C V MATHUKUTTY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The question referred to us by the Income Tax Appellate Tribunal, Cochin Bench in relation to the assessment year 1965-66 reads as follows:

(2.) The books of account of the assessee were rejected and an estimate was made by the Income Tax Officer. It is clear from the assessment order annexure A, Para.2 and note at page 5 that the estimate was based on the "normal gross profit rate obtainable in such business." The normal gross profit rate obtainable in such business was ascertained by the Income Tax Officer on the basis of the percentage of profit disclosed by two assessees whose names have been mentioned in the assessment order and styled as comparable cases In appeal before the Appellate Assistant Commissioner the assessee contended that this data collected by the Income Tax Officer had not been disclosed to the assessee and therefore there has been violation of the principles of natural justice and the provisions of S.142(3) of the Income Tax Act and hence the order should be set aside. This contention as such had not been dealt with by the Appellate Assistant Commissioner but it appears to us that the Appellate Assistant Commissioner chose to rely on the percentage of profit disclosed by the assessee for the previous year of assessment which was 10 per cent and rested his decision and sustained the addition on that ground alone. The relevant paragraph of the Appellate Assistant Commissioner's order is Para.3 which we shall extract.

(3.) There was a further appeal before the Tribunal by the assessee and the main contention that was raised before the Appellate Assistant Commissioner was again taken before the Tribunal. There is a little doubt that this contention was urged before the Tribunal because Para.7 of the Tribunal's order clearly indicates that the Tribunal adverted to this contention. Nevertheless the point had not been dealt with in the Tribunal's order. It only considered whether the percentage determined by the Appellate Assistant Commissioner confirming the order of the assessing authority was justifiable or not on other material that was available. It relied on the fact that the assesses himself had returned 10 per cent profits in the previous year. It considered the explanation given by the assessee for the fall in gross profit rate for the particular year in question and held that the explanation had not been made out. For these reasons and these reasons alone the addition was sustained. The first question that arises for our consideration is whether in these circumstances the question referred to us really arises from the Tribunal's order.