A.R. Tiwari, J.
1. The applicant (Commissioner of Income-tax, Bhopal) has filed this application under Section 256(2) of the Income-tax Act, 1961 (for short 'the Act'), seeking direction to the Tribunal to state the case and refer the undernoted questions arising out of the order dated July 16, 1993, passed in I.T.A. No. 618/Ind. of 1992, for the assessment year 1987-88 after rejection of the application, presented under Section 256(1) of the Act, registered as R.A. No. 192/Ind. of 1993 on May 27, 1994 :
' (1) Whether, on the facts and in the circumstances of the case, the Tribunal Was justified in law in deciding an appeal for which a petition before the Settlement Commission is already pending for disposal ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 1,13,602 and Rs. 5,50,635 added by the Assessing Officer on account of gross profit and investment in unrecorded purchases ?'
2. Briefly stated, the facts of the case are that the assessee filed a petition before the Settlement Commission, Bombay, for the assessment years 1982-83 to 1988-89. The case was, however, heard during the pendency of this petition. A search of the business premises of the assessee was conducted by the sales tax authorities. Thereafter, search of the business and residential premises of the assessee was also conducted by the income-tax authorities. A large number of books and documents relating to sale and purchase of gold and silver ornaments were found and seized. After a detailed scrutiny of these documents, the Assessing Officer adopted the figure of sale and purchase as determined by the sales tax authorities for assessment purposes. On the basis of sales determined at Rs. 11,82,039, the Assessing Officer estimated additional gross profit at Rs. 1,13,602 by applying a gross profit at 25 per cent. The sales tax authorities determined the unrecorded purchases at Rs. 5,50,635 and the Assessing Officer on.that basis estimated the investment made in the unrecorded purchases at Rs. 5,50,635. He, therefore, added the same to the income of the assessee as unexplained investment. In appeal, the Commissioner of Income-tax (Appeals) directed the Assessing Officer to enhance the gross profit from Rs. 1,13,602 to Rs. 1,29,140 and also confirmed the addition of Rs. 5,50,635, towards the investment in unrecorded purchases. The Tribunal, however, deleted these additions and held that the Assessing Officer solely depended upon the determination made by the sales tax authorities. According to the Tribunal, the assessment order passed by the sales tax authorities may be useful for investigation but is not liable to be adopted as the basis for determination of the gross profit in the trading account. Aggrieved by the order of the Tribunal, the Department filed the application under Section 256(1) of the Act. That application was rejected. The applicant thereafter filed this application under Section 256(2) of the Act proposing the aforesaid two questions for direction.
3. We have heard Shri D.D. Vyas, learned counsel for the applicant/ Department, and Shri G.M. Chaphekar, learned senior counsel with Smt. Meena Chaphekar, for the non-applicant/assessee.
4. Right at the threshold, counsel for the applicant did not press question No. (i) as the same was not agitated before the Tribunal and the Tribunal declined to refer the same on the linchpin that it did not arise out of the order of the Tribunal. He, however, submitted that question No. (2), as noted above, is a question of law and does arise out of the order passed by the Tribunal.
5. Counsel for the non applicant, on the other hand, submitted that question No. (2) also is based on appreciation of facts and is thus not a referable question of law.
6. We find that the Tribunal declined to state the case in the undernoted terms :
'In regard to question No. (ii) we have noted that the Tribunal decided this question after taking into consideration the various facts and evidence produced. The acceptance or rejection of any piece of evidence by the Tribunal is squarely falling within the ambit of appreciation of facts and in the instant case it does not give rise to any question of law. Accordingly, we decline to accept the prayer made by the learned Commissioner of Income-tax.'
7. The order of refusal cannot be termed as a speaking order. It contains the observations that the question was decided after taking intoconsideration the various facts and evidence produced. It also containsthe observations that the acceptance or rejection of any piece of evidenceby the Tribunal is within the ambit of appreciation of facts. The observations are clearly too general in nature and no specific contention is foundto be dealt with.
8. We have read the order of the Tribunal passed on July 16, 1993. The Tribunal found that the additions were vitiated as under :
' It is apparent that the Assessing Officer solely depended upon the assessment order under the Madhya Pradesh Sales Tax Act as was revised by the revisional authority thereto. It is needless to say that the assessment order under the Madhya Pradesh Sales Tax Act, may be useful material for the income-tax authorities for the investigation, but the said order itself cannot be adopted en bloc for assessment of gross profit in the trading account. The additions of Rs. 1,13,602 and Rs. 5,50,635, are, therefore, vitiated. '
9. It is contended that the appellate order docs not spell out the reasons as to why the assessment order passed by the sales tax authorities could not furnish a valid basis for the income-tax authorities, and for the additions. It is urged that the conclusion is perverse.
10. As we find that a direction is necessary in the interest of justice, we do not propose to examine the merits of the matter in detail. Considering the order dated May 27, 1994, and the appellate order dated July 16, 1993, we are satisfied that the aforesaid question is one of law and does arise out of the order passed by the Tribunal.
11. In the circumstances, we accept this application in part and call upon the Tribunal to state the case and refer the aforesaid question No, (2) for our consideration and opinion as expeditiously as possible.
12. We, however, make no order as to costs,
13. Counsel fee for each side is, however, fixed at Rs. 750, if certified.
14. Transmit a copy of this order to the Tribunal immediately for compliance.