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Assessment based on independent enquiries without disclosing materials to the assessee, preclusion of plea due to conduct, legality of assessment on a flat rate basis, extent of disclosure of particulars by income-tax authorities without contravening the Indian Income-tax Act. Analysis: The judgment pertains to an assessment for the year 1947-48 of a firm engaged in dyeing, printing, and selling cloth. The Income-tax Officer rejected the accounts submitted by the assessee due to various reasons, including lack of stock register, fanciful expenditure, unexplained cash credits, and fictitious entries. The Officer determined the income based on independent enquiries, concluding the assessee made at least Rs. 1,20,000 profit. The Appellate authorities upheld the assessment, leading to an appeal before the High Court. The questions referred to the High Court included the validity of assessment without disclosing materials, preclusion of plea due to conduct, legality of a flat rate assessment, and the extent of disclosure of particulars by income-tax authorities. The Court highlighted the importance of the Income-tax Officer exercising discretion judicially and reasonably when resorting to independent enquiries for assessment. The Officer must disclose the information collected to the assessee and provide an opportunity to rebut it to ensure fairness. The Court emphasized the necessity of disclosing information to the assessee and allowing them to present relevant evidence to challenge the assessment. Failure to provide such details violates fundamental rules of justice. The judgment cited precedents to support the assessee's right to displace the Taxing Officer's estimate through evidence. The Court found the authorities had not adequately considered the unique aspects of the assessee's business in determining the profit, leading to an unfair assessment. In conclusion, the High Court set aside the Tribunal's order and remanded the case for proper disclosure of materials to the assessee. The Court directed the Tribunal to allow the assessee to present relevant evidence and conduct further enquiry if necessary. The judgment answered the referred questions, emphasizing the importance of disclosing all particulars forming the basis of assessment. The assessee was awarded costs in the case.
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