N.K. Kapoor, J. - (1.) INCOME Tax Cases Nos. 137, 142 and 143 of 1992, CIT v. D.M. Bricks Industries, raise identical questions of law and so the same are being decided by a common order. The relevant facts are being taken from Income Tax Case No. 142 of 1992 (assessment year 1986 -87).
(2.) THIS petition is under Section 256(1) of the Income Tax Act, 1961, seeking a direction to the Tribunal, Amritsar Bench, Amritsar, to draw up a statement of the case and to refer the following questions of law : "1. Whether, on the facts and in the circumstances of the case, the learned Tribunal was right in law in directing the Assessing Officer to treat the receipt of Rs. 8,34,650 from the Government Departments as 'advance' when the Government Departments cannot pay any advance without physical receipt of goods purchased and payments were held to have been made against sale bills not recorded by the assessee in books of account maintained by the firm ? 2. Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in not treating the receipt of Rs. 8,34,650 as sales when the said receipt is supported by the sale bills of ascertained and specified goods ? Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in law in referring the case back to the Assessing Officer for verifying as to when the sales were effected when there was sufficient material on record to prove that the sales have duly been made as per bills and were not recorded by the assessee ?
(3.) WHETHER , on the facts and in the circumstances of the case, the learned Tribunal is right in law in directing the Assessing Officer on the basis of mere verbal claim of the assessee that the sales were made and accounted for in the subsequent assessment year when this issue has only been considered and rejected by the first appellate authority - 3. All these questions arise out of the order dated September 18, 1990, passed in Income Tax Appeal No. 1196/(ASR) of 1989. The Income Tax Officer scrutinised the return filed by the assessee and reached the conclusion that the amounts of advances shown in the balance -sheet in the name of Government agencies cannot be accepted as these Government agencies cannot make payment in advance as per treasury Rules and so made an addition of Rs. 1,25,198, i.e., 15 per cent in the income of gross profit rate of advance shown in the Government agencies of Rs. 8,34,650, vide order dated March 30, 1988. The Commissioner of Income Tax (Appeals) too declined to exclude the advances shown to have been made by the Government agencies on the ground that the same is contrary to the treasury rules and it is nothing but a device to suppress the sale of bricks otherwise made which finds no reflection in the accounts maintained by the assessee and so dismissed the appeal. Before the Tribunal, once again, it was stressed that the conclusion arrived at by the authorities below is not based on facts, but on surmises and conjectures. It was urged that the assessee is maintaining a regular system of accounting and the advance amount received from the Government agencies and duly shown in the balance -sheet, has been erroneously taken to be on account of sales, which, according to the Revenue Department, are not reflected in the accounts made by the assessee. The assessee, thus, contended that without any material on record, the Income Tax Officer added income calculated at the rate of 15 per cent of Rs. 8,34,650 ; assuming that bricks worth this much amount were in fact sold during the assessment year under scrutiny, merely for the reason that treasury rules do not provide for advance payment by any of the Government agencies is by itself no ground to hold that such amount was received by the assessee for having sold bricks of this value either to the Government agencies or to somebody else and this device has been employed so as to suppress the profits/income. The Tribunal, after hearing learned counsel for the parties and on perusing the record and also relying upon the decision of the Tribunal in Shadi Lal Puri's case, came to the conclusion that the payments received by the assessee by way of advance were not sales and so the profits thereon or in connection with the sales could not be assessed in the hands of the assessee. However, to consider as to whether the entire advance received by the assessee had been accounted for in sales for the year under consideration as well as in the subsequent years, the Tribunal remitted the matter to the assessing authority with a direction that it should treat the advances received by the assessee as advances and not sales and verify as to when the sales were actually effected in terms of these advances and then proceed in accordance with law. 4. With a view to seek reference of the question of law as noticed in the earlier part of the judgment, the Commissioner of Income Tax filed petition under Section 256(1) of the Income Tax Act, 1961, before the Tribunal. The Tribunal came to the conclusion that no referable question of law arises out of the order of the Tribunal and so declined the request made. Dealing with questions Nos. 1 and 2, it was held that the Tribunal has nowhere held that specific receipt should be treated as advances. Similarly, the Tribunal found no merit in question No. 3 as it was held that the Tribunal is competent to pass any order in appeal as it deems fit and proper which includes the power to refer the case back. As regards question No. 4, it was held that the same is wholly misconceived as no verbal claim was made by the assesses. In fact, as per detailed information supplied by the assessee with regard to the sale that finds mention at pages Nos. 1 to 45 of the paper book, the assessing authority was directed to verify the same.;