M/S. FARMAKAL vs COMMNR. OF INCOME TAX, INDORE — C.A. No. 7865/2001

Case Summary: M/S. Farmakal v. Commissioner of Income-tax, Indore Outcome: The Supreme Court granted leave and allowed the appeal on November 9, 2001. The Court set aside the High Court's rejection and directed the Income-tax Appellate Tribunal to draw a statement of facts and refer three questions of law to the High Court for opinion. Key Issue: The High Court had rejected Farmakal's application under Section 256(2) of the Income-tax Act, 1961, holding the questions were factual rather than legal. The Supreme Court found three reframed questions—concerning the basis for adding Rs. 50,000 as income, whether omission from cash book implies income, and whether an unreliable cash book alone justifies such addition—were proper questions of law arising from the Tribunal's findings. Next Steps: The Income-tax Appellate Tribunal was directed to refer these questions to the High Court for its opinion in accordance with law. This case analysis is maintained by casestatus.in based on publicly available court records.