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Additional Commissioner of Income-tax Vs. Bhanwarlal Sohanlal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. Income-tax Case No. 85 of 1972
Judge
Reported in[1973]92ITR558(Raj); 1972()WLN985
ActsIncome Tax Act, 1961 - Sections 256(2)
AppellantAdditional Commissioner of Income-tax
RespondentBhanwarlal Sohanlal
Appellant Advocate S.C. Bhandari, Adv.
Respondent Advocate S.K. Kakkar, Adv.
Cases ReferredIn Sovachand Baid v. Commissioner of Income
Excerpt:
income tax act, 1961 - section 256--question relating to shortage of grain not a question of law--finding of tribunal requires no interference.;that tribunal has given due regard to this fact and has reduced the percentage in the case of the assessee having regard to the shorter period by taking out proportionate average of shortage. in the circumstances, it cannot be said that the decision of the tribunal is such as no reasonable man could have arrived at.;we are of the opinion that no question of jaw arises out of the order of the tribunal. - section 2(k), 2(1), 7 & 40 & juvenile justice (care and protection of children) rules, 2007, rule 12 & 98 & juvenile justice act, 1986, section 2(h): [altamas kabir & cyriac joseph, jj] determination as to juvenile - appellant was found to have..........shortage on such quantities of the grains. learned counsel for the assessee also placed before the tribunal a notification issued by the co-operative department of the government of rajasthan showing the maximum permissible percentage of losses in weight due to driage and shortage, etc., on account of storage for the period ranging between two months to twelve months. after considering the notification and materials on the record the tribunal came to hold that it would be fair and reasonable to allow shortage at the rate of 2.5% in respect of maize, 1.2% and 2*65% in respect of gram and jowar, respectively. accordingly, the tribunal restricted the addition to the value, of shortage in excess of the percentage allowed by it.4. the department was not satisfied with the finding of the.....
Judgment:

Joshi, J.

1. This is an application under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') on behalf of the Additional Commissioner of Income-tax, Rajasthan, Jaipur, praying that the Appellate Tribunal be directed to state the case and refer a question of law arising therefrom.

2. Facts which are necessary for the disposal of this case may be stated in brief, Messrs. Bhanwarlal Sohanlal, the assessee, is a partnership firm registered under the Indian Partnership Act. The assessee is a dealer in various grains. It filed return of income for the assessment year 1966-67.Along with its return a summarised trading account was also filed. According to the statement of trading account, the assessee, claimed shortage of 1,017 Kgs. in maize, 2,117 Kgs. in gram and 13,746 Kgs. in jowar on account of driage, handling and storage, etc., during the year of account-The shortage claimed by the assessee on the basis of the statements furnished by it was found to be reasonable by the Income-tax Officer and the same was allowed by him while passing the order of assessment for the year in question. However, on examining the books of account of the assessee, the Income-tax Officer found that the assessee had manipulated quantitative details in the books of account by making wrong and reduced details of purchase by making overwriting in the figures of the entries in its books of account. On the basis of correct details the Income-tax Officer found that 30,041 Kgs. of maize, 10,000 Kgs. of gram and 40,100 Kgs. of jowar were sold by the assessee without showing the sale proceeds thereof in its books of account. Accordingly, he valued these quantities and made an addition of Rs. 45,000 as the sale price of detected quantities of grains to the business income of the assessee as concealed income.

3. On appeal the Appellate Assistant Commissioner accepted the finding of the Income-tax Officer and maintained the addition of Rs. 45,000 to the business income of the assessee. Being aggrieved by the order of the Appellate Assistant Commissioner the assessee went in second appeal before the Appellate Tribunal, Jaipur Bench. Before the Tribunal it was contended that the Income-tax Officer had no justification to add the sale price of unshown quantities of the sale without allowing the shortage on such quantities of the grains. Learned counsel for the assessee also placed before the Tribunal a notification issued by the co-operative department of the Government of Rajasthan showing the maximum permissible percentage of losses in weight due to driage and shortage, etc., on account of storage for the period ranging between two months to twelve months. After considering the notification and materials on the record the Tribunal came to hold that it would be fair and reasonable to allow shortage at the rate of 2.5% in respect of maize, 1.2% and 2*65% in respect of gram and jowar, respectively. Accordingly, the Tribunal restricted the addition to the value, of shortage in excess of the percentage allowed by it.

4. The department was not satisfied with the finding of the Tribunal, and, therefore, moved an application under Section 256(1) of the Act before the Appellate Tribunal with the prayer that the following question of law arising out of the order of the Tribunal may be referred to this court:

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the suppressed stock of maize,' gram and jowar as a result of manipulation of totals represented normal shortages in these accounts ?

