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TMI Blog1973 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, showing gross turnover in the sum of Rs. 2,34,576. Breaking up the aforesaid amount the assessee said that the sweets manufactured by him amounted to Rs. 75,000 and those that were purchased by him amounted to Rs. 1,59,576. According to the assessee the gross profit rate of the confectionery manufactured by him was 17.5% and for the one that was purchased by him it was 8.5%, yielding an average profit of 11.2%. The Income-tax Officer, not finding the books of account entirely reliable, estimated the turnover at Rs. 2,50,000 and calculated the average rate of profit at 17.5% and taxed the assessee accordingly. An appeal was taken before the Appellate Assistant Commissioner. He reduced the gross turnover to Rs. 2,44,000 and reduced the ave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l turnover to be Rs. 2,10,000 and the rate of profit at 17.5%. On appeal, the Appellate Assistant Commissioner reduced the estimate to 15% profit and the total turnover to Rs. 2,03,000. In second appeal before the Tribunal, Jaipur Bench, the total turnover was reduced to Rs. 2,00,000 and the confectionery manufactured by the assessee was at the request of the assessee separated from his total turnover and taken to be at Rs. 75,000 and that which was purchased and sold by him at Rs. 1,25,000. The Tribunal fixed the profit in regard to the confectionery made by the assessee at 20% and that which was purchased and sold by him at 10%, the average coming to 13.75%. In regard to both the assessment years the assessee requested the Tribunal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. Mr. B. L. Purohit appearing for the assessee urged that at this stage all that the court was required to consider was whether a question of law arose out of the order of the Tribunal and not what the fate of such question will be. He submitted that as for the increase of rate in regard to the confectionery manufactured by the assessee the Tribunal increased it from 15% or 17.5% to 20% without there being any evidence on record and this according to his submission amounted to a question of law which deserved to be referred. He relied on Dhirajlal Girdharilal v. Commissioner of Income-tax, Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax, Omar Salay Mohamed Sait v. Commissioner of Income-tax, Jonnalagadda Yedukondala Rao ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lordships of the Supreme Court in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. such a question cannot be required to be referred under section 256(2) of the Act. The exact words of section 256(1) which fall for our consideration are " any question of law arising out of such order " of the Tribunal. It is in this situation that the Tribunal has to make a reference to the High Court failing which the High Court may require the Tribunal to make a reference. The principles relating to the interpretation of these words are to be found in Dhirajlal's case which lays down that if the court of fact whose decision on a question of fact is final, arrives at a decision of fact by considering material which is irrelevant to the enqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee before us is that there was no evidence to sustain the rate of 20% on the confectionery which was manufactured by the assessee. It is not disputed that the assessee placed before the taxation authorities its own account books and they were not found reliable and, therefore, the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal have acted under the provisions of section 145(1) and the proviso thereto and this part of the decision has not been challenged. The only question is whether adopting such basis for the determination of the rate of tax of the assessee could be called as a determination without any evidence ? Could it be characterised as based on mere conjecture, suspicion or based on surmises ? Could it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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