MOHANLAL MAHRIBAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AS directed by this court, the Income-tax Appellate Tribunal, Indore Bench, has referred the following questions of law to this court for its opinion :

(2.) THE material facts giving rise to this reference briefly are as follows : THE assessee, which is an HUF, carried on at the material time business in cotton at Bhikangaon and Barwaha. While framing the assessment for the year 1966-67, the ITO found that 6,929 quintals of kapas were ginned at the Barwaha shop of the assessee, but the assessee had disclosed that 2,315 quintals of rui were extracted, thus showing the yield at 33'4 per cent. which was considered to be too low by the ITO. THE ITO held that the normal yield of cotton could not be less than 35 per cent. He, therefore, made an addition of Rs. 80,000. In the appeal preferred before the AAC, the AAC found that the quantity of rui extracted was 2,364 quintals and not 2,315 quintals, as found by the ITO. THE AAC, however, confirmed the finding of the ITO that the normal yield of cotton could not be less than 35 per cent. He, therefore, made an addition of Rs. 18,000 only and partly allowed the appeal. On further appeal before the Tribunal, the Tribunal held that on the basis of the material on record the percentage of yield should be taken to be 34.75%. In this view of the matter, the Tribunal partly allowed the appeal. THE assessee submitted an application for making a reference, but that was rejected. Hence, the assessee filed an application before this court under Section 256(2) of the I.T. Act, 1961, hereinafter called the Act, which was allowed and the Tribunal was directed to state the case and refer the aforesaid questions of law to this court for its opinion.

(3.) NOW, in the instant case, the question as to whether the ITO was justified in proceeding to make a best judgment assessment without rejecting the account books of the assessee was admittedly not raised before the AAC. That question was not raised or considered by the Tribunal. In these circumstances, it must be held that question No. 1 does not arise out of the order passed by the Tribunal.