TMI Blog1937 (6) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... rejection of accounts and estimating the sales at ₹ 1,50,000 and applying a flat rate of 15 per cent profits to the sales. The assessee, who is a cap manufacturer, carried on wholesale trade in that commodity in the City of Delhi. The sales as shown by his account books for the last ten years are as follows: Rs. 1925-26 2,70,336 1926-27 2,20,909 1927-28 2,12,340 1928-29 1,35,114 1929-30 2,24,784 1930-31 1,85,979 1931-32 1,54,785 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he books of the assessee of the transactions referred to above, the Income-tax Officer came to the conclusion that the books did not reveal the true extent of his business both as regards sales and as regards profits. In view of the large business that had been carried on by the assessee for the ten years from 1925-26 to 1934-35 the sales for the accounting period was fixed at the sum of ₹ 1,50,000. The Income-tax Officer calculated the profits at a flat rate of 15 per cent for wholesale business. The assessee was taxed on an income of ₹ 20,841 to tax and sur-tax aggregating ₹ 2,578-1 as against the declared income of ₹ 3,983-5-4 from property and ₹ 3,638-3-8 from business. The Assistant Commissioner of Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,54,785. Thereafter there was a sudden drop. The sales in the next three years amounted to ₹ 51,380, ₹ 49,380 and 81,866 respectively. It appears that the figure of ₹ 1,50,000 was worked out by taking a rough average of the business of the assessee for the last ten years. Past assessments therefore provided the material for the fixing of the sales at ₹ 1,50,000. Though the sales in the last three years, according to the books of the assessee, decreased considerably, there was no consequent decrease in the staff employed by the assessee or in the overhead charge. The shop expenditure in 1925-26 when the sales amounted to ₹ 2,70,336 was ₹ 5,365. In subsequent years the expenditure account throughout ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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