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TMI Blog1971 (7) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... uced, the Income-tax Officer impounded these books of account on 24th September, 1965. On 27th September, 1965, the Income-tax Officer issued a letter to the firm indicating that in the cash book he had found certain transactions on the 28th of June, 1954, relating to the sale of 22 silver bars, but the corresponding credit for the value of the silver bars had not been given to any individual or firm, and hence it seemed that the cash balance had been under-stated by Rs. 97,087-11-0. The firm was required to indicate the name of the parties from whom it had purchased those silver bars. Hotilal, one of the partners of the firm, sent a reply on 19th October, 1965, stating that the firm had since been dissolved and it was not possible to give a proper explanation without examining the books of account in detail. He intimated that Tarachand and Babu Ram, the other two partners of the firm, were in a better know of the state of affairs of the firm, and enquiries might be made from them. The Income-tax Officer, however, by his letter dated 27th July, 1966, reiterated the earlier queries and wanted a satisfactory answer. Nothing seems to have happened thereafter for some time till 15th Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purchase and sale of these 22 silver bars in the trading account relating to silver. In the third place, there was no entry in the books of account about the commission which the firm might have charged in respect of the sale of these silver bars. It was also stated that the assessee had been called upon to explain the significance of these entries and omission therefrom, but they did not do so in spite of several opportunities. The Income-tax Officer observed that these facts and materials led him to believe that these 22 silver bars actually belonged to the assessee, which it kept outside the books of account and entries had been made by the assessee to introduce its own goods which had been sold to the aforesaid parties. Action was, therefore, necessary to assess the sum of Rs. 97,087-11-0 in the hands of the assessee which represented the cost as well as the profit on the sale of 22 silver bars to the aforesaid parties. Upon this report, the Commissioner of Income-tax, U.P., gave his assent that this was a fit case for the issue of a notice under section 148 of the Act. The matter was then taken to the Central Board of Direct Taxes. The Board also signified its approval. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truth, he is not on that account precluded from exercising the power to assess income which had escaped assessment. In the present case, the Income-tax Officer now found that there had been a transaction of sale of 22 silver bars, about which relevant entries were not made in the trading account and the cash book, and for that reason, at the time of completion of the initial assessment, it could not be determined whether this transaction of sale of 22 silver bars represented introduction of the assessee's own silver bars and earning of any profit therefrom. It was the duty of the assessee to have informed the Income-tax Officer of this particular transaction, or the primary facts relating to it, namely, the person from whom the assessee had purchased these silver bars, the person to whom they were sold and whether any commission was charged on their sale, etc. In the writ petition, it has been stated that during the year 1955-56, the petitioner-firm was doing business of commission agent on the sale and purchase of silver bars on forward transactions. Commission used to be charged on the transactions alone and no commission was charged when the delivery of goods were effected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made by the Income-tax Officer, C-Ward, Kanpur, and, on the basis of that report, the Central Board of Direct Taxes accorded its sanction. That would go to show that only the Income-tax Officer, C-Ward, Kanpur, was authorised to take action in accordance with the sanction. Unfortunately, this point has also not been taken in the writ petition. If the point had been taken, the respondent would have clarified the position as to the jurisdictional division of work between these two Income-tax Officers. For all we know, the Income-tax Officer, Circle I(7), was the relevant officer doing the work relating to the petitioner-firm. We, therefore, decline to entertain this point as well. Learned counsel for the petitioner then urged that the Income-tax Officer had impounded the petitioner firm's books of account on 24th September, 1965. He had retained the custody of these books and has not returned them to the petitioner-firm in spite of repeated requests and reminders. Section 131(3) of the Income-tax Act, 1961, authorises the Income-tax Officer to impound any books of account after recording his reasons for so doing. This provision further provides that the Income-tax Officer shall n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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