LOKENATH TOLARAM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE are cross references under the provisions of S. 66(1) of the Indian IT Act, 1922.

(2.) IN the earlier reference, the question raised are at the instance of the assessee. They read as follows:

(3.) THE assessee dealt in yarn and cloth. The ITO, in the course of the assessment of the assessee's income, found the profit disclosed to be lower than that of others in the same line of business. He found that a large proportion of the total sales of yarn by the assessee had been made to two concerns, namely, Ganesh Trading Co. and Mahavir Trading Co.. He found, on examining the accounts of these two concerns in the assessee's books of account that, there were deposits by Ganesh Trading Co. of Rs. 10,49,319 against sales to it of Rs. 8,53,699 and that there were deposits by Mahavir Trading Co. of Rs. 3,09,430 against sales to it of Rs. 1,61,727. The assessee's explanation of the surplus deposits was found to be unsatisfactory. Inquiries made by the ITO showed that Ganesh Trading Co. and Mahavir Trading Co. were not traceable at the addresses given by the assessee and that they had never been there. The ITO was, therefore, "led to believe that the surplus deposits made in these accounts are not genuine loans but are really suppressed sale proceeds of yarn and cloth, I, therefore, treat the deposit of Rs. 1,47,703 in the account of Mahavir Trading Co. and the deposit of Rs. 1,95,620 in the account of Ganesh Trading Co. as suppressed profits of the assessee."