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Issues: Assessment of gross income, expenses claimed by assessee, net income declaration, application of net profit rates, disallowance of expenses, appeal process, justification of Tribunal's decision, referral of questions of law to High Court.
In this case, the assessee-firm declared a gross income for the assessment year 1988-89 and claimed various expenses, resulting in a net income declaration. The Income-tax Officer applied different net profit rates on receipts from various sources and disallowed the expenses claimed by the assessee due to lack of maintained account books. The Commissioner of Income-tax (Appeals) partially allowed the appeal, reducing the net profit rate in certain cases. The assessee then appealed to the Income-tax Appellate Tribunal, which ruled in favor of the assessee. The Tribunal found that the income-tax authorities were unjustified in applying specific net profit rates and disallowing expenses, based on evidence provided by the assessee, including commission receipts and wage payment records. The Tribunal directed the assessing authority to allow the claimed expenses. Subsequently, the Revenue sought to refer questions of law to the High Court regarding the Tribunal's decision. The Tribunal declined, stating that its findings were based on factual evidence and no legal questions arose. Upon review, the High Court concurred with the Tribunal, emphasizing that the findings were factual and based on proper evidence appreciation. The High Court dismissed the Revenue's application, noting that no question of law was present in the case. The decision highlighted that the Revenue's query was a matter of fact, lacking legal merit. Consequently, the application under section 256(2) of the Income-tax Act was dismissed due to the absence of referable legal questions.
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