Income-tax---

----Reference---Accounting---Rejection of accounts---No finding in assessment order that S 145(2) of the Indian Income Tax Act, 1961 was applicable or taken as a ground in appeal filed before Tribunal---Section 145(2) whether applicable---Day to day stock records for each stage of production not maintained---Section 145(2) whether applicable---Questions of law:

Held. (i) that the question whether the Tribunal was justified in law in holding that the provisions of section 145(2) of the Income Tax Act, 1961, were applicable even though no such finding had been recorded in the assessment order nor was any such ground taken in the appeal filed before the Tribunal by the Revenue was a question of law;

(ii) that, whether the Tribunal was justified in law in holding that, in -the absence of maintenance of day to day stock records for each stage of production, the books of account were liable to be rejected and the provisions of section 145(2) were to be applied was a question of law.

Vikram Gulati for the Assessee.

JUDGMENT

JEEVAN REDDY, CJ.---Havingheard counsel for both the parties, we direct the Tribunal to state the following two questions, namely, questions No.l and 2, out of the questions suggested by the assessee under section 256(2) of the Income Tax Act, 1961:

"(1) Whether the Income-tax Appellate Tribunal was justified in law in holding that the provisions of section 145(2) of the Income-tax Act, 1961, were attracted to the facts of the case, even though no such finding had been recorded in the assessment order, nor was any such ground taken in the appeal fled by the Revenue before the Tribunal?

(2) Without prejudice to the above and, in the alternative, whether the Income-tax Appellate Tribunal was justified in law in holding that in the absence of maintenance of day-to-day stock records for each stage of production, the books of account were liable to be rejected and the provisions of section 145(2) of the Act were to be applied?"

It is agreed by the assessee's counsel that questions Nos.3 to 7 were merely argumentative and that it is enough if questions Nos.1 and 2 are referred.

The income-tax appeal is allowed in part and the Tribunal is directed to state the abovementioned two questions.

M.B.A./1537/TOrder accordingly.