Law: Income Tax Act, 1922

Section: 66,66(1)

[Income Tax Act, 1922 (XI of 1922)].........Section 66(1)-Reference to High Court-Question of law arising out of Tribunals order-Questions of applicability or otherwise of application of provise to Section 13 and rejection of account books not raised before the Tribunal-Whether questions arises out of Tribunals order Held no-Tribunal setting aside assessment for re investigation and determination of reasonability of allowance of wastage of yarn claimed-Question not decided against the assessee-Reference to High Court on this account-Whether misconceived-Held yes-When a question of law arises out of Tribunals order, explained. JUDGMENT [The judgment of the Court was delivered by MUHAMMAD Amin Burr, J.].-This is a reference application at the instance of assessee who is a manufacturer of art silk cloth. 2. The brief facts of this case are that for the assessment year 1971-1972 the assessee declared a loss of Rs. 1,17,679/-. In the course of assessment under Section 23(3) of the Income Tax Act the Income Tax Officer found that the assessee had consumed 21,188 Lbs Yarn while production of cloth was 20,040 Lbs which disclosed the wastage of 5.41% as against 5.24% shown in the preceding year. The Officer further found that no day to day production record had been maintained. Describing the claimed wastage of 5.41% as excessive he allowed it at only 2% and disallowed the balance of 3.4% as "excessive unexplained Wastage" and thus added Rs. 21,860/-to the returned income of the assessee; 2." On appeal before the Income Tax Appellate Tribunal the action of the learned Income Tax Officer was questioned on the ground that he had not disclosed any basis for the wastage allowed by him. 3. Before the Appellate Tribunal the following grounds were taken: (i) That the order of the learned Income Tax Officer in making an addition of Rs. 21,860/-to the cloth account on account of shortage is unjustified, improper, wrong and arbitrary. (ii) that the wastage is proper compared to the earlier years wastage Besides it is in order in view of the items manufactured this year. A perusal of the order of the Income Tax Appellate Tribunal also shows that the assessee did not dispute the…

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