G.L. Chopra, J. - (1.) THIS is a petition under section 66 (2) of the Income Tax Act for an order requiring the Income Tax Appellate Tribunal, Bombay Beach A, Camp, Delhi, to state a case and refer certain questions of law which allegedly arise out of two orders of the Tribunal dated April 2, 1949, and May 14, 1952. In the petition as many as nine questions were stated so to arise and we sought to be referred, but Mr. Sibal, learned counsel for the petitioner, has confined his arguments to the following three questions and wants those alone to be referred : 1. Whether, under the facts and circumstances of the case, the appeal before the Appellate Tribunal was filed by the proper person. 2. Whether there is any material on record affording sufficient justification to support the conclusion drawn by the Tribunal for restoring the addition of Rs. 90,000 out of Rs. 1,50,000 totally deleted by the Appellate Assistant Commissioner. 6. Whether under the facts and circumstance of the case and having rectified the figure of 35 chhataks to 17 chhataks the Tribunal could, instead of deleting the entire addition of Rs. 1,50,000 revise the original order so as to include in the income a sum of Rs. 90,000.
(2.) THE facts relevant for the purposes of this petition are these : The petitioner is a private limited company of Ambala. The assessment on the petition for the year 1945 -46 was made by the Income Tax Officer, D Ward, Amritsar, on March 28, 1946. The assessee preferred an appeal which was substantially accepted by the Appellate Assistant Commissioner. The only item which is now in dispute is one of Rs. 1,50,000 and relates to additions jade for excessive shortage in wheat claimed. Under the directions of the Commissioner of Income Tax, Delhi, the Income Tax Officer of the Companies Circle, New Delhi, preferred a further appeal to the Income Tax Appellate Tribunal from the order dated July 21, 1948, of the Appellate Assistant Commissioner. Besides pointing out certain formal defects in the appeal presented to the Tribunal, the assessee contended that since the assessment was made by the Income Tax Officer, D Ward, Amritsar, the Income Tax Officer, Companies Circle, New Delhi, was not competent to file the appeal. The Tribunal overruled the objections raised by the assessee and partly accepted the departments appeal, vide its decision dated April 2, 1949. The result was that the add -back amounting to Rs. 1,50,000 made by the Income Tax Officer and deleted by the Appellate Assistant Commissioner was restored. This is what the Tribunal stated on the point : The assessees stock account showed milling gains to the extend of 15,814 mds. which worked out to about 19 chhataks per maund as compared to 35 chhataks per maund shown by the assessee last year. There is not reason why the milling gains should have dropped to this huge extend. If the stock account were to be amended to show milling gains of 35 chhataks as shown by the assessee himself last year, the addition made by the Income Tax Officer can be justified on this basis alone.
(3.) WE are satisfied that as the assessee had not maintained correct stock account from day to day, the normal milling gains had to be estimated by the Income Tax Officer. The disallowance of Rs. 1,50,000 calculated by the Income Tax Officer was therefore justified. Subsequently, it was discovered that in fact the milling gains in weight of what handled during the last year as shown in the books of the assessee worked out to about 17 chhataks and not to 35 chhataks per maund, as wrongly assumed by the Tribunal. In some of the earlier years, according to the books of the assessee, the milling gins worked out to 29 chhataks or more maund. In the year under assessment they were shown as 19 chhataks maund. To get rid of the above decision of the Tribunal, based as it was on a wrong assumption of fact, the assessee submitted an application under section 35 (2) of the Income Tax Act for rectification of the mistake. The same day, viz., on 21st July, 1949, the assessee submitted another application under section 66 (1) of the said Act for a statement of the case and reference of a number of questions of law which, according to the assessee, arose out of the Tribunals decision. The question formulated by the assessee on the point in question was : Whether there is sufficient material on record to equally support the conclusions drawn by the Tribunal and for restoring the addition of Rs. 1,50,000 deleted by the Appellate Assistant Commissioner of Income Tax. The Tribunal first dealt with the application under section 35. The Tribunal arrived at the conclusion that the mistake was apparent on the record and that it needed rectification. By its order dated May 14, 1952, the Tribunal reduced the amount of add -back from Rs. 1,50,000 to Rs. 90,000 and substituted the following for the passage already quoted : The assessees stock account showed milling gins to the extent of 15,814 mds. which worked out to about 19 chhataks per maund as compared to over 29 chhataks per maund shown by the assessee in earlier years except the next preceding year. There is in reason why the milling gains should have dropped to this huge extent. If the stock account were to be amended to show milling gains of 29 chhataks per maund, which appears to be a fir minimum average of such gains over a number of years as shown by the assessee himself, the addition made by the Income Tax Officer can be justified to the extent of about Rs. 90,000.... We are satisfied that as the assessee had not maintained correct stock account from day to day, the normal milling gain has to be estimated as above. The disallowance of Rs. 1,50,000 calculated by the Income Tax Officer is therefore reduced to Rs. 90,000. ;