TMI Blog1966 (2) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ute consignments on five days in February, 1948, and also in July and August of that year, but these despatches were not shown in the assessee's accounts. The assessee was also asked to explain about that but the Income-tax Officer did not feel satisfied with whatever explanation was offered in that respect. In the result, the assessing officer held : " From the omission of the transaction in the accounts the presumption would be strengthened that the assessee kept away the profits of his business (and ?) introduced capital here. Taking all these facts into consideration, I would add back a sum of Rs. 51,000 to the profits. " Against that, an appeal was taken before the Appellate Assistant Commissioner, who upheld the assessment. When the matter came before the Appellate Tribunal, the only ground pressed before them was with regard to the explanation about Rs. 51,000. In their order dated the 4th December, 1953 (annexure " C-1 "), the Tribunal held that the assessee should be given an opportunity to produce further evidence in support of his explanation in regard to Rs. 51,000 introduced in the cash book on the date of commencement of the business and, in that view, they remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether, on the facts and circumstances of the case, the addition of Rs. 51,000 as estimated profits from suppressed transactions is justifiable in law ? " The finding of the Appellate Tribunal that the assessee's business, on which tax was to be levied, did not commence from the 12th October, 1948, as was shown by the books of account of the assessee, is final. The other finding that there were several transactions during the period up to the 12th of October, 1948, which did not find a place in the assessee's account books or in the return filed by him, cannot be challenged. The finding that there were four despatches in the month of July, 1948, but they also did not find a place in the assessee's accounts is also there. In view of these findings, whether the question, as it has been framed, can be answered in the affirmative or in the negative is to be considered. The addition of Rs. 51,000 made by the Income-tax Officer was on account of the rejection of the assessee's account books. The justification for such a rejection cannot now be challenged, in view of the findings recorded by the Appellate Tribunal to the effect that the account books did not represent the entire perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )." Provisions under that section of the Sales Tax Act were the same as sub-section (3) of section 23 of the Income-tax Act under which the present assessment was made. Their Lordships also referred to this similarity in the two provisions because they also considered some decisions on the Income-tax Act and particularly the dictum laid down by Lord Russell of Killowen in the case of Income-tax Commissioner v. Badridas Ramrai Shop, Akola. Referring to the observations of Lord Russell which were quoted in the judgment, their Lordships of the Supreme Court observed that they did not find anything in those observations which ran counter to what the Supreme Court had said in the case of Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax and continued. " No doubt it is true that when the returns and the books of account are rejected, the assessing officer must make an estimate, and to that extent he must make a guess; but the estimate must be related to some evidence or material and it must be something more than mere suspicion. To use the words of Lord Russell of Killowen again, 'he must make what he honestly believes to be a fair estimate of the proper figure of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had been despatched in the month of July, had not found a place in the assessee's accounts. Thus, it cannot be said that there were not some materials or evidence before the assessing officer as well as before the Appellate Tribunal in arriving at the figure of estimate. In that view, what their Lordships of the Supreme Court laid down in the case of Raghubar Mandal Harihar Mandal v. State of Bihar, as already referred to, cannot be said to have been violated in any way. Learned counsel's further contention was that, when the Appellate Tribunal held in disagreement with the assessing officer that the explanation offered by the assessee in respect of Rs. 51,000 was satisfactory, that was necessarily to be omitted from the volume of materials and/or evidence on which the estimate of Rs. 51,000 for addition to profit was made. This is correct. A part of the materials which were depended upon for arriving at the figure of estimate at the original stage, by the orders of the Tribunal, had to be omitted. That became irrelevant so far as the figure of estimate was to be arrived at. The original estimate of Rs. 51,000 must be now taken to have been based upon some irrelevant mater ..... X X X X Extracts X X X X X X X X Extracts X X X X
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