1986 (4) TMI 35 - HC - Income Tax

Summary

Issues:
1. Applicability of proviso to section 145(1) of the Income-tax Act.
2. Justification of additions in trading account and alleged sales.
3. Disbelief of sworn statement and approval memo.
4. Burden of proof regarding goods in approval sale memo.

Analysis:

Issue 1:
The Income-tax Appellate Tribunal found that the value of "tal" in the account books of the assessee had not been shown, leading to the application of the proviso to section 145(1) of the Income-tax Act. The Tribunal held that the assessee had suppressed profits by not reflecting the value of "tal" in the account books. The Tribunal's decision was based on the premise that "tal" had value and should have been accounted for either in sales or closing stock. The Tribunal's finding was upheld, emphasizing the necessity for the assessee to maintain an account of "tal" in the account books, regardless of wastage during the manufacturing process. The burden was on the assessee to account for all materials from the first to the last stage of production. The court dismissed the assessee's argument, supporting the Tribunal's decision and citing relevant case law.

Issue 2:
The other questions raised by the assessee pertained to additions in the trading account and alleged sales, specifically regarding annexure G found in the premises of the assessee. The contention was based on the sworn statement of Abdul Wahab, asserting no connection between the assessee and the items in annexure G. The court deemed the credibility of Abdul Wahab's statement a question of fact. The Tribunal's decision not to believe the evidence and to hold that the burden of proof regarding the goods in annexure G was not discharged by the assessee was upheld. Consequently, no question of law arose for the court to intervene, leading to the dismissal of the application.

Issue 3:
The court emphasized that the Tribunal's findings on the credibility of evidence and burden of proof were factual determinations, not giving rise to any legal questions warranting a reference. The dismissal of the application was based on the factual nature of the issues regarding the sworn statement and approval memo, highlighting that no legal direction or question arose from the Tribunal's decision.

Conclusion:
The judgment addressed various issues, including the applicability of the proviso to section 145(1) of the Income-tax Act, justification for additions in trading accounts, disbelief of sworn statements, and burden of proof regarding goods in approval sale memos. The court upheld the Tribunal's findings on these matters, emphasizing the factual nature of the determinations and dismissing the application without costs.