TMI Blog1970 (5) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... gures in Srinagar contract ? " The facts are not in dispute. The relevant assessment year is 1959-60. The business of the assessee is execution of construction contracts. The assessee commenced its business from January 25, 1958, and the accounts were closed for the first time on January 25, 1959. During the accounting year the assessee undertook three contracts with respect to which it submitted separate profit and loss statements disclosing the following net profit :- Rs. 1. Rourkela Dolomite Pig Casting 4,80,299 26.5 % 2. Rourkela Calcinning Plant 8,14,639 24 % 3. Srinagar Aerodrome runway taxi stand 6,38,235 9% The accounts in respect of the first two contracts were accepted by the authorities under the Income-tax Act into to but with regard to the accounts relating to the third contract the Income-tax Officer declined to accept the assessee's reasons for low profits at the rate of 9 % in respect of that contract. He, therefore, applied at rate of 12 1/2 % profit and made an addition of Rs. 22,558 to the aasessee's income. On appeal, the Appellate Assistant Commissioner of Income-tax agreed that some addition was called for but he felt that the addition made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld also indicate in his order the material on which he had made his assessment as an order under section 23(3) was appealable. Basing himself on the above observations, Mr. Bajaj argued that, the same applied to the Tribunal and that before any addition was made to the income of the assessee on the ground that recourse to section 13 was necessary the material on which that addition was contemplated should have been disclosed to the assessee. Since the order of the Tribunal did not disclose any such material, it did give rise to the questions formulated by the assessee. Reliance was also placed on the judgment of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax and on the decision of the Kerala High Court in S. Veeriah Reddiar v. Commissioner of Income-tax. Particular stress was laid by the learned counsel on the judgment of the Kerala High Court in which it was held that low profits and absence of a regular stock register were not sufficient reasons or material on the strength of which the accounts of the assessee could be rejected under the proviso to section 13 of the Income-tax Act and an assessmentmade therein. In any case it was argued that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs in the previous years, coupled with the fact that the assessee had a large mortgage loan business and must have enforced mortgages by sale on many occasions, afford ample material for the assessment made'. The other judges concurred and the Privy Council also agreed ' adding only that, if the assessee wished to displace the taxing officer's estimate, it was open to him to adduce evidence of all his purchase transactions during the year and of the financial results thereof, which he apparently made no attempt to do.' The Income-tax Officer had assessed the assessee to the best of his judgment on the material before him and the material was sufficient for the purpose. " In the present case there was material before the Tribunal on which its finding could be based the assessee's representative had admitted before the Appellate Assistant Commissioner that full quantitative details in respect of the stores of the value of Rs. 1,30,000 consumed in the execution of the Srinagar contract might not be available. In the circumstances, recourse to estimating the profits on the contract was inevitable. He, therefore, made an addition of Rs. 10,000 as against Rs. 26,434 added by the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Officer on the ground that the assessee did not maintain a variety-wise stock register and the percentage of profits disclosed by the books was very low. An addition of Rs. 76,478 was, therefore, made to the profits disclosed in regard to a certain category of goods, but the profits shown in the rest of the trading were accepted. On appeal the Appellate Assistant Commissioner reduced the addition to Rs. 40,909 and on further appeal the Tribunal affirmed the decision of the Appellate Assistant Commissioner on the ground that the assessee had not proved that the additions were by any means excessive or unreasonable. There is not even the remotest resemblance between the facts of that case and the facts of the case before us. Mr. Bajaj finally referred to two decisions of this court. The case of R. S. Chiranji Lal and Sons v. Commissioner of Income-tax (I.T.R. No. 17D of 1966, decided on April 6, 1967, has been rightly distinguished by the Tribunal as the addition of Rs. 50,000 which was sustained by the Tribunal in that case was based on a pure guess as to how much material had found its way to the black market. The addition made in the present case is not made on any s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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