Punjab & Haryana H.C : This is a petition under s. 256(2) of the IT Act, 1961, filed by M/s Haryana Iron & Steel Rolling Mills, Hissar, praying that this Court may direct the Tribunal, Chandigarh Bench. Chandigarh (hereinafter referred to as “the Tribunal”), to refer certain questions of law which are said to have arisen, the proposed questions being enumerated in para. 11 of the petition.

Counsel Appeared

Balwant Singh Gupta, for the Petitionr : D.N. Awasthy & B.K. Jhingan, for the Respondent

SURINDER SINGH, J.:

This is a petition under s. 256(2) of the IT Act, 1961, filed by M/s Haryana Iron & Steel Rolling Mills, Hissar, praying that this Court may direct the Tribunal, Chandigarh Bench. Chandigarh (hereinafter referred to as “the Tribunal”), to refer certain questions of law which are said to have arisen, the proposed questions being enumerated in para. 11 of the petition. It is stated that in consequence of the reference application made to the Tribunal, only one question of law was referred to this Court which is the subject-matter of IT Ref. No. 101 of 1976. The Tribunal had, however, declined to refer the other two questions as proposed by the petitioner, on the ground that these questions were pure questions of fact and no questions of law arose in respect of the two amounts of Rs. 45,000 and Rs. 15,430 mentioned in the said two questions.

The assessment in this case relates to the year 1966-67, the previous year having ended on 30th Sept., 1965. The petitioner had disclosed its total income at Rs. 46,880. As mentioned in the statement of the case (copy annex. P-11), it was admitted that the stocks of the value of Rs. 3,26,389 pledged by the petitioner with the bank were in excess of the stocks recorded in the books of account and the investment in the aforesaid stocks was unexplained. The petitioner had Surrendered Rs. 1,15,440 in the preceding year and was required to explain how the stocks worth the remaining amount of Rs. 2,10,949 were acquired during the assessment year. With a view to explain the financial source in regard to the above excess amount, the petitioner put up an explanation that a sum of Rs. 99,850 had been received by it from various creditors with the request that these amounts be kept by the petitioner outside their books of account and this amount had been utilised for the stocks in excess of those recorded in the books. It was further the stand of the petitioner that the various creditors, who had made a total deposit of Rs. 99,850, had made voluntary disclosures under s. 24 of the Finance (No. 2) Act, 1965 and had paid tax on the said amounts. The ITO, however, accepted the plea of the petitioner only partly to the extent that out of the total amount of Rs. 99,850 the petitioner had proved its contention in respect of seven items of the total value of Rs. 54,850 and in regard to the balance amount of Rs. 45,000 it was held that there was no immunity available to the petitioner. The ITO, therefore, assessed the petitioner’s income at Rs. 1,56,099 (Rs. 2,10,949 minus Rs. 54,850) being taxable on account of the fact that the stock of goods outside the books of account pledged with the bank were not satisfactorily explained. The ITO then proceeded to make certain calculations which are not material for the purpose of the present case and on the basis of these calculations, the total income of the petitioner was computed at Rs. 1,46,170, vide order, dt. 31st Aug., 1971. The ITO also directed that interest on the amount be charged under s. 139 of the Act.

The petitioner filed an appeal against the aforesaid order of the ITO which was heard and disposed of by the AAC. The AAC accepted the contention on behalf of the petitioner in respect of a sum of Rs. 45,000 to the effect that in view of the voluntary disclosures made by the creditors under s. 24 of the Finance (No. 2) Act, 1965, the said amount ought not to have been included in the total income. This amount was, therefore, deleted. In respect of the second item of Rs. 15,430 also the AAC agreed with the petitioner’s contention and deleted that amount. Apart from the above two amounts, the AAC made some other reduction, the total reduction being Rs. 98,266. Another relief which was granted to the petitioner by the AAC was in respect of the interest which had been directed to be charged and it was held that no interest was chargeable under s. 139, IT Act.

