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TMI Blog1954 (10) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... , when they were handed back to the appellant. In this situation the assessee pleaded for extension of time to furnish the return. This request was refused, and a show cause notice was issued under Section 28(3) of the Act calling upon the appellant company why penalty should not be imposed upon it for its failure to file the return. An officer of the company appeared before the Income-tax Officer and explained the cause for this default. In order to ascertain whether the explanation furnished by the assessee was genuine, the Income-tax Officer made inquiries from the court concerned about this matter. He also made a request to the court to allow him access to the books of account. The court, however, neither acceded to the demand that books of account be made available to the assessee nor did it permit the Income-tax Officer to have access to them. The Income-tax Officer having thus satisfied himself about the genuineness of the assessee's explanation, condoned the default in filing the return and dropped the proceedings taken against the company under Section 28(3) of the Act. It seems that no further action in the matter was taken by the department till the year 1947. Durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der was upheld by the Appellate Assistant Commissioner. The assessee then appealed to the Tribunal against these decisions. What happened before the Tribunal may well be stated in terms of the Tribunal's order itself. This is what is mentioned in the judgment of the Tribunal :-- "At the end of the hearing of this appeal on 25th of November, 1949, the Income-tax Appellate Tribunal requested the departmental representative to produce for the examination of the Income-tax Appellate Tribunal the gross profit rates shown or assessed in the cases of other similar cotton mills. The departmental representative wanted 3 or 4 days' time to collect information on this point. On this the appellant also wanted to be allowed to produce information regarding the gross profit rates shown or assessed by other similar cotton mills, and he was also allowed to produce information on the point. On or about the 29th November the counsel for the appellant requested that he should be allowed time till Saturday the 3rd of December to file the above information and time for this purpose was allowed to him. On the 3rd December Mr. Banerjee the appellant's counsel saw the Accountant Member in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it appears to us that the Income-tax Officer was justified in coming to the conclusion that all sales had not been brought into the books. We have, however, considered all facts relevant to this case and are of the opinion that the addition to the sales should be reduced from Rs. 36 lakhs made by the Income-tax Officer to Rs. 16 lakhs which would reduce the gross profit rate to about 35 per cent. " The sum and substance of these decisions is that the Income-tax Officer estimated the gross profit on sales at 40 per cent. by a pure guess, while the Tribunal reduced it to 35 per cent. by applying some other rule of thumb. It is not clear from either of these judgments on what material these estimates were based. Dissatisfied with the decision of the Tribunal, the assessee wanted the Tribunal to state a case and refer to the High Court for its decision ten questions of law. It seems that Dr. Pal who represented the assessee before the Tribunal had only argued one question namely, whether the estimate of profit made by the Income-tax Officer was excessive or whether it was justified on the material on the record. The other points raised in the memorandum of appeal regarding the valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put the assessee in possession of full particulars of the case he is expected to meet and that he should further give him ample opportunity to meet it. It was said that the Tribunal failed to disclose to the assessee the material that the departmental representative had given to it regarding the rates of gross profit of cotton mills varying between 49 per cent. and 13 per cent., and that if that disclosure had been made, the assessee would have satisfied the Tribunal that the mills which had shown gross profits at rates mentioned above had no similarity of any kind with the appellant company's mill or to other mills in Bengal and therefore those rates had no relevancy in the enquiry as to gross profits of the assessee company's mill. It was also argued that both the Income-tax Officer and the Tribunal acted arbitrarily and on suspicion in estimating the rate of gross profit. In conclusion the learned counsel urged that now that the books of account of the company were available, it was only just and fair that the Income-tax Officer and the Tribunal should examine these books in order to determine the correctness of the return furnished by the assessee. The learned Solicit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot possible to fetter the exercise of this power by any set formula or rule. All that can be said is that the Constitution having trusted the wisdom and good sense of the Judges of this Court in this matter, that itself is a sufficient safeguard and guarantee that the power will only be used to advance the cause of justice, and that its exercise will be governed by well established principles which govern the exercise of overriding constitutional powers. It is, however, plain that when the Court reaches the conclusion that a person has been dealt with arbitrarily or that a Court or tribunal within the territory of India has not given a fair deal to a litigant, then no technical hurdles of any kind like the finality of finding of facts or otherwise can stand in the way of the exercise of this power because the whole intent and purpose of this article is that it is the duty of this Court to see that injustice is not perpetuated or perpetrated by decisions of courts and tribunals because certain laws have made the decisions of these courts or tribunals final and conclusive. What we have said above sufficiently disposes of the first contention raised by the learned Solicitor-General. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it contained. The assessment in this case and in the connected appeal ; we are told, was above the figure of Rs. 55 lakhs and it was meet and proper when dealing with a matter of this magnitude not to employ unnecessary haste and show impatience, particularly when it was known to the department that the books of the assessee were in the custody of the Sub-Divisional Officer, Narayanganj. We think that both the Income-tax Officer and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion. It is thus a fit case for the exercise of our power under Article 136. In the result we allow this appeal, set aside the order of the Tribunal and remand the case to it with directions that in arriving at its estimate of gross profits and sales it should give full opportunity to the assessee to place any relevant material on the point that it has before the Tribunal, whether it is found in the books of account or elsewhere and it should also disclose to the assessee the material on which the Tribunal is going to found its estimate and then afford him full opportunity to meet the substance of any private inquiries made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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