PREMIER BREWERIES LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Cochin Bench, referred the following questions of law for our opinion under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), at the instance of the assessee :

(2.) THE assessee is a public limited company (Premier Breweries Limited) engaged in the manufacture and sale of beer. For the assessment year 1985-86 (calendar year 1984 is the relevant previous assessment year), the assessee filed a return. On going through the accounts, the Assessing Officer noticed a sum of Rs. 9,98,200 under the head "Machinery and electrical repairs". THE assessee produced 16 bills of various dates from December 2, 1984, to December 31, 1984, in support of the claim, issued by Elgi Equipments Limited, Coimbatore. THE assessee-company was a company promoted by the directors of Elgi Equipments Limited and at the material time one of the directors of assessee-company was the managing director of Elgi Equipments Limited and both companies had good business relationship. Payments against the bills issued by Elgi Equipments Limited were made only in December 1985, and, this aroused the suspicion of the Assessing Officer. On perusing the records of Elgi Equipments Limited, the Assessing Officer found that the 16 bills supplied to the asses-see did not figure in the ledger maintained by them and the trade balance with Premier Breweries Limited, as per their books of account was only Rs. 5,583.20 as on December 31, 1984, as against Rs. 9,98,200 appearing to their credit in the books of the assessee. THE assessee was asked to reconcile the difference in the trade balance and the assessee by letter dated February 24, 1988, confirmed that the bills produced were genuine and bona fide. THE sales executive engineer of Elgi Equipments Limited when summoned on March 8, 1988, under Section 131 of the Act submitted in writing as follows :

(3.) THE contention that the Assessing Officer did not give an opportunity for cross-examination and materials were gathered behind the back of the assessee without disclosing it to him can be considered first. Admittedly, the assessee did not ask for cross-examining or summoning any person before the Assessing Officer. All the evidence put forward by the assessee was considered by the Assessing Officer. Entire contentions raised by the assessee were considered by the Assessing Officer. THE assessee was asked to reconcile the difference in the trade balance with Elgi Equipments Limited and the number of bills based on which the charges were raised. THE assessee was also asked to explain regarding the cost of machinery and why the cost of such machinery was put as revenue expenditure. THE explanation offered by the assessee was considered by the Assessing Officer. THE Tribunal considered the contention that the Assessing Officer has not relied on materials behind the back of the assessee and found as follows :