1968 (11) TMI 26

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..... ther. The appeals preferred to the Assistant Commissioner and the Income-tax Appellate Tribunal were dismissed. This reference is made by the Tribunal to us under section 66(2) of the old Act and section 256(2) of the new Act. The question of law referred to us reads: "Whether, on the facts and in the circumstances of these cases, the Income-tax Appellate Tribunal was right in law in holding that the Income-tax Officer could act on the proviso to section 13 of the Income-tax Act, 1922, for completing the assessment for the assessment year 1961-62 and on the proviso to sub-section (1) of section 145 of the Income-tax Act, 1961, for completing the assessment for the assessment year 1962-63." The principal reason why the Income-tax Officer .....

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..... ficer's restricted criticism of the assessee's stock inventory was confined to the valuation of stock and did not extend to the correctness of the other particulars stated in it. That that was the only reason for which the Income-tax Officer did not, as he himself stated, depend on the accounts was missed by the Appellate Tribunal. In the course of its judgment, the Appellate Tribunal which did not say that the accounts maintained by the assessee were not correct, made the criticism that the assessee had not maintained a day-to-day stock book. The relevant part of its judgment reads: "It is admitted that the assessee had not maintained a day-to-day stock book. We consider its absence as a vital defect. In its absence it is not possible to .....

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..... of the Income-tax Officer, the income, profits and gains cannot properly be deduced therefrom." So long as it is not impossible to deduce the true income from the accounts, its computation could not be made in any other way, and so, the Privy Council proceeded to observe: "The simplest case would be where it appears on the face of the accounts that a stated deduction has been made for the purpose of a reserve. But there may well be more complicated cases in which nevertheless, it is possible to deduce the true profit from the accounts, and the judgment of the Income-tax Officer under the proviso must be properly exercised. It is misleading to describe the duty of the Income-tax Officer as a discretionary power." The Appellate Tribunal, w .....

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