9911796707
TMI Blog1976 (6) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement of the case discloses the following facts : The assessee is an individual. The dispute relates to the assessment years 1964-65, 1965-66 and 19-66-67 and the corresponding previous years were financial years 1963-64, 1964-65 and 1965-66. During these years, the assessee was carrying on the business of supplying provisions of meat, vegetables, etc., to the various Government and military authorities under contracts obtained from them. No proper accounts were kept by the assessee. During the financial year 1963-64, corresponding assessment year being 1964-65, the assessee obtained several contracts for supply of provisions of meat, etc., from the various authorities. Some of these contracts related to the supply of meat, poultry, eggs, bread, etc., during the period October 1, 1963, to September 30, 1964. These contracts were obtained from the Commander, Army Service Corps, Z-Area, Shillong. The assessee assigned these contracts to Manilal Gupta for consideration of Rs. 30,000 which was payable to the assessee in twelve monthly instalments of Rs. 2,500 each, vide agreement dated September 30, 1963. Some other similar contracts obtained from the same authority were also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of the contract as well as the receipt of the amount fell in the financial year 1965-66. Thus, according, to the assessee, the amounts to be considered on account of the sub-letting of contracts were Rs. 30,000 in the assessment year 1964-65, Rs. 42,000 in the assessment year 1965-66 and Rs. 50,000 in the assessment year 1966-67. The Income-tax Officer rejected both the contentions of the assessee. The Income-tax Officer held that the amounts received by the assessee in lieu of these contracts were revenue receipts and not capital receipts. The Income-tax Officer further held that the amounts accrued to the assessee on the dates on which the respective agreements for transfer of these contracts were executed. The contention of the assessee that these amounts should be considered on the basis of the dates of receipt was rejected. On the above basis the Income-tax Officer included Rs. 60,000 in the assessment year 1964-65, Rs. 12,000 in the assessment year 1965-66 and Rs. 50,000 in the assessment year 1966-67. Against the orders of the Income-tax Officer the assessee appealed to the Appellate Assistant Commissioner, who agreed with the Income-tax Officer and the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effecting supplies and sales of the commodities in question. Some of these contracts were carried on by him personally. It was open to the assessee to supply the commodities, for which he had contracted with the departments either by himself or through some agent. Depending upon the business expediency, the assessee may fulfil the contract by himself or through some other person with whom he may have some sub-contracts. The assessee had entered into agreements with a third party for supply of the commodities for the three periods under consideration. The third party would supply the commodities on behalf of the assessee to the military departments. The bills would be prepared in the name of the assessee and the payment would be received by the assessee. Thus, it is found that the structure and nature of the business of the assessee to supply the commodities to the military departments remains intact and does not undergo any change. What has been done by the agreements with the third party is that instead of himself supplying the commodities to the military departments, the assessee has asked the third party to supply the commodities in the assessee's name to the military departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts maintained by the assessee were kept in cash system or mercantile system. In the assessment order for the assessment year 1964-65, item No. 5 method of accounting, is not filled up. In the assessment order for the assessment year 1965-66 in item No. 5, method of accounting, it has been stated as "no proper accounts". In the assessment order for the assessment year 1966-67, in item No. 5, method of accounting, it has been stated that "no proper accounts kept". It can safely be assumed that ordinarily people keep accounts in cash system, that is to say, when certain sum is received, it is entered in his account and in the case of firms, etc., where regular method of accounting is adopted, we find sometimes accounts are kept in mercantile system. In the instant case it is not the case of the department that the assessee's accounts were kept in mercantile system. On the other hand, the assessment orders show that no proper accounts were kept. That being so it would not be justified to presume that the assessee kept his accounts in the mercantile system. Income-tax is normally paid on money actually received as income after deducting the allowable deductions. In the case of an a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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