GANGADHAR BAIJNATH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE reference applications under Section 66(2) of the Indian Income-tax Act, 1922, are based upon identical questions of fact, and are as such being disposed of by a common order. The assessee by these applications seeks a reference of as many as twelve questions of law which relate to an ex parte best judgment assessment made against the assessee.

(2.) PROCEEDINGS under Section 34(1A) were initiated against the assessee. The assessee did not file any return and neither did he comply with the notice under Section 22(4) of the Act. The Income-tax Officer, thereafter, proceeded to make an ex parte best judgment assessment. He found that the aggregate sales of cloth and yarn during the period were as under: <FRM>JUDGEMENT_382_ITR102_1976Html1.htm</FRM>

(3.) AN appeal was filed before the Appellate Assistant Commissioner by the assessee. The appellate authority reduced the estimate made by the Income-tax Officer. In making the reductions, he placed reliance on the estimates made by the Investigation Commission. The assessee thereafter filed an appeal before the Tribunal. The Tribunal agreed with the reduction made by the Appellate Assistant Commissioner and approved of the reasons given by the appellate authority for making the reduced estimate. It repelled the contention of the assessee that the estimate made by the Income-tax Officer was based solely on the findings given by the Investigation Commission on the ground that the order of the Income-tax Officer disclosed that, apart from referring to the finding of the Investigation Commission, the Income-tax Officer had exercised his own independent judgment in the matter and had taken into account a number of other circumstances. In this view of the matter, it dismissed the appeal filed by the assessee. Counsel for the assessee had, contended that the Income-tax Officer was not justified In referring to the report of the Investigation Commission and the material collected by it for the purpose of making the estimate, and that the estimates made were arbitrary and conjectural. It is true that the Act under which the Investigation Commission was constituted was declared to be ultra vires by the Supreme Court, but it does not follow as a matter of law that the material collected by the Investigation Commission could not be relied upon by the Income-tax Officer; As has been seen, the Income-tax Officer relied upon the admissions made by the assessee in his two letters and, after referring to the findings of the Commission, made an estimate of the income of the assessee which was in excess of that made by the Investigation Commission. In making this enhanced estimate, the Income-tax Officer took into consideration a number of circumstances which have already been tabulated above. The estimate as such cannot be said to be arbitrary, capricious or conjectural. It is supported by the relevant materials on the record. The questions raised are mostly of fact and those which have a semblance of questions of law, are based upon a misreading of the order of the Income-tax Officer.