1987 (7) TMI 21

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....is a reference made under section 256(2) of the Income-tax Act, 1961 (for short " the Act " hereinafter), as a result of a direction of this court to decide the following question of law, namely: " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of section 145 can be resorted to only when the accounts of the assessee are rejected....

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....e-tax Officer took the view that the yield of dal and the overall increase in the aggregate weight of milled products was low as shown in the assessee's books of account. Accordingly, he asked the assessee to explain the same. The assessee gave several reasons to indicate that the moisture content was reduced resulting in reduction in the overall weight of the dal as well as the aggregate weight o....

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.... Assistant Commissioner from the figure of Rs. 45,708 to Rs. 21,770. The assessee preferred a further appeal to the Tribunal. It was contended by the assessee that the proviso to sub-section (1) of section 145 of the Act did not apply since the method of accounting adopted in the assessee's books of account had not been rejected nor had the books of account of the assessee been rejected by the ....

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....d by the Income-tax Officer are under sub-section (2) of section 145 and not under the proviso to subsection (1) thereof. He argued that the Tribunal overlooked this aspect and, therefore, the conclusion reached by it is not justified. In other words, no attempt is made on behalf of the Revenue to rely on the proviso to sub-section (1)of section 145 of the Act, the only argument being based on the....