GANGOOMAL CONTRACTORS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under S. 256(1) of the INCOME TAX ACT, 1961 by the Tribunal referring the following question of opinion for this Court :

(2.) THE assessee is a registered firm and derives income form contract business. For the accounting period ending Diwali 1973, relevant for the asst. year 1974 -75, the assessee claimed the liability for sales -tax amounting to Rs. 49,110 which was rejected by the ITO on the plea that the assessee is a contractor and was not registered under the ST Act hence there was no liability on it to pay the sales -tax, that it was no neither obliged nor it filed any quarterly returns to the ST Department and as such it was not under any obligation to pay sales -tax, hence liability accrued. Accordingly, the prayer of the assessee was disallowed. The matter was agitated in appeal by the assessee before the CIT (Appeals) who allowed the same holding :

(3.) IN the present case, the Tribunal has found that the assessee is not a registered dealer and no proceedings for levy of sales -tax were there, limitation for initiation of proceedings under the provisions of M.P. ST Act has already expired and as such it is not liable to pay sale -tax. Moreover no sales -tax has been paid at all. However, the learned. counsel for the assessee urged that this has not been stated in the statement of the case submitted by the Tribunal. This has no merit because the Tribunal while stating the case mentioned that the appellate order was part of statement of the case. It was next urged that since the finding of the Tribunal was based on legal inferences drawn from facts it is not a finding of fact and the Tribunal has not considered the intimation of the STO dt. 11th May, 1977 demanding tax from the assessee. The findings of the Tribunal are based on admitted facts and not on legal inferences. The letter of the STO was not an assessment order but was intimation. No liability arose on the basis of such a letter. This Court has no jurisdiction to go behind or question the statement of facts made by the Tribunal in its appellate order of statement of the case unless there is no evidence to support the findings or the Tribunal has misdirected itself in law. So it is clear that the assessee was not a registered dealer, even assuming that no registration was necessary as the assessee was a contractor and its turnover exceeded the exemption limits to make it liable to pay sales -tax but no returns were filed. Neither tax was assessed nor any sales -tax was paid. By the time its case for assessment came, the liability if any, to pay sales -tax got barred by time. In order to claim deduction towards liability of payment of sales -tax the assessee must show that he had taken necessary steps for discharging the liability. Though it is not necessary at that stage that the tax should be actually assessed or paid. The assessment or the payment may be later on. As has been observed by the 'Allahabad High Court in Deepchand Shyam Sunder vs. CIT (supra) that before such an entry would be made, the liability must be a legal liability and not a mere hypothetical one. Under the circumstances, the Tribunal was right in not allowing deduction in respect of sales -tax amounting to Rs. 49,110.