The learned Members of the Tribunal examined the case and came to the conclusion that the question sought to be referred is not a question of law as it involved only a pure question of fact. The Tribunal accordingly refused to state the case and refer the question to this court. It is in these circumstances that the department has come up to this court by way of application under Section 256(2) of the Act and prays that the Tribunal may be directed to refer the above-mentioned question for the opinion of this court.

It was contended by the learned counsel for the department that a question of law did arise out of the order of the Tribunal as the finding of the Tribunal as to the shortage in the quantities of various grains referred to above is not based on evidence and is rather perverse. It was urged that the Income-tax Officer had already allowed the shortage as claimed by the assessee in his books of account and, therefore, it was not open to the Tribunal to allow additional shortage by placing reliance upon the notification of the Rajasthan Government prescribing the maximum shortage on account of storage, handling, etc. It is not disputed that whether there was a shortage in weight of particular grains on account of handling, storage, driage, etc., is a pure question of fact, but the grievance of the department is that there is not an iota of evidence to sustain the finding of the Tribunal. In order to examine the contention of the learned counsel we deem it proper to notice a few cases bearing on the point. In Sree Meenakshi Mitts Ltd. v. Commissioner of Income-tax, [1957] 311.T.R. 28; [1956] S.C.R. 691 (S.C.) it has been held that 'finding on a question of pure fact arrived at by the Tribunal is not to be disturbed by the High Court on a reference,unless it appears that there was no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they have come ; and this is so, even though the High Court would on the evidence have come to a conclusion entirely different from that of the Tribunal.'

5. In Sovachand Baid v. Commissioner of Income-tax, [1958] 34 I.T.R. 650 (s.c.).the Supreme Court held that if the view taken by the appellate court is reasonably a possible view on the evidence adduced and that it cannot be said that the view is not supported by evidence or was unreasonable, then there should be no interference with the finding of fact arrived at by the Tribunal. In Commissioner of Income-tax v. M. Ganapatki Mudaliar, [1964] 53 I.T.R. 623 (S.C.) it has been observed by the Supreme Court that the High Court should not act as an appellate court and consider whether the finding of fact was justified, if there was some material to support the finding of fact arrived at by the Tribunal. In the light of the position of law enunciated above we propose to examinethe order of the Tribunal to find out whether any question of law arises out of this order. We have gone through the order of the Tribunal and have also noticed the reasons given in support of it. After examining the order and considering the reasons, we are of the opinion that no question of law arises out of the order of the Tribunal to direct it to state the case and refer the question asked for.

6. The books of account of the assessee admittedly did not record the correct and faithful quantities of various grains purchased by the assessee. Even the learned counsel for the department had impeached the veracity of the account books of the assessee. The Tribunal while dealing with the reliability of the account books have observed as follows :

'The assessee has no doubt followed a highly unconventional method of recording those shortages. As pointed out earlier, the proper method of recording the shortage would have been to show it in the trading account after recording the quantities of opening stock and purchases and sales and closing stock. But this alone should not operate to prejudice the assessee's case so as to sustain an addition of Rs. 45,000, if the ultimate shortage claimed by the assessee is well within the permitted percentage of shortage.'

7. Admission of the assessee made in the books of account, therefore, could not be taken as a safe basis for arriving at the correct quantum of shortage. The Tribunal has relied upon the Government notification for arriving at the permitted percentage of shortage. The notification was placed before the Tribunal on behalf of the assessee and it has not been challenged that the percentage of the shortage permitted in the notification is in any way unreasonable. Under the notification certain percentage of shortage has been allowed by the Government of Rajasthan to the co-operative societies through whom the Government has been selling large quantities of grains in Rajasthan. It has, however, been contended by the learned counsel for the department that the percentage of shortage permitted by the notification does not cover the assessee's case as the assessee was carrying on sales from month to month. The Tribunal has given due regard to this fact and has reduced the percentage in the case of the assessee having regard to the shorter period by taking out proportionate average of shortage. In the circumstances it cannot be said that the decision of the Tribunal is such as no reasonable man could have arrived at. When the Tribunal has relied upon the notification of the Government of Rajasthan, which was relevant on the point, the contention put forward by the department that there was no evidence, cannot also be sustained. The basis adopted by the Tribunal appears to us to be a reasonable one and we do not see any justification to differ from it. In view of what we have said above, we are of the opinion that no question of law arises out of the order of the Tribunal.

8. In the result, the application of the department is rejected. However, in the circumstances of the case, we not make any order as to costs.


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