1966 (10) TMI 35 - SUPREME COURT

Whether the estimate of the income of the assessee confirmed by the Income-tax Appellate Tribunal rests upon irrelevant considerations and the estimate is not made in accordance with law ?

Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in sustaining both the additions of ₹ 41,142 as income from business and ₹ 7,000 as cash credits, and whether such addition does not result in double taxation ?

Held that:- 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 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 with two sums of ₹ 6,000 and ₹ 1,000 in the months of November and December, 1950, respectively. It was clear that Sampangappa had not advanced at the material time any amount to the assessees. The explanation of the assessees was, therefore, untrue.