Dwarka Prasad, J. - (1.) IN the assessment of Man Structural Ltd., Jaipur, for the assessment year 1976-77, the INcome-tax Officer, Company Circle I, Jaipur, by his order dated November 24, 1977, made an addition of Rs. 60,000 on account of excessive consumption of zinc during the previous year relatable to the aforesaid assessment year.
(2.) THE assessee company carried on the business of manufacture of high transmission towers which were supplied to various State Electricity Boards and in the case of those supplies, raw material was supplied by the buyers and the assessee company did the job work. THE Income-tax Officer was of the view that the assessee company did not maintain complete records showing the day to day requirement and consumption of zinc and the assessee has not been able to explain excessive wastage of 7.30 tonnes of zinc valued at about Rs. 60,000. THE finding recorded by the Income-tax Officer in this respect was affirmed on appeal by the Commissioner of Income-tax (Appeals), Rajasthan, Jaipur, by his order dated November 2, 1979, THE Commissioner held that, according to the contract, the consumption of zinc was estimated at 7%, which made sufficient allowance for wastage and in actual practice, the consumption was less than 7% and that the assessee was unable to point out any cogent reasons for a very heavy increase in the consumption of zinc during the accounting year relevant to the assessment year in question. On further appeal, the Income-tax Appellate Tribunal discussed at great length the question of consumption of zinc by the assessee company and it was pointed out that in the year 1964-65, the consumption of zinc was accepted by the income-tax authorities at 13.3%, while in 1969-70, the Income-tax Officer on spot inspection took out two samples and found that the consumption of zinc worked out to 7% in one sample and 9.7% in another sample. It was pointed out that the consumption of zinc in the period relevant to the assessment year in question worked out to 8.8%. The Tribunal on the facts found by it arrived at the following finding : "Even in view of the assessee's own past history where consumption of zinc has been accepted as reasonable by the Appellate Assistant Commissioner at 13.3% and by the Income-tax Officer himself by spot verification at 8.35% of the samples, we see no reason in not accepting the consumption of zinc at 8.8% claimed by the assessee for the assessment year 1976-77 as reasonable." The Appellate Tribunal relied upon the reasons given by the assessee company for excessive consumption of zinc that during the year relevant to the assessment year 1975-76, the tank was substantially damaged and the factory remained closed for most of the time and when the tank was repaired and put to use in the assessment year 1976-77, the consumption of zinc was higher and came to 8.8%. Thus, the Appellate Tribunal, by its order dated October 31, 1980, deleted the addition of Rs. 60,000 made by the Income-tax Officer and sustained by the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax filed an application under Section 256(1) of the Income-tax Act, 1961, before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, for making a reference to this court, but the said application was rejected on the ground that the finding arrived at by the Tribunal was one of fact and it could not be said that the Tribunal had omitted any material fact and relied on any irrelevant material in arriving at the conclusion. In this application under Section 256(2) of the Act, it was urged before us by learned counsel for the Department that the question relating to the applicability of the provisions of Section 145 of the Act without arriving at a finding that the assessee did not maintain proper account books, was a question of law and the Income-tax Appellate Tribunal was in error in refusing to make a reference to this court.
(3.) WE have considered the order passed by the Income-tax Appellate Tribunal and we find that the Tribunal has come to its conclusion after consideration of the material on record that the rate of 8.8% regarding consumption of zinc as claimed by the assessee could not be held to be excessive, but was reasonable. This was essentially a finding of fact and the Income-tax Appellate Tribunal was right in refusing to make a reference to this court. The application under Section 256(2) of the Income-tax Act has no force and is, therefore, dismissed.;