence of such an Association and create a liability on that basis, in our opinion the evidence of N. R. Harihara Iyer would have been immensely useful. If notice had been issued on this basis to Harihara Iyer and if he had appeared before the Income Tax Officer, it would have given an opportunity to Choodamani Iyer to cross examine Harihara Iyer and elicit the true facts which would have a great bearing on the case now put forward by the Income Tax Department. 23. In response to the notice issued under S.34, Choodamani Iyer filed objections to the legality of the proceedings and he also challenged the proceedings on the merits. He had categorically stated that the business of N. R. Harihara Iyer belonged only to Harihara Iyer and that he had nothing to do with that business. Excepting that he was known to Harihara Iyer as belonging to the same village and as having been in Rangoon for some years, there is no further relationship or business connections between them. 24. Notwithstanding these objections, the Income Tax Officer Palghat, by his order dated 5th March 1953 held that the business done in the name of Harihara Iyer really belonged jointly to Choodamani Iyer and Harihara Iyer. 24. Notwithstanding these objections, the Income Tax Officer Palghat, by his order dated 5th March 1953 held that the business done in the name of Harihara Iyer really belonged jointly to Choodamani Iyer and Harihara Iyer. Before the passing of this order, it will be seen that the Appellate Assistant Commissioner Coimbatore has already allowed the appeal of the N. S. V. family on 8-1-1953 and held that there was no evidence to justify the finding that the business belonged to N. S. V. family as such and the department had filed an appeal against that order to the Appellate Tribunal. 25. After setting out the various orders in the proceedings relating to Harihara Iyer and also the findings of the Appellate Assistant Commissioner in the appeal filed by the N. S. V. family the Income Tax Officer stated that if the business does not belong either to Harihara Iyer or N. S. V. family, then it is obvious that it must have belonged to a third party. The Income Tax Officer observes: When two persons jointly carry on a business there must be some agreement, either implied or written, between them as to the terms. No such agreement is forthcoming. In the absence of any evidence to the contrary, the status will therefore be taken as an unregistered firm. The contention regarding the legality of S.34 proceedings was negatived. 26. Regarding the actual ownership of the business, the officer observed that he cannot accept the contention of Choodamani Iyer that he was only helping Harihara Iyer in the business as a friend and that he had no financial, interest or connection in the said business. The officer relied upon the following circumstances as establishing an Association of Persons between Harihara Iyer and Choodamani Iyer regarding the business of Harihara Iyer:- Their stay in Burma when they were employed; Harihara Iyer being the President and Choodamani Iyer the Secretary of Noorani Sastha Cooperative Society, Palghat; Harihara Iyer giving Rs. The officer relied upon the following circumstances as establishing an Association of Persons between Harihara Iyer and Choodamani Iyer regarding the business of Harihara Iyer:- Their stay in Burma when they were employed; Harihara Iyer being the President and Choodamani Iyer the Secretary of Noorani Sastha Cooperative Society, Palghat; Harihara Iyer giving Rs. 2,700/- towards capital for starting the business ; Choodamani Iyer asking the Melarkode Bank for giving overdraft to N. R. Harihara Iyer; N. R. Vaidianathan being a common clerk of the Popular Stores run by Choodamani Iyer and of the business in the name of N. R. Harihara Iyer; The admission of Sankaranarayana Iyer, another clerk that Choodamani Iyer used to come to the shop occasionally and enquire about the business ; Choodamani Iyer arranging for the insurance of the stock in trade of N. R. Harihara Iyer; Business being conducted in the upstairs of a building in which the downstairs portion Popular Stores was run by Choodamani Iyer; Harihara Iyer managing Popular Stores when Choodamani Iyer was absent at Coimbatore; Goods of Harihara Iyer sold by Choodamani Iyer at Coimbatore and Choodamani Iyer being synonymous with the N. S. V. family. In view of these circumstances, the officer came to the conclusion as mentioned above and made the assessment at the sum of Rs. 30,000/- Against this order of the Income Tax Officer, Choodamani Iyer filed an appeal to the Appellate Assistant Commissioner of Income Tax, Coimbatore. Objection was taken to the officer using the materials contained in the proceedings relating to N. R. Harihara Iyer and the N. S. V. family. The jurisdiction to invoke S.34 was also challenged. The order was also attacked on other grounds. 