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TMI Blog1960 (10) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1946, when one K. C. Shah became the managing director. For the assessment year 1949-50 relating to the account year ending on December 31, 1948, the assessee-company was assessed to income-tax as well as business profits tax. In so assessing the assessee-company, the Income-tax Officer added back a sum of Rs. 50,000 on the ground that expenses under the head " wages and salaries " were inflated to that extent by the assessee-company. The assessee-company showed a sum of Rs. 12,18,409 as expenses under the head " wages and salaries " for the year in question as against Rs. 8,04,766 for the preceding year. The Income-tax Officer examined certain comparative figures of the coal despatched, wages and salaries claimed, and cost of raising per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000 by his order of assessment. The assessee-company then went up in appeal to the Appellate Assistant Commissioner of income-tax, Nagpur. The Appellate Assistant Commissioner held that the Income-tax Officer was justified in his conclusion that the wages had been inflated. He came to the conclusion that the inflation was to the extent of Rs. 3 lakhs and not Rs. 50,000 only. Accordingly, he added back the sum of Rs. 3 lakhs for purposes of the assessment in question. The assessee-company then carried an appeal to the Income-tax Appellate Tribunal, Bombay Bench " B ". The Tribunal said that if the income-tax authorities, more particularly the Appellate Assistant Commissioner, had taken into consideration the fact that there was an increase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at of income-tax. The assessee then moved the then High Court of Nagpur under section 66(2) of the Indian Income-tax Act and the High Court directed the Tribunal to state a case on the following three questions of law : " 1. Whether there was any material before the Tribunal for the finding that the wages had been inflated ? 2. Is there any material on record supporting the estimate of Rs. 50,000 ? 3. Whether the disallowance of Rs. 50,000 was a valid deduction from expenditure under section 10 of the Act ? " The Tribunal then stated a case, and by its judgment and order dated February 24, 1955, the High Court answered the first two questions against the assessee and the third question being consequential was also answered against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to state what the precise scope of the appeal before us is. Neither the High Court nor this court sits in appeal over the assessments in question. As in the High Court so also before us, the short question is whether there was any material before the Tribunal for the finding that the wages had been inflated. If there was such material from which a reasonable inference as to inflation of wages could be drawn, the matter is at an end. Having heard learned counsel for the appellant, we agree with the view expressed by the High Court that there was such material. Learned counsel for the appellant has taken us very carefully through the explanations which the assessee-company gave for the increase in the wages. He referred to the increase in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given as to the increases made between 1939 and 1948. The monthly acquittance rolls showed a somewhat unusual state of affairs. First, many payments were acknowledged by persons other than the payees ; secondly, even in the case of literate persons, payments were acknowledged by persons affixing their thumb impressions. It has been contended before us that the colliery worked in shifts, and it sometimes so happened that a workman was working in the colliery at the time of payment of wages and, therefore, his wages were taken by some other workman. Then, there were cases of no acknowledgmentss at all. With regard to these, the explanation was that one person was dead and as it was a case of unpaid wages no acknowledgment was taken ; and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat with regard to every reason which the Income-tax Officer formulates for his order, the assessee must be given an opportunity to produce fresh evidence or fresh explanation. The Income-tax Officer fully considered whatever materials the assessee-company produced in reply to the notices issued to it or even independently of that notice. The Appellate Assistant Commissioner also considered the explanations which the assessee-company gave with regard to the defects noticed by the Income-tax Officer. Indeed, the Tribunal accepted some of the explanations as good explanations ; yet the Tribunal found that the defects in the keeping of acquittance rolls or the wages record indicated an inflation of wages and held that the Income-tax Officer wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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