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TMI Blog1974 (12) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 25,55,555. In the first year of its working the lease, the assessee did not effect any sale. On January 24, 1961, the assessee made a representation to the Chief Conservator of Forests, Jammu and Kashmir, complaining therein that on exploitation of the aforesaid forest compartment, it had found that over 65% of the trees marked fit for felling had turned out as unsound and praying that " volume " proportionate thereto be issued to it in some adjoining forest or the royalty be reduced to the volume found actually sound. This representation was forwarded by the Chief Conservator of Forests to the Conservator of Forests, North Circle, for report after personal detailed inspection on the spot by the latter and the Divisional Forest Officer, Langet. Pursuant to this direction the Divisional Forest Officer vide his No. 43-C dated May 11, 1962, reported to the Conservator of Forests that there was heavy incidence of rot in the compartment, that the Range Officer, Mewar, had checked all the 1,200 trees felled up to that time by the assessee and found them unsound though they appeared to be free from any visible defect. The Divisional Forest Officer further reported that he had also " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the Income-tax Officer were replied to by the assessee by its letter dated November 28, 1968. Not feeling satisfied with the explanation tendered by the assessee, the Income-tax Officer added a sum of Rs. 36,000 " for suppression of sales " made at the Pathankote depot and holding the plea taken by the assessee regarding the logs lying in the forest as on March 31, 1963, and their conversion and sale in favour of Shri Abdul Rehman Guru of Doabagh as not verifiable and taking the yield of sawn timber at 50% he worked out the same at 72,805 c. ft. and made an addition of Rs. 2,27,354 to the trading account of the assessee. Aggrieved by the order of the Income-tax Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner, who dismissed the same relying on the system of valuation of closing stock and the schedule adopted by the forest department of the state as regards the out-turn of the sawn timber. The assessee then took the matter in second appeal to the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh. At the hearing of the appeal before the Tribunal, the assessee contended that there had been no suppression of sales as found by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated December 11, 1970. Thereafter, the assesses moved the Income-tax Tribunal for rectification of its aforesaid order by means of an application under section 254(2) of the Act which was rejected by the Tribunal, vide its order dated April 12, 1972, with the observation that there was no mistake apparent from the record to justify rectification. The assessee then made an application to the Tribunal for referring certain questions of law arising from its order dated December 11, 1970, for decision to this court. According to the request of the assessee the Tribunal has referred the aforesaid question of law for our decision. Appearing for the assessee, Mr. Chadha has strenuously urged that the income-tax authorities have misdirected themselves, that there is no material on the record for holding the 42,250 c. ft. of timber was not sold in favour of Abdul Rehman Guru at the rate and for the consideration shown by the assessee, that simply because 42,250 c. ft. of timber was shown to have been sold for Rs. 25,246 could not reasonably lead to the conclusion that there had been a suppression of sales on the part of the assessee, that the material on the record is not legally suffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistant Commissioner also appears to have affirmed the assessment made by the Income-tax Officer, taking into consideration the comparative analysis of the out-turn of the previous years, and the schedule adopted by the Jammu and Kashmir Forest Department according to which the expected out-turn from the marked volume is taken at 55% for Deodar and holding that " the evidentiary value of the correspondence of the forest department of Jammu and Kashmir which pointed out rock-bottom minimum could not be of much assistance to the assessee." On the matter coming up before the Appellate Tribunal it also brushed aside the report regarding the assessment of rot made by the concerned Divisional Forest Officer on May 11, 1962, characterising it as inconclusive and despite the pious declaration made by it that the report of the Ayyangar Commission had not been properly brought on the record and no opportunity had been given to the assessee of proving its case regarding the recitals in the particular paragraphs of the report dealing with rot, it relied on it as an expert report of immense value in estimating the existence, nature and extent of rot. We would like at the very outset to obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was collusion between the assessee and the Divisional Forest Officer, or that the assessment of rot made by him was exaggerated or incorrect, if the authorities thought that certain things which had been left vague and obscure by him needed clarification they ought to have sent for and examined him. Without adopting that course they ought not to have ignored his report. The sale alleged to have been made in favour of Shri Abdul Rehman Guru of Doabagh could also have been easily verified by the Income-tax Officer by sending for the former and examining him. Without doing so it was not just and proper for the Income-tax Officer to have treated it as fictitious and thus to have abstained from relying on it. Now, so far as the Schedule adopted by the forest department for working out the yield of sawn timber is, concerned, we have no hesitation in agreeing with the learned counsel for the assessee that it has no statutory or legal force and cannot even otherwise be relied upon as the yield depends upon various factors, Reference in this connection may be made to the decision of the Calcutta High Court in Director-General, Ordnance Factories Employees' Association v. Union of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st its officers and is not meant to produce any document of a judicial nature. As held in Ram Krishna Dalmia v. S. R. Tendolkar and reaffirmed in P. V. Jagannath Rao v. State of Orissa a commission is appointed under the Commissions of Inquiry Act merely to investigate and record its findings and recommendations and the inquiry and the report made by it cannot be looked upon as a judicial inquiry in the sense of its being exercise of judicial functions properly so called, In Director-General, Ordinance Factories Employees' Association v. Union of India, it was held that the pay Commission's observations had no legal force but were only matters for consideration of the administrative authorities. Reference in this connection may also be made to a decision of the Privy Council in Martand Rao v. Malhar Rao, where it was held that the opinion expressed in official reports should not be treated as conclusive in respect of matters requiring judicial determination, however eminent the authors of such reports may be. Reference in this connection may also be made with advantage to H. Mathewson v. Secretary of State were it was held that Government reports have no judicial author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment on the basis of best judgment. Again in Raghubar Mandal Harihar Mandal v. State of Bihar, their Lordships of the Supreme Court held " There must be something more than bare suspicion to support the assessment. When the returns and the books of account are rejected, the assessing officer must make an estimate and to that extent he must make a guess, but the estimate must be related to some evidence or material and it must be something more than mere suspicion." Reference in this connection may also be made to a decision of the Nagpur High-Court in R. B. N. J. Naidu v. Commissioner of Income-tax. Now, even assuming that there was some material on the record to support the impugned addition of Rs. 2,27,354, the orders passed by the income-tax authorities and the Appellate Tribunal are vitiated by the fact that reliance was also placed by them on irrelevant and inadmissible evidence like the report of the Ayyangar Commission and the aforesaid schedule of the forest department. In Dhirajlal Girdharilal v. Commissioner of Income-tax their Lordships of the Supreme-Court observed that if the court of fact whose decision on a question of fact is final arrives at a deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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