1982 (3) TMI 100

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....d 6-11-1979 explained the various points raised in the notice issued by the Commissioner. 3. After considering the objections of the assessee, the Commissioner has passed his order dated 20-11-1979 under section 263 of the Income-tax Act, 1961 ("the Act"). He has held that in respect of loss of Rs. 3,71,000 on account of breakages of bottles, the ITO ought to have scrutinised this item in great detail before accepting the assessee's claim. With regard to the sales tax liability of Rs. 96,238 he held that this related to the earlier years and it is not debitable for this year. On the point relating to the sale of beer, he held that the price reductions were not the result of commercial consideration but something else. He further held tha....

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....at the order of the Commissioner should be cancelled. 5. The learned departmental representative submitted that the ITO has not scrutinised the various items pointed out in the notice of the Commissioner. In fact, in the questionnaire issued by the ITO to the assessee for information the items noted in the notice of the Commissioner do not figure though the amounts involved are heavy. The ITO without scrutiny, has accepted the claim of the assessee in respect of the loss on breakage of bottles, the sales tax liability, and the reduction in the rate of selling price of beer, with retrospective effect. He also pointed out that for advance tax, the estimated income was Rs. 12 lakhs whereas the returned income was Rs. 2,90,000. This itself r....

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....reweries. In view of the close connection, the ITO ought to have probed into the matter. The action of the Commissioner with respect to this item also is perfectly justified. 7. Coming to the sales tax liability, it is admittedly a liability for the assessment years 1973-74, 1974-75 and 1975-76. Even the demand for these three years has not been raised in this year, but has been raised in the earlier years. In view of the decision of the Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363, this item cannot be allowed as a deduction in this year. The action of the ITO in allowing the same as a deduction is certainly prejudicial to the interests of revenue. The returned income when compared to estimated incom....