1952 (10) TMI 45

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..... ook the view that the method of accounting adopted by the assessee did not make it possible for him to deduce the profits and gains of his business and therefore he computed the profits and gains upon a certain basis which he adopted. In other words, the Income- tax Officer acted under the power given to him by the proviso to Section 13 of the Income-tax Act. The proviso to Section 13 leaves it to the Income-tax Officer to compute the profits upon such basis and in such manner as he may determine. Although the discretion is vested in the Income-tax Officer, the discretion cannot be exercised arbitrarily or capriciously or dishonestly. He must exercise his judgment in such a manner as would make it possible for him to ascertain the profits a .....

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..... s are available to the Income-tax Officer for the purpose of assessment, the one which is more just to the assessee and which involves a much less margin of chance and uncertainty should be taken as the basis. Therefore what the Income-tax Officer has always got to bear in mind in resorting to the proviso to Section 13 is the salutary principle that his main function is again to repeat the words of Earl Loreburn, L.C.--to see that the true gains are ascertained as nearly as it can be done. Therefore we must approach this reference from the point of view of the principles which have been accepted as well settled in construing the proviso to Section 13. In this case the Income-tax Officer found that the sales effected by the assessee in the .....

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..... nt or the Tribunal had ignored the profits which were realised on the sales of ₹ 3,42,183. As the Tribunal points out, two methods were open to the Tribunal. They could have accepted the profits as disclosed from the books of account of the assessee on the sales of ₹ 3,42,183 and then they could have proceeded to assess the profits on the balance of ₹ 3,47,817 by deciding what percentage of profit should be charged on those sales, or taking into consideration the profits on the sales of ₹ 3,42,183 they could have decided upon an average flat rate on all the sales effected by the assessor, and the Tribunal has chosen to adopt the latter method. One important thing is to be noted. From the statement of the case of the .....

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