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TMI Blog1959 (2) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee constitutes a firm trading in oils and cotton at Gulbarga with branches at Latur and other places in the erstwhile Hyderabad State. It carries on business as commission agent and also owns and runs oil mills. Its head office is at Gulbarga and there are branches at various other places. The assessment year is 1358. The accounting year is Samvat year 2004 which ended on October 30, 1948. I may straightaway say that we are only concerned now with the assessment regarding the Gulbarga Oil Mills as the assessment with regard to the rest does not fall within the jurisdiction of this court. 3. An order was passed by the Income Tax Officer. Second Circle, to the following effect : Deficit yield of oil. - The assessee has no manufacturing account. No record is kept of the yield of seed from ground-nut, oil and cake from seed. The assessee himself has estimated the yield of seed from the ground-nut at 73.7 per cent and on this basis and with reference to the sales of oil and cake has worked the yield at 39 per cent (oil) and 57.3 per cent (oil cake) respectively. The result is low compared to the yield disclosed by the other merchants in the line. The assessee's auditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration of the Income Tax Officer as to why his statement should be accepted as against the statement regarding the yield by other merchants. He further contends that this lack of opportunity has greatly prejudiced the case of the assessee. 7. A scrutiny of the order of the Income Tax Officer reveals that he compares the yield disclosed by the books of account of the assessee with those of other merchants in the line. If so, it was incumbent on the Income Tax Officer to have apprised the assessee either by notice or by writing of the data on which he based his conclusions. It was further incumbent on the Income Tax Officer to have called for an explanation in this regard from the assessee. In other words, an opportunity should have been given to the assessee to satisfy the Income Tax Officer as to why his statement should be believed as against the statement of yield given by other merchants in the same line. The learned Government Pleader frankly admits that there is no statement to the effect that any notice was given in this regard to the assessee; nor is there any record made in the files of the Income Tax Officer to show that he has done so, but he argues that the internal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been accepted by the Appellate Assistant Commissioner without any indication as to whether the assessee was apprised of the names of other merchants, etc., so as to enable the assessee to give a satisfactory explanation. 11. The Appellate Tribunal has also not given any indication as to whether this matter was brought to the notice of the assessee and whether the assessee was given sufficient opportunity to give an explanation in this regard. In fact, in the grounds of appeal before the Tribunal I find that a particular reference has been made to the lack of opportunity. The relevant ground is as follows : The Tribunal, however, in spite of this ground has not considered whether the Income Tax Officer has given sufficient opportunity to the assessee to satisfy him regarding the deficiency of yield as compared with the yield shown by the other merchants in the same line. But on the other hand, the learned Members of the Tribunal have given their own reaction and stated the basis for checking the assessment made by the Income Tax Officer. 12. In their order they state as follows : The Tribunal has on a number of occasions considered what could be regarded as nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the order of the Income Tax Officer that no such opportunity was given to the assessee; no particulars were furnished to enable him to satisfy the Income Tax Officer regarding the yield as stated in his books of account as compared with the yield of the merchants in the same line. Natural justice demands that such information should be given to the assessee. This does not mean to say that the Income Tax Officer should disclose to the assessee the private sources of information of a confidential nature. But what prevents an Income Tax Officer to inform the assessee the names of the merchants in the same line whose statements are taken into consideration ? If that were done, the assessee could have been in a position to compare the kind of machinery employed by those merchants, the quality of seeds used by them, the season when those seeds were purchased etc. With his and would be in a position to justify his statement of yield as compared to those merchants. 16. In the connection, I am armed by the leading decision on the subject of the Supreme Court, Dhakeswari Cotton Mills Ltd. v. Commissioner of Income Tax. This is the first of the series of Dhakeswari cases. His Lordsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court in Gunda Subbayya v. Commissioner of Income Tax. His Lordship Leach, C.J., has stated as follows : It is true that the Income Tax Officer when making an assessment on material which he himself has gathered will not be bound to disclose to the assessee the material on which he proposes to act or to refer to it in his order, but natural justice demands that he should draw the assessee's attention to it before making the order. It is desirable that the Income Tax Officer should indicate in his order the material on which he has made his assessment; but he is not bound to disclose the source of his information. 20. There are numerous other decisions on the topic. Enough if I refer to a couple of them, viz., of the erstwhile Hyderabad High Court and the Andhra Pradesh High Court. The decision is Ramgopal Shrikishen v. Commissioner of Excess Profits Tax, wherein it is stated as follows : The question in this case, therefore, would be whether the assessee was given an opportunity to rebut the basis of the fixation of the flat rate. Thus, though the question of the Income Tax Officer being unable to compute the income, profits and gains from the account b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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