Law: Income Tax Act, 1961

Section: 145,256

Income-tax---Reference---Method of accounting---Mixed system of cash and mercantile---Consignment sales accounted on basis of receipt of sale pattials from consignees---Consistent method of accounting followed--­Tribunal holding that margin of 50 per cent. can be allowed for delay in receipt of sale pattials from consignees---Balance alone to be taken for computation of income---Conclusions of Tribunal finding of fact---No interference called for in reference---Indian Income Tax Act, 1961, 5.256. The assessee was a registered firm dealing in arecanuts and other agricultural produce like pepper, rubber seeds, copra, etc. Consignment sales were accounted for by the assessee from year to year on the basis of receipt of sale pattials from the consignees. The Assessing Officer did not accept this method and for the assessment year 1987-88 he enhanced the assessee's consignment sales by including the sales in the trading account and on that basis the gross profit arrived at was a higher figure. The Commissioner of Income-tax (Appeals) confirmed the addition. The Tribunal took into account the consistent method of accounting followed by the assessee and directed 50 per cent. of the sales to be considered for the assessment year 1987-88. On a reference: that the system of accounting followed by the assessee was not strictly the mercantile system or cash system. It was a mixed system. The Tribunal recorded a finding on the facts that a reasonable margin of time was necessary for the patties to reach the assessee and accordingly a margin of 50 per cent. attributable to the time gap was fixed. The, conclusions were essentially of fact and could not be said to be perverse or based on surmises or conjectures. Hence, no question of law arose for consideration. JUDGMENT ARIJIT PASSAYAT, C.J.---Heard. These two income-tax references are interlinked and are disposed of by this common judgment. Pursuant to the directions given by this Court in two original petitions filed by the assessee and the Revenue (O.P. Nos.17247 of 1993 and 2486 of 1994), the following questions have been referred for opinion of this Court under section 256(2) of the Income Tax Act, 1961 (in short "the…

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