TMI Blog1975 (11) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... Prices) Order, 1968, cannot be taken cognizance of by any one except by an authority constituted by the statute for implementing the penal provisions of the Control Order ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in fixing the maximum prices fixed under the Kerala Paddy (Maximum Prices) Order, 1965, and Kerala Paddy (Maximum Prices) Order, 1968, as the price at which the appellant has sold the excess paddy in the open market? " In respect of the assessment years 1964-65, 1966-67, 1967-68 and 1968-69, the assessee filed returns under the Kerala Agrl. I.T. Act, 1950. The Agrl. ITO finalised the assessments on best judgment basis and net assessable income was determined at Rs. 50,119 for 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Gazette and when there is no other official data to show what is the market rate of paddy, it is safer and proper to follow the nirak rate. According to the counsel for the appellant, the assessing authority has valued paddy without any basis. He has invited our attention to the order of this Tribunal in AITA Nos. 444 to 455 of 1962 dated 20-9-63, wherein this Tribunal has directed that nirak rate is to be followed. As no other official data is available we also feel that it is safer to follow the nirak rate and we direct the concerned assessing authorities accordingly ...... From these wordings it is clear that these rules, are mandatory and not merely directory and, as pointed out by Sri.Thommen, any violation of these rules will enta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference Applications Nos. 9 to 12/73 requiring the Tribunal to refer to this court certain questions of law which are said to arise from the common order in the four appeals before the Tribunal. It is on these applications that the reference has now been made on the questions earlier shown. Sri K. S. Paripoornan, learned counsel for the revenue, contended that the decision of the Tribunal, that if at all any one is contravening the Maximum Prices Control Orders and got higher prices, that cannot be taken cognizance of by an authority constituted by the statute except for implementing the penal provisions, is clearly erroneous. It is on this basis that the Tribunal has held that the taxing authorities are not justified in fixing a higher p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the computation of the income. The Gujarat High Court, when the matter came before it on reference, referred to various English decisions as also to Wheatcroft's Law of Income Tax and Simon's Income Tax for supporting the view that even where a trade is illegal it would still be a trade within the meaning of the income-tax law and if any profits are derived from such trade they would be assessable to tax. There is in principle no distinction between profits and losses of a business and if the profits of an illegal business are assessable to tax equally the losses arising from illegal business must be held to be liable to be taken into account in computing the income of the assessee. In considering the question when it came before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO has not proceeded on the basis that the assessee has actually sold the paddy at a rate exceeding the nirak rate or the rates prescribed under the Kerala Paddy (Maximum Prices) Order. There is no finding by the officer with regard to that. He only presumes that paddy could have been sold at that rate and, therefore, fixed the price of paddy at different rates for different periods at a rate higher than that fixed under the Kerala Paddy (Maximum Prices) Order. That one would have been able to sell at prices in excess of the legally fixed rates did not necessarily imply that the assessee also did break the law by selling his paddy at prices in excess of the rates fixed by the Maximum Prices Order. As justice Rajagopalan pointed out in A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paddy might be sold by any person in the State. When such an order has been issued any violation of it becomes a wrong punishable under section 7(1)(a)(ii) of the Act with a prison-term which may extend to 5 years and with fine. When such fixation of maximum price is in force the market price cannot rise above it : It may be anything equal to or less than the maximum price. Any sale at a price above it will not be lawful and, therefore, cannot afford a standard for ' just equivalent ' for the commodity. The word ' just ' in ' just equivalent ' seems to repel consideration of any illegal transaction as its standard. If dealings with racketeers or other anti-social elements in black market are to rule the price of paddy procured for equitable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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