1937 (6) TMI 11

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..... er there is any material on the record justifying the rejection of accounts and estimating the sales at ₹ 1,50,000 and applying a flat rate of 15 per cent profits to the sales." The assessee, who is a cap manufacturer, carried on wholesale trade in that commodity in the City of Delhi. The sales as shown by his account books for the last ten years are as follows: Rs. 1925-26 2,70,336 1926-27 2,20,909 1927-28 2,12,340 1928-29 1,35,114 1929-30 2,24,784 1930-31 1,85,979 1931-32 1,54,785 1932-33 51,380 1933-34 49,380 1934-35 81,866 The books show a capital account of ₹ 1,20,000 which is increased or decreased by the profit or loss shown in each year. During the assessment for the year 1934-35 it came to th .....

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..... d was fixed at the sum of ₹ 1,50,000. The Income-tax Officer calculated the profits at a flat rate of 15 per cent for wholesale business. The assessee was taxed on an income of ₹ 20,841 to tax and sur-tax aggregating ₹ 2,578-1 as against the declared income of ₹ 3,983-5-4 from property and ₹ 3,638-3-8 from business. The Assistant Commissioner of Income-tax rejected the appeal of the assessee and the Commissioner declined to make a reference to this Court under Sec. 66(2) of the Income-tax Act. The case of the assessee was that the sum of ₹ 50,000 for the purpose of purchasing a house in Chandni Chowk, Delhi, ₹ 50,000 for the expenses of the conspiracy case, and ₹ 39,000 for the purchase of pr .....

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..... at ₹ 1,50,000. Though the sales in the last three years, according to the books of the assessee, decreased considerably, there was no consequent decrease in the staff employed by the assessee or in the overhead charge. The shop expenditure in 1925-26 when the sales amounted to ₹ 2,70,336 was ₹ 5,365. In subsequent years the expenditure account throughout has been between ₹ 5,000 and 6,000. The word 'evidence' as used in sub-Sec. (2) of Sec. 23 of the Income-tax Act obviously cannot be confined to direct evidence. This word is comprehensive enough to cover circumstantial evidence. The circumstances alluded to above, in my opinion, provide material for fixing the sales during the year under review at the sum .....

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