KUMARASWAMI REDDIAR S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under section 66(2) of the Indian Income-tax Act, by the Income-tax Appellate Tribunal, Madras Bench. The question referred is :

(2.) THE assessee, S. Kumaraswamy Reddiar, is a wholesale and also retail piece-goods merchant carrying on business at Alleppey and Quilon. In computing the profits on the assessees business for the assessment year 1123 M.E., the Income-tax Officer found that the accounts maintained by the assessee were unreliable and the profits had therefore to be estimated. Accordingly he made an addition to the book version of the profits to the extent of Rs. 26,418 in respect of the Alleppey business and Rs. 11,438 as regards the Quilon business. He further found that certain deposits in banks and certain advances entered in the books of account at the head office totaling Rs. 83,926 were only secret profits. THE petitioner was assessed on this amount also. In appeal by the petitioner to the Appellate Assistant Commissioner, Trivandrum, the estimated addition made by the Income-tax Officer was upheld but only to the extent of Rs. 14,418 for the business at Alleppey and Rs. 11,433 for Quilon together making up Rs. 25,856. he also upheld the addition made by the Income-tax Officer under the category of secret profits as limited to three items, viz., (i) Rs. 2,375 in the petitioners wifes account (ii) Rs. 2,000 credited in the account of one Thiruvenkita Reddiar, and (iii) Rs. 13,027 representing deposits in bank i.e. Rs. 17,402 on whole. THE petitioner took further appeal to the Income-tax Appellate Tribunal, Madras, objecting to the estimate of the extra; income of the petitioners business at Alleppey and Quilon and also to the additions made of the credits and deposits as income of the petitioner. THE contention was raised that the addition of the Rs. 17,402 could not be sustained inasmuch as an addition of the profits of the petitioners business at Alleppey and Quilon had already been made. This contention was rejected by the Appellate Tribunal. It is this contention that is again the subject of the reference here.

(3.) AND then went on to hold that :