At, Income Tax Appellate Tribunal ITAT Chandigarh Bench
By, F. C. RUSTAGI & RAM RATAN
R. K. Bali : R. N. Sehgal
The Judgment was delivered by F. C. RUSTAGI, J. :
F. C. RUSTAGI, J. M. :
The CIT vide this application under s. 256 (1) has requested the ITAT to refer the following question, said to be a question of law, arising out of its order dt. 27th June, 1985 in I. T. A. No. 648-chandi/84, to the High Court:
"Whether on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the order of the AAC allowing inclusion of anticipated profits for assessment on release orders and import licences in the absence of actual sale of goods and against any recognised system of accounting?"
Inasmuch as, in our opinion, the above said question does not call for reference, we are unable to accept the request of the concerned CIT for the following reasons.
2. The assessment year under reference is 1976-77. All through in the past years, the assessee had been showing expected profit on value of release and import licences from year and on actual profit having been received subsequently through adjustments. Return was made for the year under reference on the same basis. The assessee's contention was not accepted by the ITO but when the matter came before the AAC, he accepted the same.
3. When the Revenue came in appeal before the Tribunal it, after perusing the paper-book placed on the assessee's compilation, observed that right from 1971-72 to 1976-77 method adopted by the assessee for exclusion of expected profit for import licence was the same as during the year under consideration. Therefore, for the reason given by the AAC in his order, i. e. on the basis of consistency of accounting method adopted by the assessee year after year. the Tribunal confirmed the finding of the AAC.
4. At the time of hearing of this reference application, the ld. Senior Departmental Representative Mr. R. K. Bali was exclaimed to support that and submitted that anticipated profit on any business could be no basis. But when the paperbook which was placed at the time of hearing was perused by the ld. senior Departmental Representative with the assistance of the ld. counsel for the assessee, on the one hand, and by us, on the other hand, we find that year after year profits were disclosed on the same basis, i. e. for the first year anticipated profit was shown and in the second year when actual profit was known, adjustment was allowed either by application or adding the difference. So much so, the ld. counsel for the assessee submitted at the time of hearing of this application that for the year 1974-75 identical addition was proposed to be made by the ITO but the IAC under s. 144B proceedings accepting the consistency of accounting method adopted by the assessee, ordered the deletion of the same and he laced on record copy of directions under s. 144B issued by the IAC. Strangely enough, the addition proposed by the ITO on the basis of consistency of accounting method was ordere
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d to be deleted by the then IAC, who subsequently became CIT and strangely enough, for the reasons best known to him, he preferred a question for reference under s. 256 (1), which apparently is misconceived and not referable. The request of the concerned CIT is, therefore, rejected. 5. Reference application is dismissed.