Income Tax Appellate Tribunal - Nagpur
Ramachandra Tolba Teli vs Commissioner Of Income-Tax, C.P. & U.P. on 19 October, 1938
Equivalent citations: [1939]7ITR151(NAG)
ORDER
NIYOGI, J. - This is an application under Section 66 (3) of the Income-Tax Act for a mandamus to issue on the Commissioner of Income-Tax to state the case and refer it to High Court.
2. The petitioner deals in oil ghee cotton-seed and oil cake. In the year of assessment 1935-36 the petitioner returned an income of Rs. 2,679 which the Income-Tax Officer refused to accept as true. The petitioner produced his account books which were inspected by the Income-Tax Officer but as in the account books the sales and the closing stock were not described according to quality he was unable to deduce the income. He therefore treated the accounts as unclosed and assessed the income-tax under to state that to section 13, Income-Tax Act. It is pertinent to state that even in the previous assessment year (1934-35), the accounts were treated as unclosed (without any protest by the assessee) with the consequence that the officer had no material to verify the opening balance. The account books showed that during the accounted year the sales had gone up from Rs. 1,99,584 to Rs. 2,37,060 and the rate of profit came to 2 1/2 per cent. Being of opinion that the percentage of profit was too law for the turnover he estimated the percentage of profit was too low the turnover he estimated the profits at the rate of Rs. 3-8-0 per cent. as against Rs. 3-12-0 of the previous year which was acquiesced in by the assessee. The assessment was upheld by the Commissioner.
3. In the assessees application as many 13 grounds of law are put forward but the argument has trade mainly on two points, (1) whether the account books were so kept as to enable the Income-tax Officer to verify the income returned by the assessed and (2) whether the rate of Rs. 3-8-0 per cent. fixed by the Income-tax Officer was arbitrary.
4. On the first point its not dinted that the sales and closing stock were not descried according to quality. It is however suggested that it is impossible to enter in the accounts the qualitative description of the commodities and that contention is denied by the learned counsel for income tax commissioner. This controversy failed an issue of fact pure and simple as to the other point it should be observed that the assessees agent in his oral statement made on 31-1-1936 only urged that the rate of 3 1/2 per cent. was very high and suggested that the reasonable rate was 2 3/4 per cent. It is evident that the assessed had no objection to the imposition of flat rate in principal.
5. The learned counsel for the application invited my attention to a number of rulings but as will be presently shown, they, in so for as some of them are relevant fifths contention. Kirpal Singh v. Commr. of Income-tax, Lahore (A.I.R. 1937 Lah. 305; 1937 I.T.R. 62) has no bearing as the principle laid down there was where conclusions of fact are alleged to have been reached without any material to support them, a question of law should be deemed to arise. Jambudas v. The Commissioner of Income-tax (A.I.R. 1927 Nag. 336) also has no applicability. Gangaram Balmokand v. Commr. of Income-Tax, Lahore (A.I.R. 1937 Lah. 397; 1937 I.T.R. 65) was a case in which the Income-tax Officer from raised the amount shown in the assesses account books from 3,14,456 to 3,50,000 and a flat rate of 7 per cent. was applied. It was held that there was no material to sustain the action of the Income-tax Officer. It must be observed that in that case the Commissioner of Income-tax did not rely on the proviso proviso to section 13 but on section 23 (3). The learned Judge observations at page 398 Col. 2 are very significant. They are : "if, of course, the books had been rejected under the second part of the proviso to Section 13, the Income-tax Officer had power to assessee in such manner as he could determine and this would certainly allow an estimate to be made : but this is not the case of the Income-tax authorities, the Commissioner clearly stating that it was a case of the Income-tax authorities, the Commissioner clearly stating that it was a case of action under Section 23 (3), that is a decision on the merits". These observations demolish the applicants contention in the present case. In In re Radheylal Balmukund (I.L.R. 52 All. 991 at 996) it was remarked that Section 13 did not authorise arbitrary assessment and that if the account books did not furnish any method of computation of profits, the Income-tax authorities had to employ some method which appealed to them as the best but that there should be some method or basis. This case cannot lend any support to the applicant here for the reason that he had accepted 3 3/4 per cent. as a reasonable rate in 1934-35 and the Income-tax Officer applied 3 1/2 per cent, i.e. a lesser rate in view of the increased turnover. Moreover, the applicant did not abject to the principal of flat rate and to say in the words of KINKHEDE, A.J.C., in Commissioner of Income-tax v. Jainarain (A.I.R. 1929 Nag. 243 at 245) a case relied on by the applicants learned counsel, "It is not open to him to argue merely the question of the reasonableness of the extent of the percentage adopted."
6. On the other hand, it has been held in a series of cased cited in the order of the Commissioner of Income-tax dated 19-11-36 that under provio to section 13 the Income-tax Officer is the sole Judge on the question of the possibility of deducing of deducing the income from the method of a accounting employed.
7. The case does not in any question of laws. The application must therefore be and is hereby dismissed with costs. Counsels fees Rs. 75.
Application dismissed.