RATANLAL OMPRAKASH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference by the Tribunal, Cuttack Bench, under section 256(2) of the Income -tax Act, 1961 ('the Act'). The question referred to us is as follows:

(2.) The dispute relates to the assessment year 1975 -76. The assessee carries on business in Handloom cloth on wholesale basis. According to the return submitted by the assessee -firm, the rate of profit was 5.7 per cent. The ITO considered it to be low on the ground that the day -to -day stock account was not maintained, and estimated the rate of profit at 61/4 per cent. This was also confirmed by the AAC. In second appeal, the Tribunal reduced the rate of profit to 6 per cent. An application under section 256(1) filed by the petitioner having been rejected by the Tribunal, the petitioner moved this Court under section 256(2). This Court directed the Tribunal to state a case and refer the above question of law. In this Court, Mr. Mohanty, the learned counsel appearing for the petitioner, submitted that the Tribunal should not have rejected the claim of the petitioner that the rate of profit was 5.7 per cent on the basis of comparable cases without disclosing the particulars of such cases. We find that this is not so. From the Tribunal's order it is evident that this question was not at all considered by it, as this point was not at all pressed before the Tribunal. The Tribunal on the other hand held that the "assessee had not maintained day -to -day stock particulars and, therefore, it cannot be said that the assessee's books of account were amenable to strict verification. The past records of the assessee also showed that under similar circumstances all along its book results were rejected and profits were estimated. It is also seen that the cases relied on by the assessee's counsel were not comparable cases in strict sense because the assessee itself declared better rate of profit than that were estimated either by the department or by the Tribunal". After considering the facts and circumstances of this case, the Tribunal reduced the rate of profit to 6 per cent instead of 61/4 per cent. On the finding of the Tribunal, no question of law arises for the opinion of this Court. Even though this Court directed to state a case and refer a question of law for opinion, after considering the arguments of the learned counsels for both the sides and on the facts and in the circumstances of the case, we are satisfied that the Tribunal did not rely upon any comparable cases without disclosing the particulars of such cases for estimating the rate of profit of the petitioner -assessee. We, therefore, decline to answer the question referred to us.