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TMI Blog1973 (8) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... the mere fact that the assessee was unable to prove that the work was given to sub-contractors does not give rise to an inference that he had concealed any income - - - - - Dated:- 21-8-1973 - Judge(s) : G. K. GOVINDA BHAT., M. K. SRINIVASA IYENGAR. JUDGMENT The judgment of the court was delivered by SRINIVASA IYENGAR J.-These two references under section 256(2) of the Income-tax Act, 1961, relate to the assessment year 1964-65 (accounting year ending 31st March, 1964). The first one arises out of the assessment proceedings for the said year and the other one in respect of a penalty imposed under section 271(1)(c) of the Income-tax Act, 1961. The facts lie within a narrow compass. The assessee is a contractor at Udipi. During th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal, after considering the entire facts, reduced the addition in regard to item No. 1 to a sum of Rs. 3,000 only. In regard to the other two items of contracts the case of the assessee was that he had given them out on sub-contracts and the profit derived by him was only three per cent. The Income-tax Officer did not accept this contention. He held that the so-called sub-contractors were mere name-lenders to the assessee and the entire profit has to be assessed in the hands of the assessee. The same view was upheld both by the Appellate Assistant Commissioner and the Tribunal. It, however, gave a further relief in a sum of Rs. 1,500 in respect of these two contracts. The questions referred for the opinion of this court are three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely the Tribunal found that as the assessee had not maintained any accounts and, therefore, necessarily an estimate of reasonable profits had to be made, and accordingly sustained an addition in part. The question as to whether an addition of the cost of materials in the computation of the profits (sic), therefore, becomes absolutely academic. The real question was whether the profit as disclosed by the assessee which was on an estimate was justified or not and if it was not justified, what was the reasonable profit that has to be computed. The Income-tax Officer in his order specifically referred to the rate of profits adopted for the earlier year in regard to the construction of buildings which was at 10 per cent. It cannot at all be sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts which were alleged to have been given out on sub-contracts. For the reasons stated above, we answer the questions as follows : In the view we have taken, it is not necessary to answer question No. 1. The second question is answered that the estimate of profits as sustained by the Tribunal was correct on the farts and circumstances of the case. The answer to question No. 3 is that the finding of the Tribunal that the sub-contracts were not proved to be genuine and the assessee was liable for the entire profits arising therefrom was correct. The questions are answered accordingly. We now come to the other reference in regard to the penalty. The question referred for the opinion of this court is as follows : "Whether, on a proper c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to only 3 per cent. of the profits and the rest was to go to the two sub-contractors. That contention was not accepted by the authorities. Merely on this account it cannot be said that he had concealed any income as such or furnished any inaccurate particulars of such income. All that can be said is that the assessee was unable to establish satisfactorily his plea that the sub-contracts were genuine and be was only entitled to a profit of three per cent. Because of such a failure, it cannot be said that the assessee concealed any income as such or furnished inaccurate particulars thereof. We, therefore, answer the question referred that, in the circumstances of the case, it cannot be said that the assessee had concealed the particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X
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