27. The appeal was heard by the Appellate Assistant Commissioner Kozhikode, and he by his order dated 24-1-1955 reversed the order of the Income Tax Officer. After stating in extenso the various orders passed in the matter of N. R. Harihara Iyer and N. S. V. firm, the Appellate Assistant Commissioner observes that the records do not show that the Department made any further enquiries in the course of the assessment of the appellant firm and that the Income Tax Officer has reached the conclusion against the appellant only on the basis of materials gathered in the prior proceedings. The Appellate Assistant Commissioner negatived the contention of the appellant that S.34 proceedings should not have been started. 28. The Appellate Assistant Commissioner negatived the contention of the appellant that S.34 proceedings should not have been started. 28. Regarding the more substantial contention about the ownership of the business of N. R. Harihara Iyer the Appellate Assistant Commissioner held that the burden of proving that there was a partnership between Choodamani Iyer and N. R. Harihara Iyer was on the Income Tax Officer himself and that the Income Tax Officer has signally failed to discharge this onus of proof. 29. The Appellate Assistant Commissioner went into the reasons given by the Income Tax Officer one by one and held as follows : All the reasons given by the Officer for holding that there was a partnership, completely fall to the ground. The various facts and circumstances referred to by the Income Tax Officer, whether taken individually or cumulatively, do not in the least establish that there was a regular partnership in respect of the business carried on in the name of N. R. Harihara Iyer or that Choodamani Iyer was a partner or had a proprietary interest in this business. The Appellate Assistant Commissioner, it will be seen attached great importance, and in our view, quite rightly to the fact that even Harihara Iyer himself at no time contended that the business in question was conducted as partnership between himself and N. S. V. family or himself and Choodamani Iyer and that even according to Harihara Iyer Choodamani Iyer did not have any proprietary interest in the business in his individual capacity. He also adverted to the significant omission in the evidence of the witnesses to any partnership regarding the business of Harihara Iyer. He also commented about the non issue of a notice to Harihara Iyer. Finally he winds up his order by saying: Indeed, the theory of partnership has emanated exclusively from the Income Tax Officer himself. But there is absolutely no scrap of evidence to show that; there was an agreement of partnership or that the profits were actually divided between Harihara Iyer and Choodamani Iyer................To conclude, my findings are that there was no partnership as alleged by the Income Tax Officer and that Choodamani Iyer did not have any share in the business run in the name of N. R. Harihara Iyer. It therefore follows that the assessment made on an imaginary firm must be vacated. On this reasoning, the order of assessment was vacated. It therefore follows that the assessment made on an imaginary firm must be vacated. On this reasoning, the order of assessment was vacated. 30. Against this order of the Appellate Assistant Commissioner which was in favour of the assessee, the Income Tax Officer filed an appeal to the Income Tax Appellate Tribunal. In the appeal objection has been taken to the various findings recorded by the Appellate Assistant Commissioner. The appeal was heard by the Appellate Tribunal and the Tribunal felt that it was necessary to investigate into the ledger account of Harihara Iyer in the Coimbatore Branch of N. S. Venkatarama Iyer, i.e. the N. S. V. Firm. The Tribunal also thought that certain other matters required to be investigated regarding the bills, cheques issued and cash received. By its order dated 2-6-1955, the Tribunal directed the Income Tax Officer to carry out investigations on the lines indicated in the said order. The Income Tax Officer, after investigation sent a report dated 6th October 1955. It is enough to say that report does not throw any light on the stand taken by the Department of the business being run by Choodamani Iyer and Harihara Iyer as an Association of Persons. The report deals mainly with the accounts of the N. S. V. family at Coimbatore and other places. In fact, it is seen that the Income Tax Officer appears to have examined one Subba Iyer, an employee of the N. S. V. Firm at Coimbatore and according to his evidence, the goods of Harihara Iyer were entrusted to the N. S. V. family at Coimbatore for sale when there was plague at Palghat. His evidence further shows that Harihara Iyers clerk Vaidianatha Iyer came along with the goods and remained for some time at Coimbatore personally supervising the sale of Harihara Iyers goods. Subsequently, the goods were sold by the N. S. V. firm at the request of Harihara Iyer and Harihara Iyers accounts have been settled by the N. S. V. family. As stated earlier, there is nothing in this evidence about Choodamani Iyer being associated with the business of Harihara Iyer. 31. When the matter came up again before the Appellate Tribunal by its order dated 10-3-1956, the department appeal was allowed. As stated earlier, there