Commissioner of Income Tax vs R. Bharathan <BR> R. Bharathan Vs Commissioner of Income Tax

T.L. Viswanatha Iyer, J.—Both these petitions are u/s 256(2) of the Income Tax Act, 1961, arising out of an order of the Income Tax Appellate Tribunal in Income Tax Appeal No. 320 of 1987. The Revenue is the petitioner in Original Petition No. 6896 of 1991 and the assessee is the petitioner in the other petition.

The assessee is an abkari contractor. He had sold 2,51,086 litres of arrack during the year. According to him, the average sale price of arrack was Rs. 18 per litre. The Income Tax Officer was of the view, primarily based on two letters written by the assessee''s manager, that the assessee must have derived an average price of Rs. 25 per litre during the year, that is an addition of Rs. 7 per litre over the quantity sold by the assessee during the year. He thus made an addition of Rs. 17,98,950 to the income returned. This was confirmed in appeal by the Commissioner (Appeals). In second appeal, the Tribunal took the view that there was no sufficient material to show that the assessee had sold arrack at the rate of Rs. 25 per litre. According to them, the materials available on record comprising two letters written by the assessee and also certain records seized on inspection were insufficient to sustain the addition at the rate of Rs. 7 per litre of arrack sold. At the same time, they found that the assessee had made various payments and other expenses. In fact, the assessee''s counsel had fairly conceded before the Tribunal that he did not press for acceptance of the book results and that an estimate may be made. The Tribunal, therefore, considered the question of making an estimate and came to the conclusion that an addition of Rs. 5 lakhs to the income returned would meet the ends of justice. Accordingly, the appeal filed by the assessee was partly allowed sustaining the addition of Rs. 5 lakhs and deleting the balance.

While sustaining the addition of Rs. 5 lakhs the Tribunal did not grant relief in respect of certain payments which the assessee stated he had made to the police, excise officials and politicians for the purpose of getting licence and for the smooth carrying on of the business. It is in these, circumstances that both the assessee and the Revenue have filed these petitions, their applications for reference before the Tribunal having met with dismissal. In the Department''s petition, Original Petition No. 6896 of 1991 the question raised is primarily whether the Tribunal was right in law and in fact in reducing the estimate made by the Income Tax Officer to Rs. 5 lakhs and whether this finding of the Tribunal was supported by material. The assessee''s reference is related to the addition of Rs. 5 lakhs sustained by the Tribunal, the assessee''s contention being that the said addition was without any material to justify it. The assessee also claims that the amount of Rs. 1,10,500 paid to various officials in the excise department was an admissible deduction in the computation of the business income. There was also a point raised that another amount of Rs. 54,238 should be allowed as an admissible deduction.

We have heard counsel on both sides. But we do not find any question of law arising out of the order of the Tribunal justifying reference to this court. Admittedly, the books of account of the assessee were not acceptable and a fair estimate of ''the assessee''s income had to be made. The Tribunal has found as a fact that there was no sufficient material to justify that the assessee had sold arrack at the average price of Rs. 25 per litre. At the same time, it was also found that the assessee had made various payments to various officials. It was also noted that the assessee had sold arrack at an average price of Rs. 26 per litre in the previous year while the average sale price during the year in question was only Rs. 18. It was in these circumstances that the appeal filed by the assessee was allowed in part and an estimate was made with an addition of Rs. 5 lakhs to the income. It could not be said that the finding is not based on any materials or evidence available on record. There is a thorough and threadbare discussion of the matter by the Tribunal. We do not find any perversity in the appreciation of the materials available on record. Nor can it be said that the finding of the Tribunal is based on any guesses or surmises as contended by either side. The findings entered by the Tribunal are on questions of fact and based on appreciation of the materials available on record. There is no question of law liable to be referred.

We, therefore, dismiss these petitions.