2002 (10) TMI 65 - HC - Income Tax

Appellant is a partnership firm carrying on abkari business - That, on the facts and circumstances of the case, is the Income-tax Appellate Tribunal right in confirming the disallowance of loss from the toddy business to the extent of Rs. 6 lakhs? - it is clear that the assessee was not maintaining proper accounts in respect of its business, particularly the toddy business, and that the assessee has not produced any supporting material or evidence with respect to the loss in toddy business claimed by it. The first appellate authority, however, did not go into the said question and had decided the matter mainly on the basis that the firm was granted registration. It is not seen that the Department has filed any appeal against the order of the Tribunal. We are of the view that the Tribunal had disallowed the claim of loss to the extent of Rs. 6 lakhs on a due consideration of all the relevant materials placed before it. We do not find any illegality in the order of the Tribunal. The findings entered by the Tribunal are findings of fact. We do not find any substantial question of law much less any question of law arising from the said findings.

Summary

Issues:
Assessment of loss in toddy business under Income-tax Act, 1961 for the assessment year 1991-92.

Analysis:
The appellant, a partnership firm engaged in abkari business, filed a return declaring a loss of Rs. 1,13,313 for the assessment year 1991-92. The assessing authority processed the return under section 143(1)(a) of the Income-tax Act, determining a net loss of Rs. 93,000. Subsequently, the assessment was completed under section 143(3) of the Act, determining the total income at Rs. 41,18,770. The Commissioner of Income-tax (Appeals) allowed the appeal in part, directing that the loss incurred in the toddy section had to be allowed and the provisions of the Benami Transactions (Prohibition) Act, 1988, cannot be invoked to disallow the said loss. The Department filed an appeal against this order before the Tribunal, which sustained the disallowance of the loss in the toddy business to the extent of Rs. 6,00,000. The appellant, aggrieved by this decision, filed an appeal challenging the disallowance.

The main question before the court was whether the Income-tax Appellate Tribunal was right in confirming the disallowance of the loss from the toddy business to the extent of Rs. 6 lakhs. The Tribunal based its decision on the fact that the assessee failed to maintain proper accounts for its business, particularly the toddy business, and did not produce sufficient supporting material or evidence regarding the claimed loss. The Tribunal compared the results of the assessment for the previous year with the current year and determined the loss in toddy business at Rs. 6,82,349, disallowing the loss to the extent of Rs. 6 lakhs.

The court observed that the Tribunal's decision was based on a thorough consideration of all relevant materials and facts presented. It was noted that the Department did not file any appeal against the Tribunal's order. The court found no illegality in the Tribunal's decision, stating that the findings were factual and did not raise any substantial question of law. Consequently, the court dismissed the appeal, concluding that there was no merit in challenging the Tribunal's decision regarding the disallowance of the loss in the toddy business.

In conclusion, the court upheld the Tribunal's decision to disallow the claimed loss in the toddy business to the extent of Rs. 6 lakhs, emphasizing the importance of maintaining proper accounts and providing supporting evidence in income tax assessments.