is nothing in this evidence about Choodamani Iyer being associated with the business of Harihara Iyer. 31. When the matter came up again before the Appellate Tribunal by its order dated 10-3-1956, the department appeal was allowed. Though there is a reference regarding the assessment proceedings taken against Harihara Iyer and the N. S. V. Firm there is no reference by the Tribunal about the confirmation of the order of the Appellate Assistant Commissioner on 9-8-1956 holding that the business does not belong to the N. S. V. family. According to the Tribunal the following circumstances establish that Harihara Iyer and Choodamani Iyer were carrying on the business of N. R. Harihara Iyer as an Association of Persons:-- Choodamani Iyer and Harihara Iyer being friends from their childhood and later being friends in Burma; 32. According to Harihara Iyer the business was started in his name at the suggestion of Choodamani Iyer and Harihara Iyer contributed Rs. 2700. In support of this payment the Tribunal relies upon the entries in the account of Harihara Iyer with the Melarkode Bank and also the personal book produced by Harihara Iyer. Regarding the financing part, the Tribunal relied upon the recommendation of Choodamani Iyer to the Melarkode Bank to furnish overdraft to Harihara Iyer. The Tribunal is prepared to admit that the officials of the Melarkode Bank have not given any helpful information. The Tribunal also relies upon a transfer of Rs. 143-6-0 from Harihara Iyers account to N. S. V. familys account. The Tribunal also relies upon the fact that there was no separate godown for the business and also the fact that the goods were stored originally in the business premises of N. S. V. family and later in the first floor of the premises where the Popular Stores of Choodamani Iyer was also being run. Reliance also is placed about Choodamani Iyer effecting the insurance of the stock in trade. According to the Tribunal Choodamani Iyers letter dated 14-1-1944 and marked as Annexure A in the statement of the case amounts to an admission by Choodamani Iyer of his management of the business. 33. From all the circumstances mentioned above, the Tribunal holds that it is manifest that Choodamani Iyer had a vital role to play in the origin and conduct of the impugned business. 34. 33. From all the circumstances mentioned above, the Tribunal holds that it is manifest that Choodamani Iyer had a vital role to play in the origin and conduct of the impugned business. 34. The Tribunal was prepared to admit that there is no clear evidence as to how the profits were enjoyed by Harihara Iyer and Choodamani Iyer between them. Then the Tribunal observes : It is now clear that Harihara Iyer and Choodamani Iyer were both interested in the business. Since each of them denied ownership, the only conclusion that could be reached is that it belongs to both of them jointly.............. When a business has been carried on and profits have been earned, an assessment must follow. So long as the ownership is attributable to both Choodamani Iyer and Harihara Iyer and the parties do not come forward and speak the truth about their actual understanding, the assessment must be made on them as an Associations of Persons. On these grounds, the Tribunal set aside the order of the Appellate Assistant Commissioner and restored that of the Income Tax Officer with the modification that the status of the assessee is to be an Association of Persons. 35. The assessee was served with this order on 22-3-1956 and he filed an application dated 24-4-1946 under S.66(1) of the Act to the Appellate Tribunal requesting the Tribunal to refer the questions mentioned therein to this court. In that application it has been stated that the Tribunal committed an error in relying upon the evidence recorded in the proceedings relating to Harihara Iyer and N. S. V. family as against the assesses. It was specifically stated that Choodamani Iyer who gave evidence in the original proceedings against Harihara Iyer was allowed only to answer questions put to him by the Income Tax Officer or by Harihara Iyer. In view of the attitude adopted by Harihara Iyer of foisting the business on the N. S. V. family the N. S. V. family sought permission to intervene in the proceedings and sought permission to cross examine Harihara Iyer and also to adduce evidence independently. Harihara Iyer objected to this request and in consequence, the Income Tax Officer did not permit either the N. S. V. family or Choodamani Iyer to adduce any evidence or to cross examine Harihara Iyer. Harihara Iyer objected to this request and in consequence, the Income Tax Officer did not permit either the N. S. V. family or Choodamani Iyer to adduce any evidence or to cross examine Harihara Iyer. Therefore, the evidence of Harihara Iyer in these proceedings without Choodamani Iyer having an opportunity to cross examine him is not legal evidence in these proceedings. Apart from certain other matters, it is also mentioned in the said letter that when the departmental representative opened the case before the Tribunal and the assessees counsel began to argue by referring to the evidence the Tribunal observed that they would study the records and if they felt any difficulty they would post the appeals to a further date for hearing. On 19-3-1956 it is stated that the assessees counsel addressed a communication to the Assistant Registrar of the Tribunal enquiring about the posting of the case for further hearing and that in the meanwhile, the order of the Tribunal itself dated 10-3-1956 was received by the assessee on 22-3-1956. 