KISHINCHAND CHELLARAM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is reference under section 66 of the Indian Income -tax Act, 1922, referring the following questions to us :

(2.) THOUGH two questions have been formulated, the questions which really arises before us is only one and that question is, viz, whether there was any relevant material on which any reasonable person could possibly hold that the true profits of the assessee could not be determined and resort must, therefore, be had to the proviso to section 13 of the Indian Income -tax Act, 1922. The relevant assessment year was 1950 -51 and the court is concerned in this reference with the branches of the assessee -firm at Madras, Otacamund and Coonoor. The Income -tax Officer rejected the books of account of the assessee -company and restored to the provisions of the proviso to section 13 on the ground that, having regard to the method of accounting employed by the assessee -company, the income, profits, and gains could not be properly deducted from the books. He, therefore, estimated the true profits of which of the said branches at a certain percentage under that proviso. On appeal by the assessee, the Appellate Assistant Commissioner was of the same view, viz, that the main defect in the assessee's books of account was the absence of stock tallies and the fact that the sales had not been recorded with identifiable details as to the quality of the goods sold. On further appeal to the Tribunal, that view was confirmed, the Tribunal observing as follows.'

(3.) WE are not concerned with the actual percentage of profits that was applied by each of the taxing authorities, and I am, therefore, not referring to the same. It is out of that decision of the Tribunal that the present reference has arisen.