COMMISSIONER OF INCOME TAX Vs. PEARL WOOLLEN MILLS

JUDGEMENT

(1.) Commissioner of Income-tax (Central), Ludhiana, (hereinafter referred to as the Revenue) has filed this petition under s. 256(2) of the IT Act, 1961 (hereinafter referred to as the Act) for issuance of a mandamus directing the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as the Tribunal) to refer the following questions of law to this Court for its opinion on the ground that the same arise from the order of the Tribunal dt. 31st March, 1979 in the case of M/s Pearl Woollen Mills, Ludhiana (hereinafter referred to as the assessee) :

(2.) Assessee is a registered firm. It derives its income from manufacture and sale of woollen yarn and also manufacture and sale of scooters. It had also income from other different businesses. Previous year for the asst. yr. 1966-67 ended on 25th Oct., 1965. Assessee declared a loss of Rs. 37,854 but the total income was assessed by the ITO vide his assessment order dt. 20th March, 1971 at Rs. 23,43,260. Rs. 9,36,000 were added on account of unaccounted stock found pledged with the bank but not accounted for in the books of account maintained by the assessee. In appeal, assessee was granted relief to the extent of Rs. 17,73,424. Certain other directions in connection with the assessment were also issued by the appellate authority. Before the AAC assessee admitted that excess stock to the extent of 36,543 kgs. of the yarn was pledged with the bank. It was, however, pleaded that this stock related to the business done outside the books of account. Appellate authority after giving due consideration to the assessees pleadings held that against the addition of Rs. 9,36,000 only Rs. 1,01,270 was taxable in the year under assessment. Relief of Rs. 8,34,730 was thus granted to the assessee against this item.

(3.) Revenue aggrieved against the aforesaid order moved an application under s. 256(1) of the Act for making a reference to this Court of the questions of law reproduced in the earlier part of the judgment to this Court for its opinion arising from its order dt. 21st Dec., 1979. Tribunal refused to refer these questions of law on the ground that it had rightly restored the order of the AAC.