Law: Income Tax Act, 1922

Section: 23,13

(a) Income-tax Act (XI of 1922)---S. 23, proviso-Income-tax Officer recording finding without any material before him as such finding could not be said impliedly-Facts that profits appeared to Income-tax Officer to be insufficient and that no stock register was maintained by assessee not materials upon which such a finding could be given-Held, Income-tax Officer must dis­cover evidence or material aliunde before arriving at such a finding ­Income-tax Officer not adopting any such method or basis, held further, not acted according to provisions of statute. Punjab Trading Co. Limited v. Commissioner of Income-tax (1965) 2 Tax. 81 ; Seth Gurmuk Singh v. CommIssioner, Income-tax, Punjab (1944) 12 I T R 393 ; Dhiral Lal Girdhari Lal v. Commissioner of Income-tax (1954) 26 I T R 736 ; Nagulakonda Venkata Subba Rao v. C. I. T., Hyderabad Deccan (1937) 31 I T R 781 ; Swami Brothers v. C. I. T., Mysore and Travancore Cochin (1958) 4 I T R 123; R. M. P. Perlanna Pilli do Co. v. C. I. T. (1961) 4 Taxation 230' ; Mls. Rajput hfetal Works Limited v. Commissioner of Income-tax, Rawalputdl 1976 P T D 119 ; S. M. Yousuf fic Brothers v. Commissioner of Income-tax (1974) 29 Taxation 120 and Pandit Brothers v. Commissioner of Income-tax (1954) 26 1 T R 159 ref. (b) Income-tax Act (XI of 1922) -- . -- S. 13, proviso-Assessee a Textile Mill, keeping account regularly, vouchsafed and verifiable-Income-tax Officer not pointing out a single discrepancy nor having any material that sale price etc. were not according to market report-Income-tax Officer finding yield to be low and percentage of wastage to be high as compared to other Mills but not giving names of any such mills nor giving 4ny figures. relating to' yield and wastage given by such Mills-Held, any excess in invisible wastage would not warrant wholesale rejection of accounts and substitution of flat rate as gross profits in absence of any evidence or material in support -Additions made by Income-tax Officer and Tribunal, in circumstances over and above income, held further, without any basis and cannot be sustained under pro­viso to S.13-Fresh computation ordered to tot made on basis of evidence as to wastage visible and…

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