Judgment:
G.S. SINGHVI, J. :
The assessee is a forest lessee. During the asst. yr. 1972-73, it had exploited Tandai forest and launched, 33673 pieces of timber in the river out of which 31321 pieces were shown as recovered. River loss claimed by the assessee was 7% (2352 pieces). The assessing authority did not agree with the contention of the assessee regarding river loss and reduced the river loss from 7% to 4%. The assessing authority disallowed the excessive loss of 1006 pieces. The total amount disallowed by the assessing authority was Rs. 25,150. Accordingly, the assessing authority directed the addition of Rs. 25,150 in the income of the petitioner. The appellate authority before whom the assessee filed appeal come to the conclusion that total loss was only 3% as against 7% claimed by the assessee and 4% allowed by the assessing authority. Consequently the appellate authority not only upheld the addition of Rs. 25,150 but also enhanced the income of the assessee by Rs. 8,500.
Dissatisfied with the order of the appellate authority the respondent filed appeal before the Tribunal which reversed the orders of the assessing authority and the appellate authority and deleted the addition of Rs. 33,650 made by the AAC.
2. Reference petition filed by the Revenue was dismissed by the Tribunal, but pursuant to an order dt. 23rd Aug., 1980, passed by this Court in ITC No. 48 of 1976, the Tribunal referred the following question for the opinion of the High Court :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing river loss @7% for the asst. yr. 1972-73 when on actual calculation the loss after taking into account both the launches together, is less than 3% ?'
3. Shri S.S. Mahajan, learned counsel appearing for the Revenue argued that the finding recorded by the Tribunal is patently perverse because it is not based on any evidence. Shri Mahajan pointed out that the Tribunal has arbitrarily relied on the assessment of previous years. According to the learned counsel, the Tribunal ought to have examined the legality of the orders of the assessing authority and the AAC on the basis of the facts brought on record in regard to the disputed asst. yr. i.e., 1972-73.
4. After having gone through the record of the case we find substance in the argument of Shri Mahajan that the order passed by the Tribunal suffers from a patent illegality. It is borne out from the record that the assessee had made two launches of 57716 pieces on 19th Nov., 1970 and 24034 pieces on 21st Jan., 1971. The first launching was received during the year 1972-73 whereas the second launching was received in 1973-74 and the total loss was only 1619 pieces whereas the assessee had claimed loss of 2352 pieces during the year 1972-73 itself. After taking this patent difference in the claim made by the assessee and the actual loss suffered by him, the appellate authority concluded that the claim made by the assessee for deduction was unfounded. While reversing the order of the AAC, the Tribunal has not referred to any error in the order of the assessing authority or the appellate authority but decided the issue on mere conjecture by observing that in the past the river loss allowed by the Department was between 15% to 25% and for the asst. yr. 1966-67 river loss of 20% was allowed. Only on that premise the Tribunal accepted the claim of the assessee for deduction of the loss to the tune of 7%. In our opinion, the order passed by the Tribunal suffers from a patent illegality because it not only failed to examine the legality and correctness of the order passed by the assessing authority as well as the appellate authority but decided the case only on the basis of conjectures. The order passed by the first appellate authority is well reasoned and is supported by facts placed on record. Therefore, we hold that the assessee was not entitled to the river loss @7% for the asst. yr. 1972-73 and the first appellate authority rightly allowed river loss to the extent of 3% only.
In the result, we allow the petition and answer the question in favour of the Revenue and against the assessee.