Law:

Section:

Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 1944-45 - ITO rejected books of accounts of assessee on ground that it did not represent true profits of assessee and completed assessment on basis of estimate - AAC set aside said assessment order by holding that same was made hastily without proper scrutiny of accounts and directed ITO to make fresh assessment - While making fresh assessment, ITO found that certain items of deposits were appearing in names of a member of undivided family of assessee - Notice asking assessee to explain sources of said deposits was given to assessee but assessee failed to explain same - Further vouchers for sales were not provided by assessee - ITO taking into account said facts and also taking into consideration staggering rise in prices of all goods due to short supply during accounting year, notwithstanding promulgation of Anti-Profiteering Ordinance, which could not effectively check black-market, rejected account books of assessee and estimated income - Whether on facts, assessment made was justified - Held, yes FACTS The assessee was a HUF dealing mainly in cycle and motor accessories. In the course of assessment for the relevant assessment year, the ITO rejected the books of accounts of the assessee on the ground that the gross profit shown therein was lower in comparison with the profit ranging in the market. On appeal, the Assistant Commissioner set aside the assessment by holding that assessment was hastily made without proper scrutiny of accounts. The ITO was directed to conduct a fresh assessment. A fresh assessment was made in pursuance of the appellate order. The assessee was called upon to produce particulars of purchase and sales maintained by him regarding both the branches of his business. By this time, certain items of deposits appearing in the names of certain members of the family of 'H', a member of the undivided family of the assessee, had come to the notice of the ITO. Notice asking the assessee specifically to explain the items standing in the name of 'H' was also served on the assessee as no corresponding entries appeared in the assessee's accounts. The examination of accounts…

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