36. Evidently, in view of the fact that a grievance is made in this application under S.66(1) about the assessee not having been fully heard, the matter was again posted for hearing on 1-5-1956 and the assessee was heard through his counsel and the Tribunal passed a further order on 1-5-1956 allowing the appeal of the department in part. 37. It is seen from that order that the first objection raised on behalf of the assessee was that the proceedings in the assessment of Harihara Iyer or N. S. V. family cannot be made use of in the present proceedings against Choodamani Iyer and other. This objection has been dealt with by the Tribunal. After quoting an extract from the order sheet of the Income Tax Officer containing the substance of the objections regarding the proceedings taken against the assessee, the Tribunal disposes of this objection as follows : The counsel who appeared in the proceedings was fully briefed in the proceedings in the other cases too so that it cannot now be said that the assessee was not aware of them. The objection is, therefore, only technical. 38. The Tribunal next dealt with the objection regarding the starting of proceedings under S.34 and overruled the same. The objection is, therefore, only technical. 38. The Tribunal next dealt with the objection regarding the starting of proceedings under S.34 and overruled the same. To the objection that the burden was on the department to prove that the assessee was the real owner, the Tribunal rejected the same on the ground that in their opinion, the department has fully discharged the burden on the evidence that Choodamani too was taking an active part in the conduct of the business in such a manner as to show that he had an interest in it. 39. Regarding the assessable income, the Tribunal reduced the amount from Rs. 30,000 to Rs. 21,000 which was the estimate of the Income Tax Officer in the original proceedings against Harihara Iyer. Otherwise, the Tribunal set aside the order of the Appellate Assistant Commissioner. 40. The learned Advocate General appearing for the assessee has very strenuously contended that the finding of the Tribunal on the question of the existence of an Association of Persons as between Choodamani Iyer and Harihara Iyer regarding the business of Harihara Iyer is based upon inadmissible evidence. He even contended that there is absolutely no legal evidence in this case to justify the finding of the Appellate Tribunal. According to the learned Advocate General the materials relied upon by the Tribunal in support of their finding were materials gathered in the original proceedings against Harihara Iyer. Choodamani Iyer had admittedly no opportunity to challenge the evidence adduced in those proceedings and this has been made clear by the order of the Appellate Assistant Commissioner which has not been challenged by the Department. Though an attempt was made in those proceedings even for Choodamani Iyers family to take part, that was not allowed because of opposition from Harihara Iyer. Further in the proceedings relating to Harihara Iyer, the only question was whether the business belonged to Harihara Iyer or to the N. S. V. family. There was no case set up even by Harihara Iyer that there was any business connection between him and Choodamani in his individual capacity. Apart from the fact that no opportunity was given to Choodamani Iyer to cross examine Harihara Iyer there is also the additional fact that nobody was called upon to meet the present case of an Association of Persons in the proceedings relating to Harihara Iyer. Apart from the fact that no opportunity was given to Choodamani Iyer to cross examine Harihara Iyer there is also the additional fact that nobody was called upon to meet the present case of an Association of Persons in the proceedings relating to Harihara Iyer. Therefore, this is an instance of a finding given by the Appellate Tribunal either without any evidence or a finding given on inadmissible evidence. So ran the argument of the learned Advocate General. 41. On the other hand, Mr. N. D. P. Namboodiripad, learned counsel appearing for the department has contended that there is material for the Appellate Tribunal to come to the finding and that it is not open to this court to review the finding as a court of appeal. Inferences drawn by the Tribunal are correct. The findings cannot be set aside, once it is found that there is material on which the Tribunal could come to a conclusion. 