ADDL COMMISSIONER OF INCOME TAX Vs. SOM DUTTA

JUDGEMENT

(1.) Pursuant to an order u/s 256(2) of the IT Act, 1961 (hereinafter to be referred to as the Act) the Income Tax Appellate Tribunal, Patna hereinafter to be referred to as the Tribunal) submitted statement of the case on the following question of law :

(2.) The two taxation cases relate to two asst. yrs. 1964 -65 and 1966 -67. The assessee for the two assessment years disclosed gross receipts from contract at Rs. 1,37,60,117 and Rs. 18,70,151. This included the cost of materials at Rs. 35,67,045 and Rs. 6,41,572. The ITO observed that the trading result shown by the assessee was not fair and so he was of the opinion that it was a fit case for rejecting the trading result. He further held that 10 per cent of the net profits before depreciation allowances, was fair for the cases. In that very order he further directed a sum of Rs. 56,000 to be added to the trading account to raise the gross profit approximately to 10 per cent of the gross receipts before deprecation in respect of the asst. yr. 1966 -67 and Rs. 47,500 in respect of the asst. yr. 1964 -65.

(3.) The assessee filed appeals. The AAC observed that when the assessee had maintained proper books of accounts, the ITO should not have rejected the books and estimated net profit at 10 per cent in face of net profit shown by the assessee at 9.5 per cent. The AAC was of the view that addition of Rs. 56,000 for asst. yr. 1966 -67 and Rs. 47,000 for asst. yr. 1964 -65 in the trading account was excessive. On that opinion, he deleted Rs. 46,000 from the assessment order in respect of asst. yr. 1966 -67 and Rs. 37,500 from the assessment order for the asst. yr. 1964 -65 and he retained under that head Rs. 10,000 for both the assessment years.