HARAKCHAND RADHAKISAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN pursuance of the order of this court the following questions of law have been referred to us for opinion by the INcome-tax Appellate Tribunal, Calcutta Bench :

(2.) THE assessee, Messrs. Harakchand Radhakisan, is a registered firm doing business in oil and rice at Jorhat, Narayanpur and Tinsukia. THE assessment year in question is 1953-54 and the corresponding accounting year is Sambat year 2009. According to the accounts submitted by the assessee the mustard seeds available for crushing were 32,656 maunds, the oil yielded after crushing was 9,472 maunds and the oil cakes yielded were 20,814 maunds. THE income-tax Officer was of the opinion that the yield of oil and oil cakes from the crushing of the mustard seeds was below the normal. He, accordingly, after allowing a refraction of 2% held that the production of oil should be 32% and that of the oil cakes 66%. Calculating on this basis the oil yield should have been 10,241 maunds and production of oil cakes should have been 21,762 maunds. On this basis there was a shortage of 499 maunds of oil. He added a sum of Rs. 27,445 as the price of this unaccounted for oil at the rate of Rs. 55 per maund. He further added a sum of Rs. 4,740 as the price of the 948 maunds of oil cakes at the rate of Rs. 5 per maund. On appeal the Assistant Commissioner affirmed the decision of the Income-tax Officer. Before the Appellate Assistant Commissioner the assessee contended that the above rates were too high and that in the subsequent year when the milling was done in the presence of an officer of the Central Excise Department, production of oil and oil cakes was found to be much less. THE Appellate Assistant Commissioner brushed aside his contention on the ground that there was no evidence to show that the seeds were of the same quality. He further observed that on the other hand he found that the rates applied by the Income-tax Officer were the same as were applied by the Income-tax Officer in respect of the assessment for the immediately preceding year. When the matter went up in appeal to the Income-tax Appellate Tribunal, the Tribunal affirmed the assessment made by the Income-tax Officer on the ground that the estimates had been made on the rates usually adopted in this part of the country.

(3.) IT has now been well settled by a series of decisions of the Supreme Court under what circumstances this court can interfere with the assessment made by the Income-tax Officer under section 66 of the Indian Income-tax Act. In the case of Liquidators of Pursa Ltd. v. Commissioner of Income-tax it was laid down as follows :