TMI Blog1933 (6) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... y relevant are not unfamiliar, it will be convenient if only for facility of subsequent reference, and before going further to set them forth as they stood in 1928. They are as follows:- Section 3.-Where any Act of the Indian Legislature enacts that income-tax shall be charged for any year............ tax......shall be charged for that year............in respect of all income, profits and gains of the previous year of every individual. Section 10(1).-The tax shall be payable by an assessee under the head 'Business' in respect of the profits or gains of any business carried on by him. Section 13.-Income, profits and gains shall be computed, for the purposes [of s. 10.........] in accordance with the method of accounting regularly employed by the assessee: Provided that, if no method of accounting has been regularly employed, or if the method employed is such that, in the opinion of the Income Tax Officer, the income, profits and gains cannot properly be deduced therefrom, then the computation shall be made upon such basis and in such manner as the Income Tax Officer may determine. Section 22(2).-In the case [of such a person as the appellants] the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of the High Court of Judicature at Lahore to require the Commissioner to state a case with reference to the questions raised by the appellant that the present appeal is brought. The objection taken to its competence, already referred to, is that no appeal to His Majesty in Council lies from such refusal. The facts are short. The appellant, the assessee, is a timber merchant carrying on business at Nowshera, in the North West Frontier Province. His present complaint is with reference to the profits of his business assessable to income tax for the year ending the 31st March, 1928. As has been seen, the effect of s. 3 of the Income Tax Act is that the profits of the previous year are for the purposes of income tax to be taken to be the profits of the year of assessment. Accordingly, in response to a notice from the Income Tax Officer, pursuant to s. 22(2) of the Act, served upon the appellant with reference to the year of assessment, he made a return which showed his total income received during the previous year to have been ₹ 9,167. The officer refused to accept this return, and to test its accuracy called, under s. 23(2), for evidence in its support. In response, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a system, which he termed the mercantile system, an outstanding feature of which is that sales are recorded on the dates when they are effected, whether cash payment is then made or not. In respect of the ₹ 90,618, the appellant had for his own purposes departed from the system, and had recorded the transactions not on the dates when the sales were effected, but on a date after cash payment for all of them had been received. With regard to the second objection, the flat rate of profit was the same as that which without objection, had been charged in this previous year, and there was no proof adduced in support of the appellant's allegation that the profit was in fact lower proportionately than it then had been. On the 19th December, 1927, the appellant petitioned the respondent Commissioner to refer to the High Court of Judicature at Lahore, under s. 66(2) of the Act, the questions of law involved in his objections to the assessment made upon him. By an order of the 5th December, 1928, the Commissioner dismissed the petition. He held that the objections taken by the appellant to the assessment related to questions of fact only and that no question of law was involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the use by the Income Tax Officer and the Assistant Commissioner of the term mercantitle system. The finding of both in its essential substance, was that the appellant's system of accounting, by whatever name called, required the inclusion in his accounts of 1926-27 of the ₹ 90,618 referred to, and the only question open to judicial determination is whether there was any evidence before these officers upon which they might so find. It appears to their Lordships that such evidence was not wanting. Different descriptions of his system, inconsistent with the finding put forward by the appellant, failed to stand the test of examination. The appellant's contention, before the Assistant Commissioner, for example, that transactions of sale were only entered in his books when one-fourth of the price was paid in cash and hundis received for the balance was shown on examination of his books to be without warrant, and with reference to the disputed figure of ₹ 90,618 itself, his statement in his grounds of appeal to the Assistant Commissioner that hundis for the entire amount were received in April 1927, is contradicted in his own petition of the 9th December, 192 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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