EDARA VENKAIAH Vs. COMMISSIONER INCOME TAX DEPARTMENT HYDERABAD

JUDGEMENT

(1.) This Writ petition seeks to have the orders of the Commissioner of Income-tax, Hyderabad, passed in revision under Section 33-A of the Income-tax Act, quashed and prays for suitable directions that the amounts of Rs. 8,449.00 for 1947-48 and Rs. 15,667.00 for 1948-49 be refunded or Otherwise adjusted.

(2.) The petitioner is the proprietor of Messrs, Rama and Co., a firm of Printers and Publishers having its Head Office at Eluru and branch offices at Guntur, Rajahmundry and Bhimavaram. He was assessed for the year 1947-48 on 20-3-1951 on a taxable income of Rs. 29,061.00 and for 1948-49 on 23-11-1951 on a taxable income of Rs. 34,425.00. Against both these assessments he filed appeals before the Appellate Asst. Commissioner, Bezwada and they were disposed of on 26-6-53 and 28-6-1953 respectively. In the appeal pertaining to 1947-48 the total income was reduced by Rs. 8,887.00 and with respect to 1948-49 the total income was reduced by Rs. 18,368.00 and the tax was recomputed in both the cases and the excess amount was directed to be refunded. In so far as the assessment for 1949-50 and 1050-51 were concerned, they ultimately resulted in an appeal to the Income-tax Appellate Tribunal, Madras Bench A which was allowed on 14-4-1954. In these appeals the assesses complained that the Income-tax Officer whose assessment orders were upheld by the Appellate Assistant Commissioner had not only taken the turnover of the Head Office, but also added the turnover of the branches to which the Head Office had supplied books and thus swelled up the total turnover "treating the issue to the branches as if they were sales to the branches. The Appellate Tribunal thought that a proper approach in these assessments was to consider the turnover of, both the Head Office and the branches as one unit and, ignoring the inter branch transactions, to estimate the profits on the outside sales at suitable-differential rates for own publications, and others. From this aspect it considered the assessments to be somewhat excessive and directed the deletion of the excess amounts over Rupees 8,0007- and 10,000/- for the assessment years 1949-50 and 1950-51 respectively. It may be stated that the petitioner had not filed any appeals against the Appellate Asst. Commissioners orders with respect to 1947-48 and 1948-49, which, by the time of the Appellate Tribunals order on 14-4-1954 with respect to 1949-50 and 1950-51, had become time barred Taking advantage of the amendment to Section 33-A, ho filed two revisions before the Commissioner of Income-tax, Hyderabad, with respect to each of the assessment years 1947-48 and 1948-49,

(3.) With respect to the assessment for the year 1947-48, the petitioner stated that he had admitted an income of Rs. 1,887.00 from property, Rs. 13,522.00 from business of printing and publication of books and sale of books etc., and Rupees 258/- from other sources; but the Income-tax Officer while accepting the income returned under property, assessed the income from business of printing and publication of books and sale of books etc. at Rs. 30,850.00 and Rs. 324.00 from other sources and in doing so he added two lump sums of Rs. 8,887.00 and Rs. 8,449.00 as difference in gross profit, estimating the same on sales at 40 per cent in Head Office and at 15 per cent in branches respectively. The Appellate Assistant Commissioner has, as already stated, reduced that amount by Rupees 8,887/-. In paragraph 6 the petitioner contended that in the matter of working out the gross profits both at the Head Office and branches treating the inter-branch sales as turnover the Income-tax Officer added the difference even though it was represented that the effective sale, in respect of own publications and other books etc. both at the Head Office and branches, may be taken as one unit and the gross profit rates compared. The petitioner also referred to the order of the Appellate Tribunal relating to the assessment years 1949-50 and 1950-51 and prayed that the additions relating to the branch offices be deleted. A similar plea was raised with respect to 1948-49 for which year a sum of Rs. 2,1287- was returned as income from printing and publication of books and sale of books etc., but the Income-tax Officer rejected it and instead computed an income of Rs. 27,163.00 on this count and Rs. 9,324.00 from other sources. In computing an income of Rs. 27,163.00 the Income-tax Officer added two lump sums of Rs. 14.368.00 and Rs. 10,6677- as difference in gross profits estimating the same on sales at 40 per cent in Head Office and at 15 per cent in branches respectively while a sum of Rs. 9,000.00 received by the daughter-in-law of the petitioner from her parents through a bank cheque was added to the income-admitted under other sources.