TMI Blog1970 (4) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of arriving at the above finding, the Income-tax Officer relied upon the following circumstances : (1) To show that he could only make low profits, the assessee had made a false case that he was a wholesale dealer and not a retail dealer. The fact was that from the above sales of the value of Rs. 7,34,038 the retail sales effected by the assessee were of the value of about Rs. 6,00,000. (2) The wholesale sales made on credit disclosed that the assessee had made profits between 8 to 10 per cent. on the cost, though it was true that from these profits he claimed deduction of transport charges amounting to about 2 per cent. According to the Income-tax Officer, the margin of profit on retail sales must be much higher than disclosed by the assessee. (3) The assessee had, in spite of inquiries, failed to substantiate comparative purchase and sale rates. The finding in this connection was that the books of account maintained by the assessee did not disclose any comparative statement of stocks of purchases and sales. The assessee had failed to produce any quantitative tally regarding his purchases and sales. The result of the above method of accounts adopted by the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits made by the assessee could not be properly deduced therefrom. In reply, Mr. Joshi for the revenue contended that the above first contention did not arise under the question referred to us. As regards the second contention, he relied upon the findings of fact made by the Income tax Officer as well as the Appellate Assistant Commissioner. He stated that the facts in the present case disclosed sufficient material on the basis whereof the department was entitled to make a finding that the method of accounting employed by the assessee was such that therefrom the true profits made by the assessee could not be properly deduced. Now in connection with the contentions made by him, Mr. Trivedi relied upon the decisions in the cases of Pandit Bros. v. Commissioner of Income-tax and R. B. Bansilal Abirchand Spinring Weaving Mills v. Commissioner of Income-tax . Mr. Joshi relied upon the decision of the Supreme Court in the case of S. N. Namasivayam Chettiar v. Commissioner of income-tax. He desired to rely upon certain further authorities, but we prevented him from reading those authorities. It is first necessary to notice the contents of section 13 which provides as follows : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing was, however, a stock register. The Income-tax Officer was of the view that this was an important document. In the absence of this document, in his view, the profits earned by the assessee in that case could not be correctly determined. Now, in connection with that finding of the Income-tax Officer, the question raised before the court was " whether any addition may be made to the book version of business profits, where no stock account is maintained, on the sole ground that the net profits disclosed appear to be insufficient in relation to the total turnover ? " On that question, the contentions made before the court were that " there was no finding by the Income-tax Officer that the method of accounting employed by the assessee was improper or that the account books could not be relied upon as disclosing a true state of affairs and that the Income-tax Officer had not computed the taxable profit on any basis ...... ". In connection with these contentions, the court examined the facts found by the Income-tax Officer and the Appellate Assistant Commissioner and observed : " The mere fact that the profits are low is not material upon which a finding under section 13 can be ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act would be attracted : Bombay Cycle Stores Co. Ltd. v. Commissioner of Income-tax . It may also be added, as was held by this court in Commissioner of Income-tax v. McMillan Co. that the Income-tax Officer, even if he accepts the assessee's method of accounting, is not bound by the figure of profits shown in the accounts. It is for the income-tax authorities to consider the material which is placed before them and, if, after taking into account in any case the absence of a stock register coupled with other materials they are of the opinion that correct profits and gains cannot be deduced, then they would be justified in applying the proviso to section 13 ...... " The question is as to how the law thus announced by the Supreme Court applied to the facts in the present case. Now, in that connection, apparently, the question that arose before the Income-tax Officer was as to whether the method of accounting adopted by the assessee in the present case was such that therefrom the profits made by the assessee could not be properly deduced. The question arose, because, in spite of the fact that the assessee had produced two sets of accounts both closed and adjusted for its head ..... X X X X Extracts X X X X X X X X Extracts X X X X
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