COMMISSIONER OF INCOME TAX Vs. BANSHIDHAR DURGADUTT

JUDGEMENT

(1.) The following questions are involved in this reference under Section 66(2) of the Indian Income-tax Act, 1922, and/or under Section 256(2) of the Income-tax Act, 1961:

(2.) The assessment year concerned is 1955-56 for which the relevant previous year ended on 26th October, 1954. In the production account in respect of mustard oil, the assessee's1 account disclosed the crushing of 3,37,350 maunds of seeds and a yield of 35'7 per cent. The assessee did not maintain any production of stock register. The ITO found that the shortage shown was excessive. In the preceding year, the assessee disclosed a yield of 35.8% but it was estimated at 36.46%. In view of certain defects in the accounts and the lower yield shown by the assessee, the ITO rejected the results and estimated the yield at 36.4% and a shortage in production at 2,361 maunds. He also computed the value of the shortage of oil at the rate of Rs. 61 per maund at Rs. 1,44,169. After taking into consideration the said shortage and the corresponding reduction of 2,361 maunds in the manufacture of oilcakes of the value of Rs. 19,331, he added Rs. 1,24,838 to the income of the assessee.

(3.) In appeal, the AAC went into the comparative statements of production of past years and the year under consideration and estimated the yield at 36% and determined the shortage at 919 maunds and its value at Rs. 56,069. After making an adjustment, he reduced the addition to Rs. 50,000.