TMI Blog1939 (8) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... only hope to do that by establishing that in that year he became a reformed character. The particular assessee who made the returns, we understand, has since died but it is reasonably plain that for the years before his death until at least the year 1933-34, he was in the habit of placing before the Income-tax Officers false returns supported by false books. One assessment year which is not before us, we understand was the subject of litigation which went eventually as far as the Judicial Committee. The case is found reported in Commissioner of Income-tax, United and Central Provinces v. Badridas Ramrai Shop, Akola (I.L.R. 1937 Nag. 197) and there their Lordships laid down that the Income-tax Officer was justified in making a fair estimate for assessment purposes and that in making that estimate he can take into consideration local knowledge and repute as regards the assessee's circumstances and his own knowledge of previous returns by and assessments of the assessee and all other matters which he thinks will assist him in arriving at a fair and proper estimate, but that he is not bound to hold a local inquiry or to place on record a note of the details and results of such i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t instead of suffering a loss of ₹ 8,722-14-2 the family had made a profit of ₹ 14,000. Thereupon, not unnaturally, the Income-tax Officer scrutinised the return again. As to this, on appeal, his superior makes the following observations: On examination the Income-tax Officer for very definite reasons, found that (1) the lists did not entirely remove the defects pointed out by him (2) that there was no account in the books of the relevant account year for one Govind Mahadeo of Malameshwar against whom the assessee had obtained a foreclosure decree (3) that interest realised through purchase of Mahadeo Dagduram's property had not been adjusted (4) that the claim put forward by the assessee that the accounts had been complete since 1987-88 was not true inasmuch as (a) no less than seven accounts had been inserted in the books of the year 1988-89 (the account year) and (b) there was no trace in them of the Bank of India and Srikishan Balkishandas accounts at any rate (5) that the interest, though trifling, received from a debtor from Nizamabad had not been adjusted and (6) that there were clear reasons to think that the cash book did not represent genuine balances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are unreliable, then one goes to Section 13. Section 13 is not an assessment but a computation section. Its provisions instruct the Income-tax authorities as to the method to be adopted in computing the profits and gains of business in question. Primarily the method is that adopted by the assessee. Their Lordships of the Privy Council in Commissioner of Income-tax, Bombay v. Sarangpur Cotton Manufacturing Co. Ltd., Ahmedabad (A.I.R. 1938 P.C. 1) have shown the difference between method and books . Normally, however, the method of arriving at a profit or a loss is to be ascertained by a perusal of the assessee's books of account, though as is indicated in the above-mentioned Privy Council case there may be other factors necessary to be regarded before the method is completely discovered. But whatever the materials used for determining the method, obviously one fails to ascertain any method if it be found that those materials are unreliable. It is like attempting to arrive at a conclusion on the evidence of a perjured witness. One cannot find anything from unreliable books. One cannot therefore discover what method is employed. One is therefore driven to go to the proviso t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eformation was not complete, that the return was still inaccurate and that the books were still unreliable. In our opinion, in the light of the decision in Feroze Shah v. Income Tax Commissioner, Punjab (supra) and the general sense of the matter, the Income-tax Officer did not act without evidence. The answer accordingly to the question put is in the affirmative. As to the various questions which the assessee has raised and which are to be found at page 22 of the paper book in Mis. Judicial Case No. 66-B of 1935 we are of the opinion that none of these raises a question in relation to which it would be proper to call upon the Income-tax Officer to state a case. The one that has been most pressed is No. 6 which is in the following words: Whether the Income-tax Officer was justified in law in passing the order of assessment and in disallowing claim without telling the assessee the grounds on which the return was not being accepted and further by not giving the assessee an opportunity of substantiating the correctness of the return and of rebutting the grounds of the Income-tax Officer's disbelief? In our opinion the answer to the first part of that question, if we h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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