TMI Blog1934 (9) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... his court the following question of law:- Whether under the circumstances mentioned in the Order of the Income-tax Officer an assessment under the proviso to Section 13 could legally be made or whether the assessment should have been under the first part of Section 13. The material facts of this case are that in connection with the assessment for 1931-32, the company filed a return accompanied by copies of its balance-sheet, trading and profit and loss accounts. The Commissioner states that the assessment has been made according to the entries in the books of the assessee with a slight variation which the Income-tax Officer considered necessary. This slight variation consisted in the fact that the Income-tax Officer declined to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first part of Section 13 and not under the proviso. It has been alleged before us, and has not been denied, that the method of accounting disclosed by the petitioner in connection with the assessment under review is the same method which has been accepted by the Income-tax authorities both before and after the year in question. The exception taken in this particular instance by the Income-tax Officer to the method of accounting was based on the absence of a stock register. Counsel for the petitioner has assured us, and it has not been denied on behalf of the Income-tax authorities that the company has never had a stock register. In this particular case the suspicions of the Income-tax Officer were aroused by the reduced rates of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e returns submitted, when there is no other reason except the fact of reduced profit to justify this assumption. The economic blizzard , which affected trade in the year under review and still prevails, would explain reduction in profits; and unless the Income-tax Officer has some reason (other than the mere fact of this reduction) for holding that the profits and gains cannot be properly deduced from a method of accounting which admittedly has been regularly employed by the petitioner and has been accepted in the past, we are of opinion that use of the proviso to Section 13 for the purpose of introducing an arbitrary manner of computing the profits is not justified. We hold, therefore, that there was no material on which the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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