Ch. Patel Agencies vs Assistant Commissioner of Income Tax

P. Venkatarama Reddi, J.—In this application u/s 256(2) of the Income Tax Act, 1961, the assessee seeks reference of the following questions :

"1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in its conclusion that the assessee cannot support the grounds taken before the Commissioner of Income Tax (Appeals) by taking up a new plea in respect of the same subject-matter of appeal ?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in law in holding" that the sum of Rs. 1,11,892 is liable to tax and cannot be allowed as deduction from out of the income of the assessee-firm for the assessment year 1986-87 ?

Whether, on the facts and in the circumstances of the case, the conclusion of the Income Tax Appellate Tribunal that the sum of Rs. 1,11,892 is liable to tax, is perverse or supported by any material on record or based on no material or unreasonable ?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in upholding" the addition of Rs. 23,143 as forming part of the assessee''s assessable income for the assessment year 1986-87 when the said amount could not be recovered and falls to be allowed as deduction while computing the assessee''s income ?"

The Tribunal declined reference on the ground that the order of the Tribunal was based on pure findings of fact. With regard to the first three questions relating to addition of Rs. 1,11,892 to the returned income, the contention of learned counsel for the petitioner is that the Tribunal''s conclusion is vitiated by a legally wrong approach that a new plea cannot be entertained by the Commissioner of Income Tax (Appeals). We find it difficult to accept this contention. In accordance with the agreement reached by the assessee and its supplier company, viz., Utkal Asbestos Limited, for the cost of 50 per cent. of the broken sheets which was estimated at Rs. 7,03,653, a credit note dated August 17, 1985, was issued. However, the assessee credited in its trading account only a sum of Rs. 5,91,761. The assessee explained that it had to remit the value of the salvaged goods to Utkal Asbestos Limited and, therefore, a sum of Rs. 1,11,892 was not reflected in the trading account as income. This explanation was not accepted by the Assessing Officer. Hence, it was added to the income. Before the Commissioner of Income Tax (Appeals), it was contended that the assessee was not able to realize the disputed amount and what was realized was only Rs. 5,91,761 and, therefore, it was written off in the books of account. Though there is no bar to take a different or alternative plea, the correctness of that plea should be tested in the light of the earlier plea taken apart from other factors. Inter alia, the Tribunal relied on the letter dated January 18, 1992, issued by Utkal Asbestos Limited certifying that there were no dues in the name of the assessee-firm as on March 31, 1986. The Tribunal, therefore, held that as no amount was outstanding from the supplier company, the plea of alleged writing off the amount of Rs. 1,11,892 as business loss does not arise. Learned counsel for the petitioner contends that the confirmation by the company that there were no dues, was only done after the amount of Rs. 1,11,892 was written off. There is no material on record to believe this explanation. The assessee should have disclosed all the relevant facts before the Assessing Officer instead of coming forward with a different type of explanation at every stage. We cannot, therefore, hold that the finding of the Tribunal is perverse or vitiated by non-consideration of any relevant material.

As regards the last question, it is found by the Appellate Commissioner as well as the Appellate Tribunal that the assessee failed to account for a sum of Rs. 23,412 although credit note was issued. The claim of the asses-see initially was that the amount was credited to the transporter''s account and, therefore, it should not be added in his hands. This was not accepted by the assessing and appellate authorities. The plea of non-recovery of Rs. 23,412 in respect of which a credit note, dated March 6, 1986, was issued, was not pleaded before the Assessing Officer or the appellate authority and in the absence of an explanation as to why it was not specifically pleaded, the version of the assessee need not be accepted. Therefore, the finding of fact reached by the Tribunal need not be disturbed. The Income Tax case is dismissed. No costs.