Kerala H.C : 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 CIT (Appeals) and the hon’ble Tribunal are justified in interfering with the addition made by the ITO ?

Counsel Appeared

P.K. Ravindranatha Menon & N.R.K. Nair, for the Revenue : K.I. Mayankutty Mather, for the Assessee

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 asst. yr. 1979-80. The assessee declared a total income of Rs. 68,690. The return was rejected. The ITO took elaborate evidence and added a sum of Rs. 6,43,380 to the admitted income. In appeal, the CIT (Appeals) sustained the addition to the extent of Rs. 3.5 lakhs and deleted the balance. In the second appeal, the 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 under s. 256(1) of the IT Act praying that a few questions of law which arose out of the order of the 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 under s. 256(2) of the IT Act. The prayer is to direct the Tribunal to refer four questions of law formulated in para 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 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 Tribunal is unjustified in law. Question No. 4 is an attack on the order passed by the CIT (Appeals) in appeal. The said order has merged in the order passed by the Tribunal. So, we are of the view that questions Nos. 2 and 4 are not referable questions of law.

We direct the 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 CIT (Appeals) and the hon’ble Tribunal are justified in interfering with the addition made by the ITO ?

2. 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 ? “

4. The original petition is disposed of as above.

[Citation : 173 ITR 525]