JUDGMENT R.K. Gulati, J.
1. This is an application under Section 256(2) of the Income-tax Act, 1961 (for short "the Act"), filed by the Commissioner of Income-tax, Lucknow, for a direction to the Income-tax Appellate Tribunal to draw up a statement of the case and to refer the question set out in the application for the opinion of this court.
2. The dispute relates to the assessment year 1979-80. Against the loss return of Rs. 9,145, the assessment was completed on a net taxable income of Rs. 81,042. The assessee appealed to the Appellate Assistant Commissioner of Income-tax who allowed the appeal and deleted the entire addition made by the Assessing Officer. On second appeal at the instance of the Revenue, the appellate order was upheld by the Income-tax Appellate Tribunal. The application under Section 256(1) of the Act filed by the Department having been dismissed, this application has been filed for the directions from this court, set out earlier.
3. The question proposed in the application reads as under :
"Whether, on the facts and in the circumstances of the case and material available on record, the Income-tax Appellate Tribunal was in law justified in deleting the entire addition made on the basis of past records of the assessee which was the material available with the Assessing Officer ?"
4. We have heard learned standing counsel for the applicant. In our opinion, the order of the Income-tax Appellate Tribunal is concluded by findings of fact and, in any event, it does not give rise to any statable question of law.
5. The assessment for the year in question was completed under Section 143(3) of the Act in disregard of the accounts and the return furnished by the assessee on the ground that no regular books of account were maintained as admitted by the assessee before the Assessing Officer. The net taxable income was determined in accordance with the assessment made for the immediately preceding assessment year, namely, 1978-79, which was an ex parte assessment order. The Appellate Assistant Commissioner deleted the addition on the finding that the impugned order of assessment was capricious, arbitrary and very excessive having regard to the facts of the case. He further noticed that there was nothing in the order of assessment which substantiates the enhancement of income as determined by the Assessing Officer. In giving the relief, the Appellate Assistant Commissioner relied upon the income returned and assessed for the immediately succeeding year where the returned income from all sources had been accepted even though the assessment was made under Section 143(3) of the Act. The Income-tax Appellate Tribunal, while sustaining the appellate order, has reiterated that as the assessment order framed by the Assessing Officer was not supported by any material, the Appellate Assistant Commissioner was justified in deleting the additions made to the returned income.
6. Now, Sub-section (3) of Section 143 of the Act directs the Assessing Officer to make an assessment of the total income or loss of an assessee by an order in writing after hearing such evidence as the assessee may produce and such other evidence which the Assessing Officer may require on specified points after taking into account all relevant material which he has gathered. It is evident from these provisions that whatever may be the assessment, the judgment of the Assessing Officer must rest on the material with him. It is settled that, even where the account books are found unreliable, the assessment cannot be made arbitrarily and, in order that an assessment could be sustained, it must have nexus to the material on record. In the instant case, as noticed earlier, the assessment order for the year in question was entirely based on the quantum of income assessed in the immediately preceding assessment year, which was an ex'parte assessment order made under Section 144 of the Act. It is true that the past history might be legitimate material, but that by itself may not be sufficient to sustain an assessment order in every case without something more.
7. Learned standing counsel was unable to invite us to any material in the assessment order or otherwise on record in justification of the impugned assessment The propriety and justification of the addition to the returned income was considered at length by the Appellate Assistant Commissioner and he found no justification for any addition made by the Assessing Officer. This was confirmed by the Tribunal. The order of the Tribunal is based on appreciation of the material on record with which no fault could be found. The order of the Tribunal does not give rise to any question of law.
8. For what has been stated above, this application has no merit and is, accordingly, rejected. There shall be no order as to costs.