42. We are aware of the observations of the Supreme Court in the decision reported in Sree Meenakshi Mills Ltd. v. I. T. Commissioner AIR 1957 SC 49 At page 55 of the reports Mr. Justice Venkatarama Iyer, who delivered the leading judgment of the Bench, observes as follows : The point for decision is whether there arises out of the order of the Tribunal any question which can be the subject of reference under S.66(1) of the Act. Under that section, it is only a question of law that can be referred for decision of the Court, and it is impossible to argue that the conclusion of the Tribunal is anything but one of fact. It has been held on the corresponding provisions in the English Income Tax Statutes that a finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse, but that where there is evidence to consider, the decision of the Tribunal is final even though the Court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. From the extract quoted above, it will be seen that a finding even on a question of fact is open to attack as erroneous in law if it is not supported by any evidence or if it is unreasonable and perverse. From the extract quoted above, it will be seen that a finding even on a question of fact is open to attack as erroneous in law if it is not supported by any evidence or if it is unreasonable and perverse. According to the learned Advocate General as stated earlier, the finding in this case is not supported by any evidence and it is also perverse. On the other hand, it is the contention of the learned counsel for the Department that there is evidence to support the finding and that we should not substitute our own judgment in this case. We may also refer to an earlier decision of the Supreme Court in Dhirajlal v. I.T. Commissioner, Bombay AIR 1955 SC 271 . His Lordship Mahajan, Chief Justice, observes at page 273 as follows : The question whether or not the Hindu undivided family was doing business in shares transferred to it by the firm, is undoubtedly a question of fact; but if the court of fact whose decision on a question of fact is final, arrives at this decision by considering material which is irrelevant to the enquiry, or by considering material which is partly relevant and partly irrelevant, or bases its decision partly on conjectures, surmises and suspicious, and partly on evidence, then in such a situation clearly an issue of law arises. In that case, though it was argued by the learned Attorney General that eliminating the irrelevant material employed by the Tribunal to support its conclusion, there was sufficient, material to support its finding, the learned Chief Justice observes at page 273 again as follows : In our opinion, this contention is not well founded. It is well established that when a court of fact acts on material, partly relevant and partly irrelevant, it is impossible to say to what I extent the mind of the court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises. From the observations of the learned Chief Justice quoted above, it is again clear that if a finding is vitiated by the use of inadmissible materials, an issue of law will arise for decision. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises. From the observations of the learned Chief Justice quoted above, it is again clear that if a finding is vitiated by the use of inadmissible materials, an issue of law will arise for decision. Bearing in mind the principles laid down by the Supreme Court in the above two decisions, we will proceed to consider whether there was material before the Tribunal to hold that the business belonged to Choodamani Iyer and Harihara Iyer as an Association of Persons. The materials referred to in question (4) must obviously refer to materials on which the Tribunal can legally act or in other words, legal evidence on which the Tribunal could act. 43. S.3 of the Income Tax Act provides that income tax shall be charged In respect of the total income of the previous year of every individual, Hindu undivided family, Company and local authority, and of every firm and other association of persons or the partners of the firm or members of the association individually. The question is whether the finding of the Appellate Tribunal that the assessees should be taxed in their status as an Association of persons, is based upon legal evidence. As observed by the learned Judges, Rai and Sinha, JJ., of the Patna High Court in the decision reported in Sheikh Zainuddin Ahamad v. Commissioner of Income Tax 1956 (30) ITR 36 at 44: In order to assess the assessees with their status as an association of persons, there must be some evidence of a joint venture or there must be something to show that the income was the result of some joint effort or a joint business. Further as observed by Mudhelkar and Tambe, JJ., of the Nagpur High Court in the decision reported in Buldana Dt. Main Cloth Importers v. Commissioner of Income Tax (1956-30-ITR 61 at 71): Before any grouping of persons can be called an association of persons it must be established on facts that they are in the nature of partners, that is, in our opinion, the established facts of the case must at least lead to an inference that the members of the group of their volition or free will have joined in a venture