High Court Of Kerala
S. Murugappa Chettiar vs. CIT
Asst. Year 1964-65
K.S. Paripoornan & K. Sreedharan, JJ.
IT Ref. No. 170 of 1981
26th May, 1987
C.M. Devan, for the Assessee : P.K.R. Menon, for the Revenue
K.S. PARIPOORNAN, J.:
At the instance of the assessee, the Tribunal, Cochin Bench, has referred the following question of law for the decision of this Court:
” Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the accounts ?”
The relevant asst. yr. is 1964-65. The assessee is a manufacturer of tiles. The ITO noticed a huge difference between the stocks of tiles as per the accounts of the assessee and that supplied by the assessee to the bank for overdraft purposes. The assessee pleaded that the figures accounted for by him in his accounts are the real figures and that the figures supplied to the bank are inflated for the purpose of easy overdraft facilities. The ITO rejected the explanation of the assessee. He concluded that the figures supplied to the bank are the real figures. On this basis, finally, he added a sum of Rs. 50,528 representing the cost of production and the gross profit to the trading account. In appeal, the AAC sustained half of the addition. In further appeal, the Tribunal held that the accounted figures in the stock book of the assessee cannot be accepted as genuine. The assessee himself has furnished two contradictory figures which is sufficient to reject the accounts unless there is material to corroborate the book figures as the correct figures. The plea of the assessee that if the capacity of the factory and the quantum of the current consumed and wages paid are taken into account, he could not have produced more than what is accounted for was rejected. The Tribunal took the view that there is no acceptable data to show that a certain unit of current can produce only a certain number of tiles. The books of account were rejected. The Tribunal held that an addition of Rs. 18,000 would be sufficient to meet the ends of justice and allowed the appeal in part. On motion by the assessee, the above question of law has been referred to this Court for decision.
We heard counsel for the applicant/assessee as also counsel for the Revenue, The Tribunal has categorically found that there are two contradictory figures about the same material and both of them were supplied by the assessee. It was further found that these two contradictory figures are quite sufficient to reject the accounts unless there is sufficient material to corroborate that the book figures are the correct figures. After adverting to the relevant materials, the Tribunal finally found that there is absolutely no corroborating or other circumstance to show that the accounts of the assessee are reliable and the figures supplied to the bank are inflated. On these findings, the account books were rejected. Whether the accounts are correct or reliable or genuine is a pure question of fact. The said finding is not liable to attack for want of sufficient materials. As held in
M. Durai Raj vs. CIT (1972) 83 ITR 484 (Ker), if the findings are not supported by any materials or if the materials relied on are irrelevant or they are such that no Tribunal can reasonably come to such findings on the said materials, then a question of law would arise, and the High Court would be justified in holding that the findings cannot be sustained. In the instant case, there was material before the Tribunal to hold that the accounts of the assessee are not reliable. The plea of the assessee was that the material relied on to hold that the accounts are not reliable is not sufficient. The assessee has no case that the findings of the Tribunal are not supported by any materials or the materials relied on are irrelevant or that the findings are irrational.
4. In the absence of such plea and proof, the conclusion of the Tribunal, rejecting the accounts on the basis of facts found, which have not been assailed, is a pure question of fact and is not open to any challenge. We hold that the Tribunal was justified in rejecting the accounts. We answer the question referred to this Court in the affirmative and against the assessee and in favour of the Department.
[Citation : 174 ITR 245]