COMMISSIONER OF INCOME-TAX Vs. SALIGRAM PREMNATH

JUDGEMENT

(1.) THE assessee, a registered firm, derives income from property, manufacture and sale of woollen yarn, shawls and woollen fabrics, etc. The head office of the firm is styled as "m/s. Saligram Prem Nath" and one of its branches is styled as " Supreme Woollen Mills ". Separate accounts are maintained for the head office and the branch office. For the accounting year ended March 31, 1969, relevant to the assessment year 1969-70, the assessee declared income of Rs. 3,27,966. An audited copy of the profit and loss account for the period under consideration and balance-sheet as on March 31, 1969, were filed. The ITO found fault with the figures mentioned in the return and for a number of reasons given in his order estimated the sales at rupees seventy lakhs and by applying the gross profit rate of 25% he worked out the total gross profit, which the assessee should have shown, at Rs. 17,50,000. He thus made an addition of Rs. 7,72,953 (Rs. 17,50,000--Rs. 9,77,047 ). Loss on exports claimed at Rs. 83,766 was disallowed without any discussion in the assessment order. The assessee filed an appeal before the AAC who upheld the addition of Rs. 7,72,953. The assessee filed a second appeal before the Tribunal. It was pleaded on behalf of the assessee that neither the proviso to Section 145 (1) nor to Section 145 (2) of the I. T. Act, 1961 (hereinafter referred to as "the Act"), was applicable to the facts of the case. A number of arguments were raised in support of this contention. It was claimed on behalf of the assessee that the addition made by the ITO and upheld by the AAC could not be sustained in view of the material on the record. On the other hand, it was argued on behalf of the Revenue that the wastage at 14'50% was excessive. In support of his contention, that the shortage in this year was excessive, the learned departmental representative relied upon the following documents:

(2.) THE Tribunal did not permit the Revenue to rely on these documents as according to the Tribunal no opportunity was allowed to the assessee to ,rebut the material contained in these documents. Similarly, it was pleaded on behalf of the Revenue that imported wool tops and yarn spun out of such wool tops were being sold at premium and, therefore, it should be held that the assessee also charged premium on sale of imported wool tops and yarn prepared out of such tops. With a view to support this contention, the Revenue sought to rely on the following documents:

(3.) THIS evidence was also not allowed to be relied upon by the Tribunal on the ground that the assessee had not been given an opportunity to rebut the material contained in these documents. The Tribunal gave a number of reasons and partly accepted the appeal filed on behalf of the assessee. The Revenue approached the Tribunal with the prayer that the following questions, which according to the Revenue, are questions of law be referred to this court for its opinion, which application has been dismissed by the Tribunal: