JONNALAGADDA YEDUKONDALA RAO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN compliance with our directions the Tribunal has referred a case on the following question :

(2.) THE assessee is a bus owner in the West Godavary District, in the year of assessment 1947-48, for which the income of the previous year taken into account was the year ending March 1947. During this year he ran 27 buses, 17 out of which were plying with Eluru as the headquarters and 10 from Narsapur. THE assessee maintained separate accounts for each of these headquarters. But he returned a gross income of Rs. 56,458 for his entire business and after deducting a depreciation of Rs. 38,875 and certain inadmissible expenditure of Rs. 1000, declared a net income of Rs. 16,583. THE Income-tax Officer rejected the results to be derived from the books of account and made an ad hoc addition of Rs. 80,000 to the gross income thus determining it at Rs. 1,36,458. After deducting Rs. 32,803 on account of depreciation, he determined the net income at Rs. 1,03,655. THE Appellate Assistant Commissioner on appeal determined the gross income at Rs. 96,000 and computed the net income of Rs. 53,406 after deduction of depreciation. Both the assessee and the Department appealed to the Tribunal, where, however, neither of them questioned the quantum of the depreciation allowed by the Appellate Assistant Commissioner. THE Tribunal held that the proviso to section 13 of the Act was rightly applied in the circumstances of the case in rejecting the books of account and in so far as the assessment was concerned it found that the total collections recorded by the assessee were not verifiable and there were no counterfoils for the tickets and so it was not possible to check the collections as entered in the books. That apart, it held that the expenditure claimed was extra-ordinarily high and most of it was unvouched for and compared unfavorably with that incurred by the other bus owners. THE Tribunal further found that the borrowings of Rs. 57,000 in the account of the Narsapur branch and the remittance of that amount to the Eluru branch were not satisfactorily explained. In the circumstances it computed the gross income at Rs. 5,000 for each effective bus and arrived at the figure of Rs. 1,20,000 for 24 buses.

(3.) IN our view, the order of the Tribunal is not sustainable in law and our answer to the question is, therefore, in the negative.