Gujarat High Court
Commissioner Of Income Tax vs Vikram Plastics And Ors. on 27 August, 1998
Equivalent citations: [1999]239ITR161(GUJ)
Author: A.R. Dave
Bench: A.R. Dave
ORDER R.K. Abichandani, J.
1. The Revenue has filed these applications under s. 256(2) of the IT Act, suggesting the following questions in paragraph 4 of these applications :
IT Ref. No. 200/98 :
"Whether the Tribunal is right in law and on facts in deleting the addition of Rs. 90,17,888 on account of excess raw material shown as consumed ?"
IT Ref. No. 201/98 :
"(2) Whether the Tribunal is right in law and on facts in deleting the addition of Rs. 90,17,888 on account of excess raw material shown as consumed ?"
"(3) Whether the Tribunal is right in law and on fats in confirming the order passed by the CIT(A) deleting the disallowance made under s. 40A(2)(a) in respect of rent paid ?"
IT Ref. No. 202/98 :
"Whether the Tribunal is right in law and on facts in deleting the addition of Rs. 20,61,099 on account of excess raw material shown as consumed ?"
IT Ref. No. 203/98 :
"(2) Whether the Tribunal is right in law and on facts in sustaining addition of Rs. 7,00,000 as against Rs. 31,82,616 made by the AO on account of excess raw material shown as consumed ?"
"(3) Whether the Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the disallowance made under s. 40A(2)(a) in respect of rent paid ?"
IT Ref. No. 204/98 :
"(2) Whether the Tribunal is right in law and on facts in sustaining addition of Rs. 2,00,000 as against Rs. 10,12,320 made by the AO on account of excess raw material shown as consumed ?"
"(3) Whether the Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the disallowance made under s. 40A(2)(a) in respect of rent paid ?"
IT Ref. No. 205/98 :
"(2) Whether the Tribunal is right in law and on facts in sustaining addition of only Rs. 2,00,000 as against Rs. 10,12,320 made by the AO on account of excess raw material shown as consumed ?"
IT Ref. No. 206/98 :
"(2) Whether the Tribunal is right in law and on facts in deleting the addition of Rs. 20,61,099 on account of excess raw material shown as consumed ?"
"(3) Whether the Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the disallowance made under s. 40A(2)(a) in respect of rent paid ?"
IT Ref. No. 207/98 :
"Whether the Tribunal is right in law and on facts in sustaining the addition of only Rs. 7,00,000 as against Rs. 31,82,660 on account of excess raw material shown as consumed ?"
2. We have not reproduced the question No. 1 which is not pressed as stated in paragraph 6 of the applications.
3. The learned counsel appearing for the applicants has taken us through the relevant material on record. It was contended by him that the provisions of s. 145(2) of the said Act were rightly invoked by the AO and the Tribunal ought not to have taken a different view of the matter. In this regard, we note that the Tribunal has specifically considered the provisions of s. 145 in paragraph 7.3 of its order and after noticing the approach of the AO it found that there was no defect or discrepancy pointed out specifically in the books of accounts maintained. The Tribunal reiterated in paragraph 7.4 of its order that the assessee maintained books of accounts adopting the mercantile method of accounting as in the past and the position being so, neither the AO had given any finding nor there could be any such finding that no method of accounting had been regularly employed. It was held that the AO, therefore, could invoke the provisions of sub-s. (2) of s. 145 of the Act, only on being satisfied that the books of accounts maintained were not correct and complete. The Tribunal then found, after mentioning the situations in which the books of accounts maintained could be said to be incorrect and incomplete, that in this case there was no material brought on record to prove and establish that the purchases and expenses had been inflated or the sales had been suppressed and in the absence of any such material or finding given, the provisions of s. 145(2) ought not to have been invoked. It was held that on the facts given, the Tribunal did not find sufficient justification for invoking the provisions of s. 145(2) of the Act. In our opinion, in view of the finding reached by the Tribunal that there were no discrepancies or defects pointed out in the books of account and further that they were regularly maintained and also on the finding that there was no material brought on record to establish that purchases or expenses were inflated or sales suppressed and also in view of the finding that this was not a case that there was no method of regular accounting employed, the Tribunal was fully justified in coming to the conclusion that the provisions of s. 145(2) could not be invoked. This conclusion is based on finding of fact and raises no question of law.
4. The Tribunal, as regards the raw material used, took note of the facts that according to the assessee, the average weight changed from time to time looking to the quality and market requirements. The explanation so offered has not been controverted by the Revenue by bringing any material on record, as held by the Tribunal. Looking to the explanation offered and three sets of details of average weight found and furnished before the lower authorities on different occasions, the Tribunal observed that there was preponderance of probability that the average weight of various items manufactured saw change from time to time from heavier quality to lighter quality and looking to such trend there was every possibility that the average weights of various items furnished during the appellate proceedings were in vogue during the current assessment year and the average weight thereafter, changed to higher side. In our view, these are all questions of fact and there is no question of law involved.
5. Even as regards the question relating to deletion of disallowance of rent claimed under s. 40A(2)(a) of the Act, the finding of the Tribunal on the question of reasonableness of lease rent raises no question of law.
6. We, therefore, agree with the reasoning contained in the common order dt. 5th January, 1998 made by the Tribunal in all the reference applications of the present applicants, which were made under s. 256(1) of the said Act, and hold that there is no question of law arising in any of these applications. All these applications are, therefore, rejected.