TMI Blog1959 (9) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ork at Panchait Dam. For the assessment year 1951-52 the Income-tax Officer wrote as follows: The above contract was for excavation of sites for Telaya Dam and Power House. The assessee has maintained one consolidated profit and loss account from the beginning of the work, i.e., from December, 1950, to March 31, 1952. This account is for about 19 months. Net profits as per assessee's books of account comes to ₹ 30,076. On the basis of receipts during 1950-51 and 1951-52, the assessee has filed returns for 1951-52 and 1952-53 assessment showing the income of ₹ 7,000 and ₹ 30,076 respectively. The assessee has received the following amounts in those two years: Rs. (1) 1950-51 93,995 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case and that the rate of 15 per cent, adopted by the Income-tax Officer was a reasonable rate. The matter was then taken before the Appellate Tribunal and the argument put forward by the assessee was that the proviso to section 13 of the Income-tax Act was wrongly applied to the case and the accounts of the assessee ought not to have been rejected by the Income-tax Officer and by the Appellate Assistant Commissioner. The argument was rejected by the Income-tax Appellate Tribunal and it was held by that Tribunal that the absence of the stock register ruled out the possibility of a true ascertainment of the profits of the assessee. The Tribunal held that the account books of the assessee could not be relied upon, and although a register o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Tribunal under section 66(1) of the Income-tax Act for making a reference to the High Court. In rejecting this argument the Tribunal has observed that the orders of the Income-tax Officer and the Appellate Assistant Commissioner sufficiently indicate that materials were in fact supplied in the accounting years relevant to the assessment years 1951-52 and 1952-53. It was also observed by the Tribunal that the defect in the accounts of the assessee was that no register for the work-in-progress was maintained for the years 1952-53 and 1953-54, and this alone, in the opinion of the Tribunal, was sufficient to reject the books of the assessee. The Tribunal which heard the appeals has also observed that the register for the work-in-progress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax v. Ahmedabad New Cotton Mills Co. Ltd. [1928] LR 57 IA 121is of no assistance on the present question. The principle has been applied by a Bench of this court in Sri Sukhdeodas Jalan v. Commissioner of Income-tax [1954] 26 ITR 617 , where it was pointed out that if the method of accounting adopted by the assessee did not reflect the true profits of the preceding year, the proviso to section 13 would apply and the income-tax authorities were entitled to proceed in accordance with that proviso and to compute the profits on such basis and in such manner as they may determine. The same view has been taken in a later decision of this court in D.D. Kapoor v. Commissioner of Income-tax [1955] 24 ITR 348 where the principle has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fective, and we cannot say that that matter was not within their special and exclusive powers, in view of the provisions of the Act. Applying the principle of these authorities to the present case we hold that the question of application of the proviso to section 13 of the Income-tax Act has not passed from the region of fact to the region of law because there was sufficient material upon which the income-tax authorities could reject the account books of the assessee and apply the proviso to section 13 of the Income-tax Act. We accordingly answer the question of law referred to the High Court by the Income-tax Appellate Tribunal in favour of the Income-tax Department and against the assessee. The assessee must pay the costs of this refe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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