1955 (8) TMI 42 - HC - Income Tax

Summary

Issues:
Petition under section 66(2) of the Indian Income-tax Act - Estimation of income at Rs. 40,000 - Jurisdiction of Tribunal to base decision on new point.

Analysis:
The petitioner, running a rice mill, disclosed a turnover of Rs. 5,90,298 with a taxable income of Rs. 2,469 for the accounting period. The Income-tax Officer estimated the income at Rs. 65,000, which was reduced to Rs. 25,000 by the Appellate Assistant Commissioner. Both parties appealed to the Income-tax Appellate Tribunal, which estimated the income at Rs. 40,000. The petitioner argued that the Tribunal should have accepted the accounts under the proviso to section 13 of the Income-tax Act, but the court found this argument misconceived. The Income-tax Officer acted under section 23(3) and rejected the accounts due to various discrepancies, leading to the determination of income at Rs. 65,000.

The Appellate Assistant Commissioner disagreed with the Income-tax Officer's estimation but did not accept the accounts entirely, concluding that the income should be reasonably estimated at Rs. 25,000. The Tribunal, in justifying their estimate of Rs. 40,000, disregarded the registers kept by the assessee and found discrepancies in the yield of rice, purchase rates, and expenses. They concluded that the petitioner's disclosed income of Rs. 2,469 was unreasonably low, considering the business scale and various inconsistencies, leading to the final determination of income at Rs. 40,000.

The court referenced a Special Bench decision of the Madras High Court to distinguish between the scope of section 13 and section 23(3) assessments. The judgment emphasized that the Income-tax Officer, when acting under the proviso of section 13, must consider the accounts provided by the assessee. In this case, as the Income-tax Officer rejected the accounts and determined the income under section 23(3), the Tribunal's decision to estimate the income at Rs. 40,000 was upheld. The court found the Tribunal's reasons valid and relevant, constituting a factual finding without grounds for directing them to state a case.

In conclusion, the court dismissed the applications under section 66(2) of the Income-tax Act, upholding the Tribunal's estimation of income at Rs. 40,000 and emphasizing the distinction between the provisions of section 13 and section 23(3) assessments. The applications were dismissed with costs, including advocates' fees.