COMMISSIONER OF INCOME TAXSAATAL KATTHA AND CHEMICALS PVT LTD Vs. SAATAL KATTHA AND CHEMICALS PVT LTD

JUDGEMENT

(1.) THE above two appeals under Section 260a of the IT Act, 1961, arise from the order dt. 18th Aug. , 2000 passed by Tribunal in ITA Case No. 880/ind/1992 and ITA Case No. 818/ind/1992, both, for the asst. yr. 1989-90. The Revenue's appeal has been admitted on the following substantial questions of law:

(2.) THE assessee is a private limited company incorporated and registered under the Indian Companies Act, 1956 and is engaged in the business of manufacture and sale of Kattha and Cutch which are derived from processing Kher wood. For this purpose the assessee-company purchased Kher wood pieces from the Forest Department of the Government of MP as well as from other parties. The Kher wood contains raw material which is called hart wood which is obtained after stripping the trees.

(3.) THE assessee-company filed its return of income for the asst. yr. 1989-90 disclosing a loss of Rs. 3,49,893. The assessment was completed by the assessing authority under section 143 (3) of the Act. During the course of assessment proceedings books of account, documents and registers properly maintained by the assessee in the course of regular business, were produced. However, the AO rejected the books maintained by the assessee under the provisions of Section 145 (2) of the IT Act on the ground that the assessee has not maintained quantitative records in respect of the Kher wood trees on the basis of their weight, though the assessee has maintained complete quantitative details on the basis of the number of trees purchased. The AO also worked out the recovery of hart wood and determined the yield at 14. 13 per cent. On the basis of the yield so determined, the AO determined the sale of Kattha at Rs. 6,57,128 and treated the same as undisclosed sale. He also determined the sale of Cutch at Rs. 8,12,467.