NASIM SIKANDAR, J.-- This petition has been made under section 66(2) of the Income Tax Act, 1922.
Following questions are stated to have arisen of of the impugned order of the Income Tax Appellate Tribunal of Pakistan:-
(i) Whether in the facts and circumstances of the case, the Tribunal was justified in confirming that adequate opportunity was afforded to the applicant although no notice was issued to the counsel engaged for the specific purpose?
(ii) Whether Mr. Sidratullah and/or Mr. S.H. Zaidi were legally authorized representatives of the applicant in accordance with the provision of section 61 of Income Tax Act, 1922?
(iii) Whether there was any material for the Tribunal to confirm the rejection of the applicant's account version relating to production of yarn and wastage in the said process?
(iv) Whether in the facts and circumstances of the case, there was any material before the Tribunal to justify the confirmation of any addition in yarn production account?
(v) Whether in the facts and circumstances of the case the Tribunal was justified on the basis of any material on record to confirm the disallowance of Rs. 2,33,379/- of of the stores consumption account?
(vi) Whether the Tribunal was justified, in the facts and circumstances of the case, in disallowing Rs.
2,33,379/- of of stores consumption account and not capitalizing it in conformity with the previous history of the case?
(vii) Whether in the facts and circumstances of the case, the Tribunal was justified in declining to exercise its appellate jurisdiction with regard to the setting aside of the assessment by the Appellate Assistant Commissioner in respect of deferred revenue expenditure amounting to Rs.
5,85,621.00?
(viii) Whether the Tribunal was justified in not allowing the entire claim in respect of sales tax liability?
(ix) Whether the Tribunal was justified in not recording any finding with regard to grounds Nos. 12,13, 14 and 15, which were duly argued and were not given up by the applicant's counsel who appeared before the Tribunal?
2. The petitioner is a public limited company. For the assessment year under consideration viz 1971- 72 as against declared income of Rs. 27,60,791/- an assessment was framed on 30.5.1974 at total income of Rs. 94,54,851/-. In the process, the assessing officer made a number of additions. The petitioner received partial relief in first appeal while its second appeal was decided by the Tribunal on 30.3.1976. There upon its application under section 66(1) of the late Income Tax Act, 1922 for reference of the aforesaid questions to this Court was rejected on 23.12.1978. Hence this petition.
3. Learned counsel for the petitioner on 22.9.1979 opted not to press questions Nos. (i), (ii) and (vii).
4. For the petitioner it is inter alia contended that the assessing officer wrongly rejected the accounts, particularly the addition made on account of low yield was totally unjustified; that past history of the case was wrongly followed and that explanation put forth to explain low production was rejected on facts which were totally irrelevant, It is further stated that the assessing officer failed to appreciate that as a result of improvement the quality of yarn and improved. Lastly that history of the case followed while making other similar additions under the head consumption of stores was totally illegal and unjustified.
5. Learned counsel for the revenue on the other hand contends that none of the aforesaid questions as claimed raise any legal controversy. He maintains that all additions to income were made after the assessee failed to satisfy the revenue on the issues confronted to it. Particularly those relating to the causes for low production, excessive claim on account of consumption of stores and the claimed sales tax liability.
6. We will agree with the learned counsel for 'the revenue, It will be seen that while rejecting the application of the petitioner under Section 66(1) of the Income Tax Act a Division Bench of the Tribunal found that none of the issues raised before them give rise to any question of law. These very questions have now been submitted before us under section 66(2) of the late Income Tax Act, 1922.
12. The claim that no addition under the head yarn could have been made does not give rise to any legal controversy inasmuch the assessing officer after scanning the accounts observed that there was heavy fall in the yield shown this year. There was also a corresponding increase in the wastage. The assessee when called upon to explain, made vague and evasive answer. The claim that due to non-use of wastage a better quality was achieved was also found to be factually incorrect. Rather it was found that there was a decrease in the sale rate of yarn. After comparing the production results of the assessee-company in the earlier years it was noted that with the fall in average count of yarn during the year there should have been a corresponding improvement in the wastage. Also the heavy increase in the wastage shown was found to be un substantiated on account of absence of day to day record of the wastage. Accordingly it was allowed at 9.50% as against the claim made by the assessee at 10%. The Tribunal in its order found that the reasons mentioned by the assessing officer were sufficient to discard the declared version. Also they noted that production or yield was not only low but in fact was lowest in the last 12 years and the only explanation put forth that wastage was not re-used during the year under review was found to be factually wrong. From the average sale price of yarn per LB during the year at 2.14 as against Rs.
2.35 LB in the earlier year it was found that low yield had remained unexplained. Lastly it was found as a fact that claim of wastage determined in the last six years when compared with one allowed by the revenue during the year was still more than the similar claims made by the assessee in previous years. These findings of fact have not been questioned on any acceptable ground. Also it is not alleged that there was no material on record to support these findings.
13. Therefore we will agree with the learned counsel for the revenue that as far as rejection of accounts is concerned, no question of law has arisen in the facts and circumstances of the case.
14. As regards the disallowance of Rs. 2,33,379/- of of the stores consumption account again a finding of fact was recorded by the assessing officer that the claim was disproportionate and excessively high when compared with the similar claims in the previous years. Learned first appellate authority set aside the issue and the Tribunal maintained the same after they found themselves in agreement with the revenue of its being in line with the history of the case. No cogent reason at the bar has been stated against the finding so recorded by the Tribunal wile maintaining the remand order. The issue if the Tribunal ought to have allowed capitalization of the amount disallowed does not arise of of the order of the Tribunal inasmuch as no such claim/plea was ever raised before them.
15. That being so, as said above, the view adopted by the Tribunal does not give rise to any legal controversy.
16. In case of sales tax liability also the Tribunal recorded a finding of fact that admittedly the claimed liability pertained to the assessment years 1959-60, 1960-61, 1963- 64 to 1965-66 and therefore could not be claimed in the current assessment year viz. 1971-72. It was also noted that the amount claimed for the year 1965-66 at Rs. 7,43,566/- as an expenditure even if accepted could not have been allowed in the year under review on account of the demand having been created on 12.4.1971 which was after the end of the previous year. That sum was claimed as sales tax only for the reason that the return for the year 1971-72 was filed after creation of the demand.
Also it was. Noted by the Tribunal that in cases of demands of earlier years, 1959-60 and 1963-64 the Department had created the liability before starting of the accounting period under review but no debt entry in respect thereof was either passed or recorded, It was further seen that of of the total claim of Rs. 1625823/- a sum of Rs. 30,628/- only was deposited by the company during the accounting period towards the sale tax liability and the same was allowed by the assessing officer.
No further amount on account of sales tax having been paid during the accounting period nor any entry as liability or provision having been brought from the previous year, the findings of fact so recorded by the Tribunal again do not give rise to any legal controversy.
17. Lastly if the Tribunal had failed to decide any of the grounds of appeal it was for the appellant to approach them for rectification of the order. The non-recording of finding on an issue cannot be a subject-matter of reference to this Court under Section 66 (2) of the Income Tax Act. Learned Members while refusing a reference under sub-section (1) of Section 66 of the Act rightly observed that the best course for the assessee was to make an application before the Tribunal. However, this was never done, In the circumstances the Tribunal felt that there was no error on the part of the Tribunal and we find no exception to their observation recorded in this behalf.
18. For what has been discussed above, questions Nos. 1, 2 and 7 are not answered. Questions Nos.
3, 4, 5 and 6 are found to be those of fact and therefore, are declined to be answered. Question No. 8 is again a question of fact; while question No. 9 does not raise any legal controversy. Therefore, both of them are also declined to be answered.