- (1.) WE have heard learned Counsel for both sides.
(2.) IN this income -tax application under Section 256(2) of the Act, the Department wants the following question to be called, as according to the Department it is a question of law and it arises out of the Tribunal's order, dated October 28, 1994. Whether, in view of the facts and circumstances of the case, the hon'ble Income -tax Appellate Tribunal was legally justified in confirming the order of the learned Commissioner of Income -tax (Appeals) who quashed the assessment proceedings observing that there was no income escaping assessment being no remission or cessation of liability due to the pending litigation ? By the order dated April 10, 1995, the Tribunal has rejected the application under Section 256(1) holding that the decision of the Tribunal dated October 28, 1994, is based on findings of fact and it does not give rise to any referable question of law.
(3.) THE facts relevant for the decision are, that the assessment was originally completed on a loss of Rs. 3,26,761. In appeal the loss was enhanced to Rs. 3,32,921. Along with the original return, the assessee had filed a copy of the printed report and annual accounts for the year ending March 31, 1978. The said report contained a note No. 17 under the head 'contingent liabilities and notes'. The said note is reproduced below: Sundry creditors includes Rs. 10,71,825.52 being amount of refund received from the Excise Commissioner, U.P., Allahabad, against export duty paid on the export of rectified spirit outside U.P. As there may be claims against the aforesaid refund, the amount has not been appropriated by the company.;