FAKHRI AUTOMOBILES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is an application under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), presented by M/s. Fakhri Automobiles, Banswara. It arises under the following circumstances :

(2.) IN the cash book, entry was made in respect of purchase of diesel in one lump sum. IN respect of these purchases, the firm did not obtain purchase voucher, but Shri Kalimuddin, partner of the applicant-firm, filed an affidavit to the effect that during samvat year 2026 the firm had purchased 18,000 litres diesel worth Rs. 14,025.75 from various private parties to meet the temporary scarcity in the area and the said purchases were recorded in one lump sum in the books of account of the firm on July 4, 1970 ; that no single purchase of diesel so recorded was of the value of Rs. 2,500 or more. The ITO did not accept the version of the assessee that the diesel was purchased by the firm in the manner indicated in the affidavit and observed that it has not been clarified by the assessee as to from whom the purchases were made and it was not possible in such a small locality as Banswara to get such a huge quantity of diesel, about 90 drums, from private parties. He further observed that the assessee's explanation was not at all convincing. It was further observed that the purchases are not verifiable. It was also observed that the assessee has inflated the purchase of diesel by introducing a fictitious entry while actually no purchase has been made. He, therefore, held that the assessee was in possession of diesel amounting in value to Rs. 14,026 on July 4, 1970, whose source of acquisition remained not explained. The ITO also invoked the provisions of Section 40A(3) of the Act and considered the payment to be an expenditure and as such it was taken as inadmissible under the aforesaid provision. On appeal by the assessee, the AAC affirmed the order of the ITO and further pointed out that no private party can deal in diesel unless licensed to do so and if the purchases were from the licensed dealers, there was no reason why the assessee should not get purchases verified from them. The evidence produced by the assessee was considered to be self-created evidence and it was taken that it did not prove the assertion of the assessee and the applicability of Section 40A(3) of the Act was also maintained. The assessee went in appeal before the INcome-tax Appellate Tribunal (hereinafter referred to as "the Tribunal"). The Tribunal vide its order dated October 22, 1974, found as under;

(3.) IN this application, the main controversy centres round the question whether any question of law arises out of the order passed by the Tribunal.