with a view to earn profit. In this connection we may also refer to the judgment of Chagla, C.J., and Tendelkar, J., of the Bombay High Court in the decision reported in Indira Balakrishna v. Commissioner of Income Tax, 1956 (30) ITR 320. The learned Chief Justice observes at page 328 as follows : The Income Tax Act only refers to an association of persons as an assessable entity under sections, but it does not anywhere provide as to when an association of persons can be assessed to tax. The expression association of persons occurs along with other assessable entities, viz. individual, Hindu undivided family, company and local authority and firm, and in our opinion all these entities must stand on the same footing and the test of the liability must be whether they have earned income in the capacity in which they are sought to be assessed. That must be the test with regard to an individual or with regard to a Hindu undivided family or company and local authority, or firm or association of persons. Therefore, the question that we have to ask is whether these three widows earned income by reason of their association of property which an association of persons may own jointly may produce income, but even so the question that will have to be considered is whether these persons who are associated together have done any act which has helped to produce the income, because it is only if they have done something in respect of the property which helps the production of income that it could be said that the association of persons has earned income which is liable to tax. At page 330 the learned Chief Justice further observes : In our opinion, what is required before an association of persons can be liable to tax is not that they should receive income but that they should earn or help to earn income by reason of their association, and if the case of the Department stops short of mere receipt of income then the department must fail in bringing home the liability to tax of individuals as an association of persons. 44. We entirely agree with the tests laid down by the learned Judges of the Patna, Nagpur and Bombay High Courts in the decisions referred to above. 45. 44. We entirely agree with the tests laid down by the learned Judges of the Patna, Nagpur and Bombay High Courts in the decisions referred to above. 45. Apart from the fact that the Tribunal in this case has not considered the existence of an association of persons, from the point of view of the tests laid down by the decisions quoted above, the question is whether there was legal material before it to justify its conclusion. The final order dated 1-5-1956 of the Tribunal does not give us much assistance. In fact the Tribunal has disposed of the objection regarding the use of information obtained in the other proceedings very summarily by saying that the counsel who appeared in the proceedings was fully briefed with the proceedings in the other cases too so that it cannot be said that the assessee was not aware of them. Once again, we may point out that this is not a correct approach to meet this objection. A counsel may be appearing in several matters closely connected with one another, but when the parties sought to be affected are different, the knowledge of the counsel cannot certainly be treated as the knowledge of the party. In this case, there is no dispute that Choodamani Iyer as such was not a party to any of the previous proceedings. In fact, his grievance is that his family was not permitted to cross examine Harihara Iyer in the original proceedings. His further grievance is that he could only answer such questions as were put to him by Harihara Iyer or the Income Tax Officer and he was not in a position to say his own version. In our opinion, this objection is not merely a technical one as assumed by the Tribunal. It is really a matter which goes to the jurisdiction of the department to make an assessment on Choodamani Iyer and other as an Association of Persons. Further, in meeting the objection that the department should establish that the assessee Was the real owner, the Tribunal disposed it of by saying that the department has established by evidence that Choodamani was taking an active part. In the order dated 1-5-1956 the evidence by which the department has proved its case, has not been mentioned by the Tribunal. Therefore, we have to go back to its order dated 10-3-1956. In the order dated 1-5-1956 the evidence by which the department has proved its case, has not been mentioned by the Tribunal. Therefore, we have to go back to its order dated 10-3-1956. That Choodamani Iyer and Harihara Iyer were friends from boyhood cannot establish that they carried on the business of N. R. Harihara Iyer as an Association of persons in the assessment year 1943-44. In paragraph 4 it is stated that according to Harihara Iyer it was at the suggestion of Choodamani Iyer that Harihara Iyer started the business and the Tribunal has considered the entries in the Pass Book of Harihara Iyer with the Melarkode Bank arid also taken into account the entries in the Harihara Iyers personal note