Commissioner Of Income-Tax vs Pesto Chem India Ltd.
1999 Latest Caselaw 618 Del

JUDGMENT

1. By this application under Section 256(2) of the Income-tax Act, 1961 (for short "the Act"), the Revenue seeks a mandamus to the Income-tax Appellate Tribunal to refer the following question to this court for opinion :

"Whether, on the facts and in the circumstances of the case, the Income-tax-Appellate Tribunal was justified in deleting addition of

Rs. 11,74,000 on the basis of affidavits furnished by the directors which are self-serving documents ?"

2. Having heard Mr. R. D. Jolly, learned senior standing counsel for the Revenue, we are of the view that the proposed question is not a question of law fit for reference to this court.

3. During the course of assessment proceedings for the assessment year 1992-93, while examining the books of account of the assessee, the Assessing Officer noticed that the assessee had shown certain withdrawals by its directors from the petty accounts from time to time to meet the business expenses which were later on re-introduced as cash withdrawals either in part or in whole from time to time. It was explained by the assessee that the amounts withdrawn by the directors were deposited in the bank or in the cash book whenever there was a need to have cash balance in the bank account or in the cash book and for the purpose the amount(s) was transferred from the imprest account to the bank account or in the cash book. Rejecting the explanation furnished by the assessee, the Assessing Officer treated the amount so deposited in the bank and the cash book as the income of the assessee from undisclosed sources. The said addition was confirmed by the Commissioner of Income-tax (Appeals). In further appeal by the assessee before the Appellate Tribunal, the Tribunal after examining the imprest accounts of the directors/relatives from the assessment year 1989-90 to the assessment year 1994-95 observed that the said practice was being followed by the assessee in the past years as well as in the subsequent years but no such addition was ever made in any of the years. The Tribunal further noticed that even according to the Departmental Representative the existing debit balance in the imprest account was adequate to cover the credits on any one date in the said imprest accounts, meaning thereby that the directors re deposited the amount either wholly or partly with the company out of the withdrawals of the money made by them from the assessee by debiting the same in the respective imprest accounts. The Tribunal accordingly held that the Revenue had failed to prove that the amounts withdrawn by the directors by debiting their respective imprest accounts were spent for some other purposes and the same were not available with them for re-depositing with the bank.

4. The aforesaid findings recorded by the Tribunal, based on the material available before it are pure findings of fact, which are not sought to be challenged by the Revenue in the proposed question as perverse or unreasonable. Having regard to the format of the question proposed, we find no force in the contention of learned counsel for the Revenue that the Tribunal having failed to take into consideration the material referred to by the Commissioner of Income-tax (Appeals) a question of law does arise from its order.

5. The petition is accordingly dismissed.