COMMISSIONER OF INCOME-TAX VS HAZARI MAL KUTHIALA & CO.
1999 P T D 1602
[226 I T R 424]
[Punjab and Haryana High Court (India)]
Before G.S. Singhvi and B. Rai, JJ
COMMISSIONER OF INCOME-TAX
Versus
HAZARI MAL KUTHIALA & CO.
Income-tax Reference No. 42 of 1981, decided on 10/10/1996.
Income-tax--
----Appeal to Appellate Tribunal---Business expenditure---Loss---Assessee working timber lease---Appellate Assistant Commissioner reducing deduction on account of river loss on basis of record---Tribunal without pointing out error in appellate order allowing loss as claimed---Not justified---Order of Appellate Assistant Commissioner restored.
The assessee was a forest lessee, which exploited Tandai forest and launched the timber on the river. For the assessment year 1972-73, it claimed a river loss of 7 per cent. but the Assessing Authority permitted a river loss of 4 per cent only. The assessee appealed. The Appellate Assistant Commissioner, finding from the record that out of two launches of timber made, the first launching was received in 1972-73 whereas the second was received in 1973-74 and taking into account the difference between the claim of the assessee and the actual loss suffered in 1972-73, reduced the allowable river loss to 3 per cent. On further appeal, the Tribunal allowed the claim of the assessee to river loss at 7 per cent. On a reference:
Held, that while reversing the order of the Appellate Assistant Commissioner, the Tribunal had not referred to any error in the order of the Assessing Authority or the Appellate Authority but decided the issue on mere conjecture by observing that in the past the river loss allowed by the Department was 15 per cent to 25 per cent and for the assessment year 1966-67, a river loss of 20 per cent was allowed. The Tribunal not only failed to examine the legality and correctness of the orders passed by the Assessing Authority as well as the Appellate Authority but decided the case only on the basis of conjectures. The order passed by the Appellate Authority was well-reasoned and supported by the facts placed on record. Therefore, the assessee was not entitled to river loss at 7 per cent for the assessment year 1972-73 and the Appellate Authority had rightly allowed river loss to the extent of 3 per cent only.
S.S. Mahajan for the Commissioner.
Nemo for the Assessee.
JUDGMENT
G.S. SINGHVI, J.---The assessee is a forest lessee. During the assessment year 1972-73, it had exploited Tandai forest and launched 33,673 pieces of timber in the river out of which 31,321 pieces were shown as recovered the river loss claimed by the assessee was 7 per cent. (2,352 pieces). The assessing authority did not agree with the contention of the assessee regarding river loss and reduced the river loss from 7 per cent.. to 4 per cent. The assessing authority disallowed the excessive loss of 1,006 pieces. The total amount disallowed by the Assessing Authority was Rs.25,150. Accordingly, the assessing authority directed the addition of Rs.25,150 in the income of the petitioner. The appellate authority before whom the assessee filed an appeal came to the conclusion that the total loss was only 3 per cent. as against 7 per cent. claimed by the assessee and 4 per cent allowed by the assessing authority. Consequently., the appellate authority not only upheld the addition of Rs.25,150 but also enhanced the income of the assessee by Rs.8,500.
Dissatisfied with the order of the appellate authority, the respondent filed an appeal before the Income-tax Appellate Tribunal which reversed the orders of the assessing authority and the appellate authority and deleted the addition of Rs.33,650 made by the Appellate Assistant Commissioner.
A reference petition filed by the Revenue was dismissed by the Tribunal but pursuant to an order, dated August 23, 1980, passed by this Court in I.T.C. No.48 of 1976, the Tribunal referred the following question for the opinion of the High Court:
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing river loss at 7 per cent for the assessment year 1972-73 when on actual calculation the loss after taking into account both the launches together, is less than 3 per cent.?"
Shri S.S. Mahajan, learned counsel appearing for the Revenue, argued that the finding recorded by the Tribunal is patently perverse because it is not based on any evidence. Shri Mahajan pointed out that the Tribunal has arbitrarily relied on the assessment of previous years. According to learned counsel, the Tribunal ought to have examined the legality of the orders of the assessing authority and the Appellate Assistant Commissioner on the basis of the facts brought on record in regard to the disputed assessment year, i.e., 1972-73.
After having gone through the record of the case we find substance in the argument of Shri Mahajan that the order passed by the Tribunal suffers from a patent illegality. It is borne out from the record that the assessee had made two launches of 57,716 pieces on November 19, 1970, and 24,034 pieces on January 21, 1971. The first launching was received during the year 1972-73 whereas the second launching was received in 1973-74 and the total loss was only 1,619 pieces whereas the assessee had claimed loss of 2,352 pieces during the year 1972-73 itself. After taking this patent difference in the claim made by the assessee and the actual loss suffered by him, the appellate authority concluded that the claim made by the assessee for deduction was unfounded. While reversing the order of the Appellate Assistant Commissioner, the Tribunal has not referred to any error in the order of the assessing authority or the appellate authority but decided the issue on mere conjecture by observing that in the past the river loss allowed by the Department was between 15 per cent and 25 per cent and for the assessment year 1966-67 river loss of 20 per cent. was allowed. Only on the premise, the Tribunal accepted the claim of the assessee for deduction of the loss to the tune of 7 per cent. In our opinion, the order passed by the Tribunal suffers from a patent illegality because it not only tailed to examine the legality and correctness of the order passed by the assessing authority as well as the appellate authority but decided the case only on the basis of conjectures. The order passed by the appellate authority is well-reasoned and is supported by the facts placed on record. Therefore, we hold that the assessee was not entitled to the river loss at 7 per cent for the assessment year 1972-73 and the appellate authority rightly allowed river loss to the extent of 3 per cent only.
In the result, we allow the petition and answer the question in favour of the Revenue and against the assessee.
M.B.A./2002/FC???????????????????????????????????????????????????????????????????????????????? Petition allowed.