COMMISSIONER OF INCOME TAX Vs. THAKURMAL BAJRANGLAL

JUDGEMENT

(1.) THIS is a reference made under Section 256(2) of the Income-tax Act, 1961 (for short "the Act" hereinafter), as a result of a direction of this court to decide the following question of law, namely:

(2.) THE assessee is a registered firm deriving income from milling gram, etc., and selling the milled products. THE relevant assessment year is 1966-67 for which the corresponding accounting period ended on Ram Navmi Samvat Year 2023 corresponding to some date in the month of April, 1966. During this period, the assessee crushed 10,970 quintals of gram in its mill out of which it recovered dal weighing 8,190 quintals, churi weighing 2,302 quintals and chilka weighing 743 quintals. THE aggregate of the total yield of the milled products amounted to 11,235 quintals and on this basis, the yield of dal came to 75.1% of the quantity of gram crushed. THEse are the figures according to the assessee's books of account.

(3.) THE contention of learned counsel for the Revenue is that the powers exercised by the Income-tax Officer are under Sub-section (2) of Section 145 and not under the proviso to Sub-section (1) thereof. He argued that the Tribunal overlooked this aspect and, therefore, the conclusion reached by it is not justified. In other words, no attempt is made on behalf of the Revenue to rely on the proviso to Sub-section (l)of Section 145 of the Act, the only argument being based on the applicability of Sub-section (2) of Section 145. In such a situation, no occasion arises for deciding the justification of the applicability of the proviso to Sub-section (1) of Section 145 and the only question is whether Sub-section (2) of Section 145 is attracted. We find that the Tribunal has not taken into account Sub-section (2) of Section 145 for deciding the appeal before it and the same has been decided only on the question of applicability of the proviso to Sub-section (1J of Section 145 on which the Revenue does not even rely.