NIRANJANLAL RAMBALLABH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS case arises out of a reference under s. 66(2) of the Indian IT Act in compliance with the requisition made under that section by the High Court of Judicature at Nagpur by its order dt. 18th March, 1952.

(2.) THE statement of the case is as follows : The assessee firm does cloth business at Nagpur under the name "Niranjanlal Ramballabh". The partners of the firm are Babulal and Niranjanlal. It was registered under s. 26A of the IT Act, the registration taking effect from the asst. yr. 1946 -47. On total sales of Rs. 5,79,143 the assessee showed a profit of Rs. 24,191 that is below 4per cent which was regarded as extremely low. The ITO after scrutinising the ledger accounts of various parties in the books of the assessee felt doubtful about the genuineness of certain deposits in the personal account of persons staying in Marwad. As these deposits formed an important factor in the matter of the present assessment he called for the assessee to show that the deposits were actually received from the creditors in whose names they appeared in the assessee's account books. The accounts in which such deposits are found were as under :

(3.) THE case of the assessee was that the aggregate amount in dispute representing the credits in the accounts of the parties mentioned above were deposits made by them with the assessee firm.