Law: Income Tax Act, 1922

Section: 66,66(I)

[Income Tax Act, 1922 (Xl of 1922)].....Section 66 (I)--Reference to High Court-Tribunals order-Finding of fact-Tribunal's order total of ignoring material fact Whether vitiated and liable to be set aside- Held yes; The question referred is Whether it is open to the Income Tax Tribunal to have arrived at the impugned finding by totally ignoring the existence of the plea of the assessee that the sale has gone down on account of the Wars referred to above, a fact which had been accepted by the Appellate Assistant Commissioner as strong enough for reversing the order of the Income Tax Officer. This is a case of non-consideration of material evidence, wherefore we have no option but to accept the Reference and to set aside the order of the Income Tax Appellate Tribunal. Case relied on: Muhammad Afsar and 7 other v. Allah Ditta and 13 others (1970) S.C.M.R. 118. JUDGMENT [The judgment of the court was delivered by MUSHTAQ HUSSAIN J.].-The assessee is a Partnership Firm doing business in Textiles. It filed its return for the year 1960-67 showing a gross profit of 1.74 percent. In the preceding years the trading result of the assessee had ranged between 1.4 per cent for 1964-65 and 1.7 per cent for 1963-64. Though the percentage of profit had remained within these limits during these years, the sales were shown to have gone down considerably during the year 1966-67. The reason assigned by the assessee was circumstances arising out of the Rann of Katch dispute and the Indo-Pakistan War. The Income Tax Officer did not accept the assessment of sales as correct and applied a gross profit rate of 2.5 per cent. The assessee successfully filed an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner accepted the version of the assessee in respect of the two Wars and its effect on trade and reversed the order of the Income Tax Officer. The Income Tax Officer moved the Income Tax Appellate Tribunal, which accepted the Income Tax Officer's point of view, increased the estimate of sales to 30 lac and the gross profit to 2.5 per cent. Aggrieved by this order of the Tribunal, the assessee applied to it for stating the following two questions to…

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