JUDGMENT
T.L. Viswanatha Iyer, J.
1. These three petitions under Section 256(2) of the Income-tax Act, 1961, relate to the assessment made on the assessee one R. Bharathan for the assessment year 1982-83. The assessee is an abkari contractor. After being satisfied that the return did not truly reflect the income of the assessee, the assessing authority came to the conclusion that the assessee had sold 1,27,798 litres of arrack as against 58,950 litres accounted for. There was thus an unaccounted sale of 68,848 litres. On this basis, the assessing authority reached the conclusion that there was undisclosed income to the extent of Rs. 7,50,124. The assessing authority also found income from undisclosed sources to the extent of Rs. 19,05,898 out of which he deducted an amount of Rs. 7,55,124 added as undisclosed business income and thus fixed the income from those sources at Rs. 11,50,774. The assessing authority completed the assessment accordingly. The Commissioner (Appeals) modified the order to the extent that he limited the addition from undisclosed sources to Rs. 8,21,233 out of which he deducted an amount of Rs. 1,10,000 as explained. He confirmed an addition of Rs. 7,50,124 from business, and since the increase in wealth of Rs. 7,11,233 which resulted in the addition of income from undisclosed sources was less than this amount, no separate addition was made under the head “Other sources”.
2. This was challenged both by the assessee and the Department before the Tribunal by separate appeals. The assessee had filed a cash flow statement before the Commissioner. But the assessee did not stand by the statement prepared by himself with the help of his chartered accountant when the matter came up before the Tribunal. The Tribunal came to the conclusion that there was no certainty that the assessee had actually made a profit when he sold the excess quantity of arrack, namely, 68,848 litres. Based on these premises and others, what the Tribunal did was to allow the assessee’s appeal and delete the additions made by the assessing authority except to the extent of Rs. 1,10,000 on which the Departmental appeal was allowed. Being aggrieved, both sides are before us with these petitions under Section 256(2) of the Income-tax Act, 1961. We are satisfied on a perusal of the order of the Tribunal that so far as the assessee’s application under Section 256(2) is concerned which relates to the addition of Rs. 1,10,000 sustained by the Tribunal differing from the view taken by the Commissioner, there is no material on which we could direct
reference of any question of law sought to be referred. The assessee himself had admitted the existence of this amount though under a different head. The order of the Tribunal is based on materials and evidence on record and it could not for any reason be stated to be perverse or otherwise liable to be interfered with in reference under Section 256(1) of the Income-tax Act. We decline to make reference of the question raised by the assessee in respect of this amount of Rs. 1,10,000. So far as the Departmental applications are concerned, we are satisfied that the following questions of law arise which they have raised in their reference applications as arising out of the order of the Tribunal, namely :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal is right and had materials in considering and in holding income assessed under the head ‘Business’ as income from ‘Other sources’?
2. If the answer to the first question is in the affirmative should not the Tribunal have, for the reasons given in the assessment order, determined the income from other sources at Rs. 19,05,898 (agreed variation, if any) ?
3. If the answer to the first question is in the negative, should not the Tribunal have, for the reasons given in the assessment order, considered and sustained the addition of Rs. 11,50,774 (agreed variation, if any) under the head ‘Other sources’ ?
4. Whether, on the facts and in the circumstances of the case and the total investment and accretion to wealth according to the assessment order being Rs. 19,05,898 and the income of Rs. 7,55,124 assessed under the head ‘Business’ having been given set off in the, assessment and the balance having been brought to assessment only under the head ‘Other sources’, the Tribunal is right in law and fact in reducing the addition from Rs. 19,05,898 to Rs. 8,21,233 by confining its consideration to Rs. 8,21,233 assessed only under the head ‘Other sources’ and holding that ‘the submission . . . that it should be assessed under the head ‘Other -sources’ is safer and more reliable. Is not the above approach and order with reference to the addition not sustained by the Tribunal wrong and unsustainable in law and fact ?
5. Whether, on the facts and in the circumstances of the case-(a) the premise on which the Tribunal considered the question-telescoping Rs. 7,55,124 to Rs. 8,21,233 in paragraph 12–is right and sustainable in law and fact ?
(b) should not the Tribunal have fixed the investments and accretions to wealth at Rs. 19,05,898 and determined the additions both under the heads ‘Business’ and ‘Other sources’ or the entire addition of Rs. 19,05,898 under ‘Other sources’?
6. Whether, on the facts and in the circumstances of the case and considering the reasons and evidence on the basis of which the officer determined the profit margin of the liquor sold outside the books of account, the Tribunal had materials to interfere with the margin of business income ?”
3. Questions Nos. 7 and 8 relate to deletion of Rs. 50,000 and Rs. 5,000 on which we do not find any reason to direct reference.
4. Accordingly, we dismiss Original Petition No. 533 of 1992, filed by the assessee and we allow the other two petitions arid direct the Income-tax Appellate Tribunal, Cochin Bench, to refer the questions of law referred to earlier for the determination of this court under Section 256(2) of the Income-tax Act, 1961. The Tribunal shall state a case and refer the aforesaid questions of law at the earliest.
5. Communicate a copy of this judgment under the seal of this court and the signature of the Registrar to the Income-tax Appellate Tribunal, Cochin Bench, for information and compliance.