TMI Blog1963 (11) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... owing his income and expenses. According to the return his gross income was ₹ 10,000 and odd and his expenses of cultivation were ₹ 5,000 and odd. The assessing authority did not accept the figures of income given by the assessee in his return and estimated his income from cultivation at ₹ 16,000 and odd and his expenses at ₹ 8,000 and odd, taking them to be about half of the income. Since the estimated expenses were more than the expenses mentioned by the assessee in his return, the State applied to the Revision Board in revision for reference of the above-mentioned question to this court for its answer. The Board in the statement of the case has expressed an opinion that the admission contained in the return that the expenses of cultivation were ₹ 5,000 and odd was not conclusive, that it could be proved to be untrue or mistaken or made for a fraudulent purpose and in that event it would lose all evidentiary value, that an admission must be taken as a whole and not accepted in part and rejected in part, that if the actual income is found to be larger there is no reason for saying that the actual expenses are also not larger than what is shown in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing authority has reason to believe that a return made under section 15 is incorrect or incomplete, he shall serve on the person... a notice requiring him on the date to be specified therein either to attend at the office of the assessing authority or to produce...any evidence in support of the return. (3) On the day specified in the notice...the assessing authority after seeing such evidence as such person may produce and such other evidence as the assessing authority may require on specified points, shall... assess the total agricultural income of the assessee and determine the sum payable by him on such assessment. (4) If the...person fails to make a return under sub-section (2) or (3) of section 15...or, having made the return, fails to comply with all the terms of the notice issued under sub-section (2) of this section or to produce any evidence required under sub-section (3), the assessing authority shall make the assessment to the best of his judgment...notwithstanding any option exercised under sub-section (1) of section 6. The prescribed form of return contains a column for the expenses to be deducted in computing the agricultural income. The st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider the amount of the expenses mentioned in the return or not; neither is he bound to accept the amount as correct nor can he be prevented from basing his estimate on it. He has to estimate the amount according to his best judgment and it is for him to judge what is the best way of estimating the amount. His judgment in this respect cannot be fettered by any rules. What is the gross income, what is the amount of the permissible deductions and what is the total agricultural income are all questions of fact and no question of law can be said to arise out of a finding of an assessing authority that according to his best judgment a particular amount is the amount of the gross income, another particular amount is the amount of the permissible deductions and that the former less by the latter amount is the total agricultural income. Sri Raja Ram contended that it is not open to an assessing authority to allow greater deduction from the gross income than the deduction claimed in the return, but no provision in the Act or in the Rules can be cited in support of the contention. There is no provision laying down that in no circumstance can an assessing authority allow greater deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his judgment the amount is not actually paid. An amount actually paid can be proved by direct evidence as well as by indirect evidence and can also be estimated by the best of one's JUDGMENT It is not the law that no deduction can be allowed from the gross income without proof, whether direct or indirect. When there is a dispute, the onus does lie upon the assessee to prove the amount of the deductions claimed by him, but no question of onus arises when the assessing authority allows a deduction to him and he does not claim any greater deduction. As we explained earlier, determining or estimating the total agricultural income under sub-section (3) or under sub-section (4) of section 16 involves the determining or estimating the amount of the deductions; it is, therefore, permissible for an assessing authority to estimate the amount of deductions according to his best judgment, i.e., to allow a deduction without any proof having been offered by the assessee. He is not in a worse position than if he had not filed a return at all. It was not disputed before us that, if no return is filed, an assessing authority has still to estimate the amount of deductions to be allowed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the actual net profits as worked out by the assessee itself but on the estimate of profits made by the income-tax authorities. This court held that the question whether commission was to be worked out on the actual profit or on the estimated profits was a question of fact and it appeared that the assessee had produced no evidence to prove that the remuneration was to be a percentage of the estimated profits and not of the actual profits. Further, the amounts claimed as deduction were actually entered in the account books as payments which had actually been made to the employees, and there was no evidence that any greater amount than that recorded had been paid. It must be remembered that the book version of the assessee regarding its profits alone was rejected. Our answer to the question is: It is open to an assessing authority acting under section 16(4) of the Act to allow a larger deduction from the gross income than what is claimed in the return that is rejected and he is not bound by the deduction claimed in the return. A copy of this judgment shall be sent to the Revision Board under the seal of the court and the signature of the Registrar as required by section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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