Commissioner of Income Tax vs Nirmala Liquors

K.S. Paripoornan, J.—The Revenue is the petitioner herein. The respondent is a firm, an assessee to Income Tax. The firm contains 14 partners. We are concerned with the assessment year 1979-80. The assessee declared a total income of Rs. 68,690. The return was rejected. The Income Tax Officer took elaborate evidence and added a sum of Rs. 6,43,380 to the admitted income. In appeal, the Commissioner of Income Tax (Appeals) sustained the addition to the extent of Rs. 3.5 lakhs and deleted the balance. In the second appeal, the Appellate Tribunal upheld the rejection of accounts. It was also held that an estimate of the income was called for. But, the Tribunal estimated the income at Rs. 1,41,000. The Revenue filed an application u/s 256(1) of the Income Tax Act praying that a few questions of law which arose out of the order of the Appellate Tribunal dated August 24, 1984, may be referred to this court. It was rejected by order dated January 15, 1985. Thereafter, the Revenue has filed this original petition u/s 256(2) of the Income Tax Act. The prayer is to direct the Appellate Tribunal to refer four questions of law formulated in paragraph 12 of the original petition.

We heard counsel for the Revenue as also counsel for the assessee. We are satisfied that questions Nos. 1 and 3, formulated in para. 12 of the original petition and extracted hereinbelow, do arise out of the order of the Appellate Tribunal. Question No. 2 is only another facet of questions Nos. 1 and 3 and projects the arguments of the Revenue to contend that the estimate of income at Rs. 1,41,000 by the Appellate Tribunal is unjustified in law. Question No. 4 is an attack on the order passed by the Commissioner of Income Tax (Appeals) in appeal. The said order has merged in the order passed by the Appellate Tribunal. So, we are of the view that questions Nos. 2 and 4 are not referable questions of law.

We direct the Appellate Tribunal to refer the following questions, formulated in para 12 of the original petition as questions Nos. 1 and 3, for the decision of this court:

"1. Whether, on the facts and in the circumstances of the case and also in view of the finding that ''reliance cannot be placed on the assessee''s book results'', the learned Commissioner of Income Tax (Appeals) and the hon''ble Tribunal are justified in interfering with the addition made by the Income Tax Officer ?

Whether, on the facts and in the circumstances of the case, the hon''ble Tribunal is right in holding ''that it would be reasonable to determine the income of the assessee at Rs. 1,41,000 for this year" and is not the above finding unreasonable, unsupported by relevant materials and independent evidence and also unjustified ? "

The original petition is disposed of as above.

A copy of this judgment shall be forwarded to the Appellate Tribunal for information and compliance.