TMI Blog1966 (10) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... able, it was open to the Income-tax Officer to estimate the gross profit at a rate at which profit was earned in similar business by other merchants. We are unable to hold that the reasons recorded by the Tribunal in support of its order levying tax on profits computed on estimated turnover of ₹ 12 lakhs at the rate of 6.5 % were " irrelevant ". The criticism made by the High Court that the Tribunal had " failed to perform its duty in merely affirming the conclusion of the Appellate Assistant Commissioner " is apparently unmerited. On the merits of the claim for exclusion of the amount of ₹ 7,000, there is no question of law which could be said to arise out of the order of the Tribunal. The assessees had credited Sampangappa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation of the assessees that these were " accommodation sales to oblige weavers ", in respect of which the assessees made no profit, was rejected. It was found that the assessees had effected sales in the accounting period of the value of Rs. 73,065-7-0 in the name of Bhuvaneswariah and of the value of Rs. 31,966-5-0 in the name of Veerabhadrappa. It also appeared that there were sales to Messrs. Hameedia Cloth Stores and T. Venkataram of Trivandrum, but the exact magnitude of those transactions could not be ascertained. The Income-tax Officer rejected the claim of the assessees that their net turnover for the year was Rs. 9,42,524-8-9, and estimated the turnover at Rs. 12 lakhs and estimated their gross profit at 6.5% on the estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Tribunal the assessee did not persist in his contention that the sales were not suppressed. The only contention raised by the assessee was that the estimated turnover made was excessive. Since the income-tax authorities have been able to establish suppression of sales of over a lakh of rupees, in the view of the Tribunal it would be impossible to interfere with the estimate of Rs. 12 lakhs being the turnover of the assessee ". The Tribunal accordingly rejected the contention of the assessees about the rate of gross profit estimated by the Income-tax Officer and also rejected the contention that the entry of Rs. 7,000 in the assessees' books represented " secreted profits " which were already brought to tax. Prima facie, these were fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applied its mind to the facts and had recorded its conclusion merely affirming the decision of the Appellate Assistant Commissioner ". On that view, the second question was also decided in favour of the assessees. The Commissioner of Income-tax has appealed to this court with special leave. The true income, profits and gains of the assessees could obviously not be deduced from the books of account of the assessees. That was conceded by the assessees. The assessees had carried on transactions in the name of the son of the principal partner, and also in the name of the accountant of the business, and those transactions, besides other transactions, were never entered in the books of account. The Income-tax Officer, therefore, was of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no reason to believe that the estimate made by the Income-tax Officer was not reasonably made. The Income-tax Officer computed the profits from the business at a flat rate. The gross profits disclosed by the assessees yielded a rate of 3.8%. It appeared, however, that the normal rate of gross profits in similar business carried on by other merchants in the locality varied from 6 to 7%. The assessees furnished no explanation at all as to why profit at the normal rate was not earned. Once the books of account of the assessees were rejected and the rate of gross profit earned by them was found unreliable, it was open to the Income-tax Officer to estimate the gross profit at a rate at which profit was earned in similar business by other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal fully agrees with the view expressed by the Appellate Assistant Commissioner and has no other ground to record in support of its conclusion, it does not act illegally or irregularly, merely because it does not repeat the grounds of the Appellate Assistant Commissioner on which the decision was given against the assessees or the department. The criticism made by the High Court that the Tribunal had " failed to perform its duty in merely affirming the conclusion of the Appellate Assistant Commissioner " is apparently unmerited. On the merits of the claim for exclusion of the amount of Rs. 7,000, there is no question of law which could be said to arise out of the order of the Tribunal. The assessees had credited Sampangappa with two ..... X X X X Extracts X X X X X X X X Extracts X X X X
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