AIYASAMY NADAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following two questions have been referred to this court under Section 66(2) of the Indian Income-tax Act of 1922 :

(2.) THE assessee is a firm carrying on business in grocery such as sugar, rice, etc., both in wholesale and in retail. For the assessment year 1959-60, relevant to the previous year ending March 31, 1959, the assessee disclosed in its return a turnover of Rs. 3,48,088 and an income of Rs. 52,894 showing a gross profit of 5.1 per cent. Before the Income-tax Officer completed the assessment, the following facts came to his knowledge. THE assessee's place of business was inspected by the sales tax authorities on August 26, 1958, and a pocket note book was found to be in the possession of one Dharmalinga Nadar, a clerk of the assessee. THE said book contained entries relating to certain purchases effected by the assessee between April 1, 1958, to September 4, 1958, (not clear whether it is 4-9-1958 or 4-8-1958 but it is immaterial for our purpose). Some of the entries in the said book did not find a place in the regular books of the assessee. Before the sales tax authorities, the assessee had contended that the pocket note book did not relate to its business, that the entries therein had been made by the said clerk for a different purpose and that he did not effect any purchases outside the books of account. THE sales tax authorities, however, rejected the assessee's contention and held that the entries in the pocket note book related to purchase omission and the turnover of such transactions came to Rs. 92,000. THEy also found that there wore unaccounted stocks worth Rs. 12,437 in the assessee's shop on the date of the inspection. THE assessee was, therefore, assessed under the Sales Tax Act on a best judgment basis by making an addition of Rs. 92,000 to the taxable turnover returned by the assessee. THE assessment order was challenged in appeal before the Appellate Assistant Commissioner. That appeal having failed, they went before the Sales Tax Appellate Tribunal. THE Tribunal also upheld the said addition of Rs. 92,000 on the ground that it represented the suppressed turnover of the assessee.

(3.) THE revenue is entitled to its exists. Counsel fee Rs. 250.