Commissioner of Income Tax vs Prem Kishore Agrawal

B.R. Arora, J.—The revenue, by this application moved u/s 256(2) of the income tax Act, 1961 (''the Act'') with respect to the assessment year 1984-85 of the assessee, has prayed that the Tribunal, Jaipur Bench, Jaipur, may be directed to refer the following question of law for the opinion of the High Court: Whether, on the facts and in the circumstances of the case, it is not a case of unreasonable, perverse and improper exercise of discretion by income tax Appellate Tribunal while sustaining an addition of Rs. 10,000 only justiciable basis for the same in spite of being fully satisfied about the grossly defective position of accounts and non-acceptability of the declared Gross Profit rate of 16.77 per cent as correct and clearly ignoring comparable case of assessee''s own brother Shri Jethmal Agarwal, proprietor Janta Sweet Home, Jodhpur, relied upon by the learned CIT (Appeals) while confirming the gross profit of 23.5 per cent ?

The assessee, Prem Kumar Agrawal - the proprietor, Janta Misthan Bhandar, is an individual who derives his income from the preparation and sale of sweets. During the assessment year 1984-85, the assessee declared the gross profit of Rs. 2,07,309 on the sale of Rs. 12,36,148. As the gross profit''s rate was declared at 16.77 per cent while in the earlier year the gross profit was declared at the rate of 20 per cent, therefore, the ITO, exercising his powers under the proviso to section 145(1) of the Act, estimated the gross profit of the assessee at 23.5 per cent. This estimated gross profit at the rate of 23.5 per cent resulted in the addition of Rs. 84,006. The assessee preferred an appeal before the Commissioner (Appeals), Jodhpur, and the Commissioner allowed the appeal in part and determined the gross profit at the rate of 20 per cent. The assessee, dissatisfied with the order passed by the Commissioner (Appeals), Jodhpur, preferred an appeal before the Tribunal, Jaipur Bench, Jaipur, and the Tribunal allowed the appeal filed by the assessee and maintained the addition of Rs. 10,000 only as against Rs. 84,006 made by the Commissioner (Appeals), Jodhpur, by his order dated 27-06-1990. The revenue thereafter moved an application u/s 256(1) to refer the question, mentioned above, for the opinion of the High Court. The Tribunal refused to refer the question for the opinion of this Court on the ground that the findings arrived at by the Tribunal are purely findings of facts based on the material available on record as mentioned in the order and no referable question of law arises in the matter. Dissatisfied with the order dated 09-04-1991 passed by the Tribunal refusing to refer the question for the opinion of this Court, this application u/s 256(2) has been moved by the revenue.

We have considered the submissions made by the learned counsel for the parties and perused the orders passed by the Tribunal, both in the appeal as well as on the application u/s 256(1).

The Tribunal, after considering the various aspects of the case, looking to the gross profit shown in the year in the case of the assessee itself, exercised the discretion and sustained the addition of Rs. 10,000 only against the added income of Rs. 84,006 made by the authorities. The exercise of the discretion in the present case cannot be said to be, in any way, arbitrary or unjust. It is in the facts and circumstances of the case that the Tribunal has sustained the addition of Rs. 10,000 only. There is nothing on record to show that the findings of fact arrived at by the Tribunal, are based on mis-application of any rule or law or are based on no evidence. The Tribunal has, also, not ignored any material evidence while sustaining the addition of Rs. 10,000 against Rs. 84,006. The findings are based on the relevant consideration of the material and cannot be said to be, in any way, perverse. These are only the findings of fact and do not give rise to any question of law referable to the High Court.

Since no referable question of law arises in the present case, the application u/s 256(2), filed by the revenue, therefore, deserves to be dismissed. In the result, the application u/s 256(2), filed by the revenue, is dismissed as no referable question of law arises in the present case.