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Issues:
1. Application under Sec. 66(3) of the Indian Income-tax Act for mandamus issuance. 2. Rejection of accounts and estimation of sales at a flat rate of 15% profits. 3. Omission of transactions from account books and justification for rejection. 4. Basis for estimating sales at Rs. 1,50,000. 5. Reasonableness of a flat rate of 15% profit for the assessment. Analysis: 1. The case involved an application under Sec. 66(3) of the Indian Income-tax Act seeking mandamus to the Commissioner of Income-tax to refer the case for determining a question of law. The question pertained to the rejection of accounts and estimation of sales at a flat rate of 15% profits by the Income-tax Officer. 2. The Income-tax authorities rejected the accounts due to omitted transactions not reflected in the account books. The assessee failed to justify the omission of significant transactions related to property purchases and legal expenses, leading to the conclusion that the accounts did not portray the true state of business. 3. The estimation of sales at Rs. 1,50,000 was based on the assessee's historical sales data from the past ten years. Despite a decline in recent sales figures, circumstantial evidence, including consistent overhead charges and staffing levels, supported the rationale for fixing sales at the said amount. 4. The application of a flat rate of 15% profit was deemed reasonable based on past assessments and the assessee's own declaration of a 15% profit in the preceding year. The court referred to a previous case to support the notion that sufficient evidence existed to justify the rejection of accounts and the profit estimation. 5. In alignment with the precedent case, the judgment upheld the rejection of accounts, the sales estimation, and the application of a 15% profit rate under Sec. 23(3) of the Indian Income-tax Act. The application was dismissed, with each party bearing their own costs as per the decision delivered by the High Court judges. This comprehensive analysis highlights the key legal aspects and reasoning behind the judgment rendered by the Lahore High Court.
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