- (1.)THIS income -tax reference application, under Section 256(2) of the Income -tax Act, 1961, for the assessment year 1987 -88 has been filed by the petitioner -Commissioner of Income -tax, Jaipur, against the order dated July 17, 1990, passed in Income -tax Appeal No. 1525/JPR of 1989 by the Income -tax Appellate Tribunal, Jaipur Bench, Jaipur, and the order dated April 25, 1991, passed by the Tribunal in Reference Application No. 200/JP of 1990, upholding the order dated July 17, 1990, and dismissing the application.
(2.)THE following questions of law were requested to be referred for the opinion of this court : '1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the Income -tax Officer did not have any basis for estimating the value of closing stock ? 2. Whether, on the facts and in the circumstances of the case and in law, the order of the Income -tax Appellate Tribunal is perverse as the Income -tax Appellate Tribunal failed to appreciate the fact that the Income -tax Officer had valued the closing stock taking the minimum of the average rate of opening stock, the purchase price, the sale price and the price of processed goods?' Learned counsel for the petitioner has contended that the learned Tribunal has committed an error of law in not referring the abovesaid questions of law on the basis of lowest value and has not considered the sufficient material on record. The Tribunal has failed to take on record the estimated value of costs of its own without following any guidelines. Reliance has been placed on CIT v. S.P. Jain : [1973]87ITR370(SC) .
On the other hand, learned counsel for the respondent has contended that the learned Tribunal, on the basis of the material on record and the fact that goods of better quality carrying higher value were sold during the course of the accounting year and goods of inferior quality were left, came to the conclusion after scrutinising the evidence. It is submitted that proper accounts were kept and that even the Income -tax Officer has not pointed out any defect in the percentage in recovery of the finished goods and, as such, no question of law can be referred on the finding of fact arrived at by the Tribunal. Reliance has been placed on CWT v. Sara Varghese (Mrs.) : [1991]187ITR450(Ker) .

(3.)WE have heard learned counsel for the parties and perused the material on record.