COMMISSIONER OF INCOME TAX Vs. BHURAMAL MANICKCHAND

JUDGEMENT

(1.) This reference under Section 256(2) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), is at the instance of the revenue. The question referred to is as follows:

(2.) The facts admitted and/or found by the Tribunal are as follows. The assessment year under consideration is 1959-60. The relevant previous year ended on the March 31, 1959. The assessee is a partnership firm carrying on business in jute and cloth, with its head office at No. 4, Dayehatta Street, and branches in Dhubri and Agartalla. In its books at the head office the assessee had shown receipt of commission for sale of jute on account of Tilokchand Jain of Alipurduar and Santokchand Jain of Aluabati. At the assessment the assessee could not produce the statement of accounts showing the details of the said sales, the commission and expenses therefor and the net amount remitted nor the accounts of the said parties in respect of such sales. It was also conceded that the parties themselves would not be available. The ITO came to the conclusion that Tilokchand Jain and Santokchand Jain were the employees of the assessee and that the profit on sales on their account actually accrued to the assessee. He added Rs. 28,750 as such profit in the assessment made on the assessee- firm.

(3.) The first point urged before the AAC was regarding the transactions in the names of Tilokchand Jain and Santokchand Jain. In the course of the hearing before him, the AAC examined the account of these two parties. He found that the remittances were made almost in all cases only after sales except for Rs. 8,000 and Rs. 10,000 in the name of Santok-chand Jain remitted before the sale of the goods. Before the AAC, an affidavit had been filed by Sri Dwipchand Jain who was carrying on business in Alipurduar in the name of Tilokchand Jain confirming the sales of jute effected on his behalf. Sri Rajmal Banthia who carried on the business in the name of Santokchand Jain also filed an affidavit confirming the commission on sale. As the remittances were through banks, the AAC deleted the said amount of Rs. 28,750 from the assessment. Regarding the cash credits, the AAC gave reduction to the extent of Rs. 19,000 and upheld the addition of the balance.