book. It has also referred to the evidence of the Managing Director about the granting of overdraft facilities to N. R. Harihara Iyer on the recommendation of Choodamani Iyer. 46. There is no dispute that no notice was issued to Harihara Iyer in these proceedings, though he was alive till December 1952. In fact, the grievance of Choodamani Iyer is that no notice has been issued to Harihara Iyer. Therefore, the statement in paragraph 4 of the Tribunals order attributing certain matters as spoken to by Harihara Iyer cannot relate to these proceedings. It relates only to the statements made by Harihara Iyer in the proceedings against him in which his only contention was that the business belonged to the N. S. V. family. Apart from the fact that the statements of Harihara Iyer relied upon by the Tribunal are not legal evidence in these proceedings the reference to Choodamani Iyer can relate only to Choodamani Iyer as representing the N. S. V. family and not in his individual capacity. Further, the statement of Harihara Iyer is absolutely valueless inasmuch as Choodamani Iyer never got an opportunity to cross examine Harihara Iyer. 47. The same criticism will apply also to the evidence of the Managing Director of the Melarkode Bank and the clerks. It is also seen from the letter of the Melarkode Bank dated 22-8-1950 to the Income Tax Officer that the account with the Bank was in Harihara Iyers name and overdraft agreement was also signed by Harihara Iyer. It is further stated that there was no guarantee of Messrs. N. S. V. Brothers, Palghat. It is also seen from the letter of the Melarkode Bank dated 22-8-1950 to the Income Tax Officer that the account with the Bank was in Harihara Iyers name and overdraft agreement was also signed by Harihara Iyer. It is further stated that there was no guarantee of Messrs. N. S. V. Brothers, Palghat. There is absolutely no reference to Choodamani Iyer in this letter connecting him with the business of N. R. Harihara Iyer; and Choodamani Iyer himself, when he appeared before the Income Tax Officer has explained that the recommendation made by him was as a friend of Harihara Iyer without any obligation on his part. Further, reliance made by the Tribunal about the transfer of Rs. 148-6-0 from Harihara Iyers account to N. S. V. Venkatarama Iyers account, does not at all bring in Choodamani Iyer anywhere. It may at the most show some connection with the N. S. V. family and even here, the Appellate Tribunal has held in favour of the N. S. V. family. Even regarding the actual conduct of the business, the Tribunal has considered certain circumstances such as the absence of a separate godown for Harihara Iyer, The fact that the goods were stored with the N. S. V. family again does not incriminate Choodamani Iyer. The reliance placed upon the letter of Choodamani Iyer dated 14-1-44 and marked as Annexure A in the statement of the case does not at all carry the matter any further and it has been sufficiently explained by Choodamani Iyer himself in the statement that he gave to the Income Tax Officer in the proceedings against Harihara Iyer. In fact, even that letter was relied upon by Harihara Iyer only to show that N. S. V. family was interested in his business. Thus the entire evidence that is relied on by the Tribunal is the evidence adduced in Harihara Iyers case. 48. The Tribunal has very frankly stated in its order dated 10-3-1956 that there is no clear evidence as to how the profits were enjoyed by Harihara Iyer and Choodamani Iyer and the other reasons given by the Tribunal are pure surmises for which there is no evidence whatsoever. 49. It is also contended by the learned counsel appearing for the department that a business which was admittedly being carried on escapes without anybody being made liable to pay the tax. 49. It is also contended by the learned counsel appearing for the department that a business which was admittedly being carried on escapes without anybody being made liable to pay the tax. We are fully alive to this situation, but the question before us is whether there is legal evidence to support the finding of the Tribunal in this case. Almost all the circumstances pointed out by the Tribunal existed during the proceedings of Harihara Iyer and, in our opinion, the Tribunal was not entitled to rely upon that evidence in these proceedings. In this view, there is no legal evidence whatsoever to support the finding of the Tribunal. Considering the cases also from another point of view, the conclusions arrived at by the Tribunal are based upon evidence which is inadmissible in these proceedings. 50. To conclude, there are no materials for the Tribunal to hold that the business belonged to Choodamani Iyer and Harihara Iyer as an Association of Persons. From this it follows that an assessment in these proceedings as on an Association of Persons is not valid in law. Our answers to questions Nos. (3) and (4) are in the negative. We have already indicated our views regarding questions Nos. (1) and (2). This reference is answered accordingly. The assessee is entitled to his costs which we fix at Rs. 250/-.