COMMISSIONER OF INCOME TAX Vs. YUSUF ABDULLA PATEL

JUDGEMENT

(1.) THIS IT reference pertains to asst. yrs. 1967 68, 1968 69 and 1969 70. The following common questions of law are referred to us under S. 256(1) of the IT Act, 1961 :

(2.) THE assessee has been assessed in the status of "individual". The relevant previous years are financial years ending on 31st March, 1967, 31st March, 1968 and 31st March, 1969. The assessee filed his returns of income for asst. yrs. 1967 68, 1968 69 and 1969 70 declaring his income at Rs. 72,856, Rs. 79,628 and Rs. 50,000 respectively. No copies of the trading, P&L accounts or balance sheets were filed with the returns. The ITO issued several notices to the assessee under S. 142(1) of the Act calling for the same. The assessee, however, did not file these on the ground that no complete books were kept by him and whatever books were there, they were seized by the Customs authorities on 17th Feb., 1967. The assessee was informed that the books which were seized could have been made available to him and he could have taken inspection thereof to file the copies of the P&L accounts or balance sheets. But the assessee neither filed copies of his trading or P&L accounts or balance sheets nor did he give any basis showing how the returned income for these assessment years should be accpeted.

(3.) THE ITO in his order for the asst. year 1967 68 also observed that the assessee had come under adverse notice and was suspected to be carrying on smuggling business and there were searches by Customs authorities who had seized seventy five ingots of silver, ownership of which was admitted by the assessee. The total value of the silver was given by the assessee himself at Rs. 14 lacs in his settlement petition dt. 10th Feb., 1970. The statement of the case refers to various statements made by the assessee in his settlement petition which were need not be examined. But on the basis of various facts which are set out in the statement of the case, the ITO estimated the income of the assessee for the asst. yrs. 1967 68, 1968 69 and 1969 70 at Rs. 7,00,000, Rs. 8,50,000 and Rs. 9,50,000 respectively. The IAC made certain changes in this estimate. The Tribunal has also come to the conclusion that there was no alternative but to estimate the income of the assessee for these assessment years. The Tribunal was of the opinion that the most reasonable mode of determining the income of the assessee would be to adopt the basis on which the income of the associates of the assessee had been assessed by the lower authorities for the three assessment years under consideration taken together as all the associates of the assessee had accepted the estimates made on them and it was the case of the assessee in his settlement petition that he had given certain percentage of share to his four associates. The Tribunal ultimately held that the income of the assessee for the asst. yrs. 1967 68, 1968 69 and 1969 70 was Rs. 7,00,000, Rs. 2,35,000 and Rs. 9,50,000 respectively. The relevant particulars in this regard are set out in the tabulated form as follows :