Aggrieved by the order of the AAC the Revenue filed an appeal before the Tribunal, impugning the deletion of the amounts of Rs. 45.000 and Rs. 15,430 as also the exemption from chargeability of interest on the amount due. The Tribunal, after appraising the matter, vide its order dt. 3rd Sept., 1975, partly accepted the appeal to the extent that the inclusion of the above-mentioned two amounts of Rs. 45,000 and Rs. 15,430 was restored and the decision of the AAC for deleting these amounts was reversed. The Tribunal further held that the AAC was not justified in giving a direction that no interest was chargeable under s. 139 of the Act. The remaining findings of the AAC were, however, affirmed.

In the wake of the above decision of the Tribunal the assessee filed a reference in respect of the restoration of the two amounts of Rs. 45,000 and Rs. 15.430 and also against the decision to levy interest under 1c. 139. Three questions were submitted before the Tribunal which are enumerated in para. 7 of the statement of the case. As noticed in the earlier part of the judgment, the Tribunal decided to refer only question No. (ii) relating to the chargeability of interest and declined to refer the other two questions (i) and (iii) pertaining to the two amounts of Rs. 45,000 and Rs. 15,430 respectively. The present petition has, thus, been filed by the petitioner praying for a direction to the Tribunal to refer the question in respect of the two amounts, mentioned above.

The primary question which falls for consideration is, as to whether the Tribunal was justified in not referring the question pertaining to the restoration of the two amounts of Rs. 45,000 and Rs. 15,430. Mr. B. S. Gupta, ld. counsel for the petitioner, has submitted that the findings of the Tribunal in regard to these amounts are not correct and are contradictory to the evidence on the record. He has made emphasis on the point that so far as the amount of Rs. 45.000 is concerned the same benefit ought to have been allowed as was done in regard to the other similar items totalling Rs. 54,850. The contention is, however not tenable. As rightly considered by the Tribunal, the fact that the so-called creditors who had advanced the loans totalling Rs. 45,000 outside the books of account of the petitioner, had made voluntary disclosures in respect of these amounts would not in any way be a satisfactory explanation of the missing credits. On the direction of the Tribunal to disclose the exact dates when the various amounts had been entered in the books of account of the petitioner, the statement was furnished which is reproduced in the statement of the case. The dates of entry in the account books of various accounts pertained to the years 1967 and 1968. It was found that on the date when the application for the voluntary disclosure was made by these creditors, i.e., 26th March, 1966, the petitioner had not made the necessary entries in their account books and they did so after a lapse of a long time. A conclusion was thus rightly drawn that the disclosures made by the creditors had no link between the amounts disclosed and the amounts which are said to have been invested for acquiring the unexplained stocks. Seen from this angle, we do not find any perversity or even incorrectness in the finding of the Tribunal in regard to the restoration of the amount of Rs. 45,000. This being a pure finding of fact, the Tribunal was further justified in not making any reference to this Court, as no question of law arose in the matter.

The position in regard to the item of Rs. 15,430 is also the same. As noticed in the statement of the case, there is no dispute about the fact that the raw material and the finished material were less to the extent of the aforesaid amount on the last day of the accounting year as compared to the date when the investment in the unexplained stocks was at its highest. All that could be urged by the ld. counsel for the petitioner in regard to this item is that no sale had taken place and the profit had been estimated only on the basis of conjectures and surmises. However, there being a definite reduction in the raw material and the finished products as noticed above, the inference was correctly drawn that the shortage had been sold for profit. It is also observed in the statement of the case that the Tribunal had examined the calculations regarding the profit of Rs. 15,430 and had found these calculations to be correct. This being so, there was no occasion for making a reference on this pure question of fact.

No other point arises in this petition which is dismissed and the mandamus prayed for, is declined. In the circumstances of the case, we would leave the parties to bear their own costs.

[Citation : 142 ITR 373]