G.B. Patnaik, J.
1. The assessee having moved this court under Sub-section (2) of Section 256 of the Income-tax Act, 1961, and this court on being satisfied that a question of law arises out of the order of the Tribunal formulated the following question for opinion of this court :
'Whether the Tribunal was justified in sustaining the addition of Rs. 65,000 in the shortage account ?'
and called upon the Tribunal to draw up a statement of facts and accordingly the Tribunal has made a statement to this court.
2. The petitioner, a partnership-firm, carried on the business of supply of moong dhal in the district of Sundargarh. When the Government of Orissa in the Community Development Department invited tenders for supply of moong dhal to some districts in the State, the petitioner offered to supply the same to the Collectors of Sambalpur and Sundargarh districts and his offer having been accepted, the petitioner supplied the same. To ensure the supply, the petitioner purchased moong dhal from different millers of Andhra Pradesh and brought the same to Sambalpur either by rail or by truck. During the year in question, the petitioner had purchased 2,905 bags of dhal and it was found from the books of account that 2,315 bags had been sold. But the closing stock was shown to be 357 bags instead of 590 bags and thus there was a shortage of 233 bags. In the course of assessment proceedings for the year 1982-83, the petitioner was called upon to explain the shortage and an explanation was offered. The Income-tax Officer raised some doubts about the genuineness of a certificate produced by the assessee before him and called upon the concerned officer to confirm the issuance of the certificate from his office. The concerned officer, however, informed that he did not have any record to show that the claim of the assessee was correct as there was no record in his office. The Income-tax Officer thereafter called upon the assessee to produce before him theSpecial Officer who had issued the certificate in question for cross-examination. But the officer was not available. The assessee had made an application to the Income-tax Officer that the concerned officer who had given the certificate might be summoned under Section 131 of the Income-tax Act at the cost of the assessee or alternatively he might be examined on commission. But that prayer was never acceded to. Finally, the Income-tax Officer disbelieved the certificate but allowed the shortage due to drying up of moisture contents to the extent of two per cent. and made an addition to the tune of Rs. 77,112.
3. An appeal was preferred against the said assessment order. The appellate authority came to the conclusion that the certificate produced by the assessee could not have been held to be not genuine and the Income-tax Officer should have allowed the assessee's prayer of examining the concerned officer on commission. It, therefore, allowed the shortage claimed by the assessee to the tune of seven per cent. and deleted the addition made by the Income-tax Officer.
4. The appeal thus having been allowed, the Department filed the second appeal before the Tribunal. The Tribunal having considered all the relevant documents came to the finding that the shortage shown by the assessee was unusual and the explanation furnished by the assessee is not reliable. It also found that the certificate on the face of it was not reliable and, therefore, it must be held that the assessee could not establish the shortage to the extent it claimed but considering the general features of the transaction, the Tribunal concluded that it would be proper to allow some more shortage than what had been allowed by the Income-tax Officer and accordingly allowed shortage to the extent of three per cent. Thus, the Tribunal reduced the addition to Rs. 65,000 as against the original addition made by the Income-tax Officer to the extent of Rs. 77,112. The assessee being aggrieved by the said order made an application under Section 256(1) of the Income-tax Act to make a reference but the Tribunal having refused, the assessee approached this court and under the direction of this court the question of law has been formulated and the statement of case has been made.
5. So far as the question referred to this court for opinion is concerned, it appears that after discarding the certificate issued by Shri Nayak, the Tribunal came to the conclusion that the assessee had failed to establish the claim of shortage of 6 to 7 kgs. per bag. The so-called certificate produced by the assessee was found to be unreliable and, therefore, the plea of theassessee was held to be unusual and unsustainable. But considering the assessee's case of some shortage during the transit, the Tribunal came to the opinion that the normal shortage would be three per cent. and accordingly allowed the shortage to that extent and having allowed the same reduced the addition to the tune of Rs. 65,000 against the original addition of Rs. 77,112 made by the Income-tax Officer. On the materials, in our considered opinion, the Tribunal was justified in making the addition of Rs. 65,000 and, therefore, our answer to the question posed is against the assessee and in favour of the Revenue.
6. Mr. Rath, learned counsel for the assessee, however, contends with vehemence that another question of law really arises for the opinion of this court out of the order of the Tribunal, namely, whether the findings of the Tribunal can be said to be merely on suspicion and conjectures rather than on appreciation of evidence and as such whether the Tribunal was justified in reversing the conclusions of the appellate authority. In view of the decision of the Supreme Court in the case of Omar Salay Mohd. Sait v. CIT : [1959]37ITR151(SC) , there cannot be any dispute with the proposition that the Tribunal if it bases its findings on suspicion and surmises or it improperly rejects material evidence, then the ultimate conclusion is liable to be interfered with. But as has been contended by learned standing counsel for the Department, the reversal of the finding of the appellate authority by the Tribunal as well as the conclusion of the Tribunal cannot be said to be without consideration of materials or on surmises. A scrutiny of the second appellate order of the Tribunal clearly reveals that the rival contentions as well as the basis on which the assessee's contention had been accepted by the first appellate authority and all other relevant materials were considered by the Tribunal and the Tribunal ultimately did not accept the plea of the assessee. Therefore, the question of law which Mr. Rath had urged does not really arise out of the order of the Tribunal. In the circumstances, our answer to the question posed is against the assessee and in favour of the Department.
K.L. Issrani, J.
7. I agree.