TMI Blog1974 (9) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 1962-63 was computed at Rs. 6,380. The computation was made under section 145 of the Act. We have already stated in our judgment in (I.T. Reference No. 69 of 1970)--Mehar Singh and Co. Pvt. Ltd. v. Commissioner of Income-tax [1977] 108 ITR 607 (Cal)) the circumstances under which assessments of the income of the assessee in respect of the earlier years were made on the basis of the estimate. For the same reasons in respect of the assessment year under consideration assessment was made on estimate by the Income-tax Officer acting under section 145 of the Act. After deducting from the total income of Rs. 6,380 the tax of Rs. 3,190 the distributable surplus was worked out at Rs. 3,190. Therefore, the assessee ought to have declared a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner in which the assessee maintained accounts there was no profit shown as earned for the year, yet it must be held that profits did accrue to the assessee from year to year on so much of the work that was completed and that such profits were real profits and the non-distribution of dividends in such circum. stances could not be said to be on reasonable grounds. It was also brought to the notice of the Tribunal that, under similar circumstances, for the assessment year 1960-61, the Tribunal had upheld the order passed against the assessee under section 23A of the Indian Income-tax Act, 1922. The Tribunal, however, held that the application of section 104 of the Act was not justified in the facts and circumstances of the case. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee-company for the year for the purpose of section 104 of the Income-tax Act, 1961, no estimated profit was to be taken into account in respect of the contracts that were partly executed by the end of the year when the accounts were maintained on the basis of completed contracts ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the payment of dividend by the assessee-Company would be unreasonable within the meaning of section 104 of the Income-tax Act,1961 ?" With regard to question No. 1 it was contended on behalf of the revenue that this question really involves the question whether assessment order for the assessment year 1962-63 was correctly made or not. The question, accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n our opinion, the questions whether profits of the year were correctly determined and whether proper method of accounting was followed are not open for consideration. These questions are not at all relevant or material for considering the correctness of an order made under section 104 of the Act. In this connection reference may be made to the unreported Bench decision in the case of Banga Luxmi Hosiery Mills Pvt. Ltd. v. Commissioner of Income-tax (I.T. Reference No. 212 of 1970) [1977] 106 ITR 644. Therefore, in considering the validity of the order made under section 104, in our view, it was not open to the Tribunal to go into the question as to whether the assessee's method of maintaining accounts was correct or not. The validity of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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