Law:

Section:

(a) Income tax---Reference to High Court Question of law arising out of Tribunal's order High Court erroneously directing Tribunal to refer question Empowered to decide that referred question did not arise out of Tribunal's order Question neither raised nor considered by Tribunal -cannot be said to arise out of Tribunal's order. (b) Income tax - Best assessment Necessarily involves some guess work¬--Such guesswork should be honest and not capricious. C. I. T. v. Smt. Anusuya Devi (1968) 68 I T R 750 (S C) ref. JUDGMENT G. G. SOHANI, J. As directed by this Court, the Income tax Appellate Tribunal, Indore Bench, has referred the following questions of law to this Court for its opinion "(I) Whether, on the facts and in the circumstances of the case when the account books have not been rejected and no defects therein have been pointed out, the I. T. O. was in law justified in making any addition in the ginned cotton account on the ground of alleged low yield of cotton ? (2) If the answer to the first question is 'in the affirmative, the assessee having shown better yield of cotton from kapas than in the assessment year 1965 66 and the yield compared favourably with the accepted yield cotton at Barwaha in of a comparable case, the Tribunal was justified in determining the yield of cotton at 34.75 % in the assessment year 1966 67 and sustaining an addition of Rs. 13,000 to the book profits on that basis ?" The material facts giving rise to this reference briefly are as follows: The assessee, which is an HOF, carried on at the material time business in cotton at Bhikangaon and Barwaha. While framing the assessment for the year 1966 67, the ITO found that 6,929 quintals of kapas were ginned at the Barwaha shop of the assessee, rut the assessee had disclosed that 2,315 quintals of rui were extracted, thus showing the yield at 33'4 per cent. which was considered to be too low by the ITO. The ITO held that the normal yield of cotton could not be less than 35 per cent. He, therefore, made an addition of Rs. 80,000. In the appeal preferred before the AAC, the AAC found that the quantity of rui extracted was 2,364 quintals and not 2,315 quintals, as found by the ITO. The…

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