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Issues:
1. Determination of gross profit for an unregistered firm engaged in the business of coconut oil. 2. Whether the Income-tax Appellate Tribunal had sufficient material to estimate the income from coconut oil and empty tins. Analysis: 1. The case involved the assessment of an unregistered firm involved in the coconut oil business. The firm claimed to be a commission agency business deriving a commission of 0.75%, while the Income-tax Officer estimated the gross profit at 2.75% of the turnover. Both the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld the 2.75% estimate, rejecting the firm's contention of being a commission agent. The firm's counsel conceded to the higher estimate but argued the lack of material before the Tribunal for the specific 2.75% estimate. 2. The Tribunal based its decision on the proportion of gross profits to turnover in comparable cases, with the Income-tax Officer citing a similar oil dealer's gross profit of 2.9% as a basis for the 2.75% estimate in this case. However, the firm's counsel contended that no details of comparable cases were provided to the assessee. Citing legal precedents emphasizing natural justice, the counsel argued that the firm should have been informed of and given a chance to rebut the materials used for the assessment. The Court, in line with these arguments, concluded that the Department was not entitled to rely on the material without first providing the assessee with an opportunity to explain. 3. The Court decided to refer the case back to the Income-tax Appellate Tribunal under section 66(4) of the Indian Income-tax Act, 1922, to allow for additions to the statement of the case to enable a proper determination. The Court also noted the lack of information regarding the comparison of cases presented to the assessee and emphasized the importance of providing full opportunity for explanation and disclosure of materials used in assessments. The judgment highlighted the need for adherence to principles of natural justice in tax assessments and directed the Tribunal to consider relevant materials presented by the assessee before making a final estimate. 4. The Court dismissed the Department's contention that the issue raised was not brought up earlier in the appeals process, emphasizing that the Department could not raise it at a later stage. The judgment concluded by answering the question in the negative, highlighting the importance of providing full opportunity for the assessee to present relevant materials and meet the substance of any inquiries made during assessments.
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