CHOWDHARY MITHOO MISSAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference contains more than one matter. the first of it is reference under Section 66(1) of the Income-tax Act with reference to a notice under Section 34 of that Act reopening the assessment for the years 1940-41, 1941-42 and 1942-43. the reference was made by the Income-tax Appellate Tribunal by on order dated the 28th February 1946. the reference is of the same date but relates to the excess profits for the three years.

(2.) THE assessee is a Hindu undivided family. It carries on an extensive trade in bristles which are exported to the England and are also sold locally. THE assessee had for some years previous to the years in question adopted the method of interning in is books of account at the time of sending out the consignment a notional figure giving the value of each consignment. This amount was credited to the malkhata and debited to stock. When the bristles were sold in England accounts realised from the sales was received by the assessee, who then made final adjustments in his books. THE adjustment were made in this way that the amount realised in excess of the notional value was entered in the account books as sales, while if the amount was less, the deficiency was deducted from the sales.

(3.) THE facts, therefore, are that during the pendency of the assessment proceeding for the year 1943-44, while examining the books of assessee, Mr. Saksena discovered that if the profits were calculated at certain percentage basis on the total sales as entered in the books, a large part of the income was left out as the sales were not correctly recorded in the books and as a result thereof income liable to tax had escaped assessment in previous years.