MANI AND COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE are applications under Section 256(2) of the Income -tax Act, 1961, to compel reference of certain questions of law arising out of the common order of the Appellate Tribunal in five appeals before it, namely, Income -tax Appeals Nos. 839 and 840 of 1984 and 14, 15 and 16 of 1985. The assessment years concerned are 1979 -80 and 1980 -81.

(2.) THE assessee is an engineering contractor who undertakes works for the military engineering service. For the assessment years 1979 -80 and 1980 -81, he filed returns disclosing loss, the reason for the loss being attributed to the unusual delay in the completion of the contracts entered into by him during the year and the unbearable increase in the cost of materials and labour. The assessee had been maintaining books of account during these years, unlike in the past and he prayed for acceptance of the accounts. The Income -tax Officer made an assessment estimating the profit at ten per cent., which was based on the estimate of profit made in the prior years when the assessee was not maintaining any accounts. The Commissioner of Income -tax adopted a via media. He observed that the books of account maintained by the assessee may not have been ideally written. But the fact remained that he was maintaining books of account. His case of loss cannot in the circumstances be totally brushed aside. The fact that the accounts were not ideally written may not mean that he has made profit when the accounts disclosed loss. The Commissioner, therefore, held that the business results for the two years under appeal will be taken as nil.

(3.) THERE was an independent proceeding in the year 1980 -81 to bring to tax the profits of another contract which had been omitted to be considered in the original assessment. That led to an appeal Income -tax Appeal No. 16 of 1985 before the Tribunal.