MALBARY AND BROS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question which arises for our determination on this references is as under :

(2.) THE assessee firm is carrying on business in cloth at Surat and in the course of its business, it has been exporting cloth to its branch at Bangkok in Thailand. During war years, the business at Bangkok had been suspended obtained export licence. The head office at Surat charged a commission of about 2 per cent. Which was loaded on to the price shown in the invoices relating to the export of goods to the branch at Bangkok. That amount of 2 per cent. was shown by the assessee in its profit and loss amount. The exports so accounted by the assessee in its profit and loss account. The exports so accounted by the assessee in the income -tax proceedings relating to the previous years 1948, 1949 and 1950 were as under :

(3.) THE Income -tax Officer completed the assessment estimating the profits of the branch at 5% on the prices shown in the invoices. For the assessment year 1950 -1951 (C. Y. 1949) there was no reference to the Bangkok business in the return filed by the assessee. The Income -tax Officer did not exceed 2 per cent. of the export value of the goods and estimated the profits once again on the basis of 5 per cent. of the export price of those goods. In respect of the assessment year 1951 -52 (C. Y. 1950) also the assessee did not show the Bangkok business nor made any reference to the same in its return. That return was filed on 23rd August, 1951. Pending the assessment proceedings the assessee wrote to the Income -tax Officer on 15th December, 1951, as follows :