ORCHHA TRANSPORT COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference at the instance of the assessee, under S. 256(1) of the IT Act, 1961, for answering the following questions of law, namely:

(2.) THE material facts are these, The assessee is a registered firm earning its income from plying buses. For the asst. year 1974 -75, the assessee filed a return declaring an income of Rs. 3,714 only from its business. The assessee showed the passenger receipts at Rs. 95,448 and luggage receipts at Rs. 98,332, i.e., the gross receipts at Rs. 1,93,780. As against this amount, the total expenses shown by the assessee was Rs. 1,90,066 resulting in an income of Rs. 3,714 only from the business of plying buses. The ITO, on a scrutiny of the account books, found serious irregularities and he rejected them and made a best judgment assessment in accordance with S. 145(2) of the Act. The ITO estimated the passenger receipts at Rs. 1,50,000 and the luggage receipts at Rs. 98,332. The ITO computed profit at the rate of 22 -1/2 per cent on the passenger receipts and did not allow any deduction on account of expenses against the luggage receipts, the total of which was added to the income from the passenger receipts. The assessee's appeal to the CIT (A) partly succeeded inasmuch as the deduction of Rs. 9,000 against the passenger receipts and Rs. 3,000 against the luggage receipts, or in all, a deduction of Rs. 12,000 was granted. The further appeal of the assessee to the Tribunal has failed. Aggrieved by the view taken by the Tribunal, the assessee applied for a reference of the aforesaid questions to this Court as a result of which these questions came up for decision before us.

(3.) IT may be mentioned at the outset that the decision of making the best judgment assessment after rejecting the assessee's books of account in accordance with S. 145(2) of the Act is not in controversy at this stage and, therefore, the only question is whether the best judgment assessment actually made gave rise to the above questions of law on the facts found proved by the Tribunal. In our opinion, there is no ground for holding that the Tribunal's conclusion was unjustified.