COMMISSIONER OF INCOME TAX Vs. BUILDERS UNION

JUDGEMENT

(1.) THESE are three applications under S. 256(2) of the IT Act (hereinafter referred to as "the Act") at the instance of the Revenue asking for a direction to the Tribunal to state a case and refer the following two questions for the opinion of the Court :

(2.) THE years of assessment are 1967 68, 1968 69 and 1969 70. The assessee undertakes execution of contracts and a large proportion of its work is executed through sub contractors. In regard to the works undertaken by sub contractors, under the agreements, the assessee was entitled to five per cent. of the net receipts. The ITO completed the assessment by calculating the income of the assessee on adoption of five per cent. in regard to the works done through sub contractors and by adopting 12 1/2 per cent. rate on the receipts relating to contract work taken directly by the assessee. In the assessment order of 1967 68, the ITO gave the following reason for rejection of accounts :

(3.) BEFORE the Tribunal, the assessee contended that no grounds had been advanced for rejection of its accounts and, therefore, there was no occasion for adopting the estimates. Considering the stand of the assessee and that of the Revenue, the Tribunal concluded by saying: