9911796707
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Issues:
1. Application of the proviso to section 13 of the Income-tax Act. 2. Rejection of account books by the Income-tax Officer. 3. Assessment of profits based on work-in-progress register. Analysis: The judgment involves a firm engaged in contract work for Damodar Valley Corporation, with disputed profits for assessment years 1951-52, 1952-53, and 1953-54. The Income-tax Officer rejected the assessee's books, estimating profits under the proviso to section 13 of the Income-tax Act. The Appellate Assistant Commissioner upheld this decision, considering a 15% rate reasonable. The Appellate Tribunal affirmed the rejection, citing absence of stock register and work-in-progress register. The High Court considered whether the proviso to section 13 was validly applied. Regarding the application of the proviso to section 13, the High Court held that the income-tax authorities were justified in rejecting the account books due to insufficient material for proper profit deduction. Citing precedents, the court emphasized the duty of the Income-tax Officer to ensure accurate profit ascertainment, allowing application of the proviso if accounting methods do not reflect true profits. The court found the rejection of account books and application of the proviso appropriate based on available evidence. The judgment highlighted the importance of maintaining accurate records, especially work-in-progress registers, for proper profit assessment. The court emphasized that the absence of such registers can lead to the rejection of account books and application of the proviso to section 13. The decision underscored the authority of income-tax authorities to determine profits based on available material, ensuring compliance with accounting standards for accurate income assessment. In conclusion, the High Court ruled in favor of the Income-tax Department, upholding the rejection of the account books and the application of the proviso to section 13. The court emphasized the significance of maintaining proper records for accurate profit assessment and held that the income-tax authorities were justified in their decision based on the available evidence. The assessee was directed to bear the costs of the reference, concluding the judgment on the disputed profit assessment for the relevant years.
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