Law: Income Tax Act, 1961

Section: 5.256

Income-tax----Reference---Finding by Tribunal that sales and purchases made by assessee were verifiable and his explanation regarding gross profits was satisfactory---Tribunal justified in deleting addition to income---No question of law arose from its order---Indian Income Tax Act, 1961, 5.256. The decision in a case is rendered on its own facts. It is the ratio decidendi that may be relied upon as a precedent in another case, but it must be shown that the decision relied upon applies to the facts obtaining in a given case. The assessee filed a return disclosing a loss for the assessment year 1975-76. The Income-tax Officer rejected the account books of the assessee for certain reasons and worked out the net profit at Rs.4,47,480 and in doing so, he estimated the sales at Rs.49,72,000 and applied a net profit rate of 9 per cent thereon. The sales were estimated at 2.5 times the licence money which was Rs.19,88,950. In taking this view, the Income-tax Officer referred to a decision of the Income-tax Appellate Tribunal in the case of another assessee for the assessment year 1973-74. However, the book version of the assessee was accepted by the Commissioner of Income-tax (Appeals), on appeal, and, thereafter, on further appeal, by the Income-tax Appellate Tribunal, on the facts found by those authorities -and on appreciation of evidence that had been adduced on record. The appellate authorities had recorded a categorical finding of fact that the entire sales and purchases of the assessee were verifiable and it had kept complete accounts. The assessee had successfully proved to the satisfaction of the appellate authority the reasons for which the gross profit was less in the year in dispute by giving comparable figures. On an application to direct reference: Held, dismissing the application, that a mere reference to the decision of the Tribunal in certain other matters not pertaining to the assessee was of no consequence and could not have been relied upon. The question of estimating income could only arise when the books were not found reliable as contemplated under the first proviso to subsection (1) of section 145 under subsection (2) of that section. No such…

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