1967 (11) TMI 23 - HC - Income Tax

Assessee-company explained the losses on three considerations- because of abnormal conditions obtaining in the year 1947 due to raids, because of loss due to floods, and because of some of the timber having been washed down - Whether there was no material or evidence that the shortage claimed by the assessee-company is excessive or unwarranted

Summary

Issues:
- Disallowance of timber shortage claimed by the assessee-company.
- Reduction of the amount of wastage of timber by the Appellate Assistant Commissioner.
- Dismissal of the application for reference by the Income-tax Appellate Tribunal.

Analysis:
1. The judgment involves three applications by the assessee-company under the Indian Income-tax Act, 1922, regarding assessment years 1950-51, 1951-52, and 1952-53. The company worked leases of three forests, facing a dispute over timber extraction and losses. The Income-tax Officer disallowed a portion of the claimed loss, adding it back to the company's income. On appeal, the Appellate Assistant Commissioner reduced the disallowed amount, citing abnormal losses. The Income-tax Appellate Tribunal upheld the reduction, leading to the company's application for reference to the High Court.

2. The primary issue concerns the reduction of the timber wastage amount by the Appellate Assistant Commissioner. The company argued that the reduction lacked a proper basis and relied on conjectures. Citing legal precedent, the company contended that findings based on suspicions or conjectures should be set aside. The department, however, maintained that all factors were considered by the authorities, despite the reduction lacking a clear basis. The High Court decided to issue a mandamus to the Income-tax Appellate Tribunal to refer the question of excessive shortage to the court for review.

3. Lastly, the judgment addresses the dismissal of the company's application for reference by the Income-tax Appellate Tribunal. The Tribunal rejected the application, stating that the excessive shortage determination was a factual finding based on the available material. The High Court intervened due to the lack of a clear basis for the reduction in timber wastage, emphasizing the need for evidence-supported conclusions in tax assessments. The Income-tax Appellate Tribunal was directed to refer the question to the High Court for further review and resolution.