Law:

Section:

Section 145 of the Income-tax Act, 1961 [Corresponding to section 13 of the Indian Income-tax Act, 1922] - Method of accounting - Estimation of profit - Assessment years 1945-46 and 1946-47 - Assessee filed its return of income estimating its profits at rate of 20 per cent as its books of account were in Court - ITO estimated profit at rate of 33.1/3 per cent - On appeal, Tribunal reduced it to 28 per cent - Whether in view of decision of Supreme Court in assessee's own case Dhankeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775, Tribunal was not justified in estimating profit of assessee and its order was liable to be set aside - Held, yes FACTS For the assessment years 1945-46 and 1946-47, the assessee-company duly furnished its returns of income within the time allowed to it but the profits returned regarding these years could not be computed according to the provisions of law as the relative books of account were in the Court and were not received back by the assessee till after the completion of the assessment. The ITO did not accept the estimate disclosed of the gross profit and sales during the years and for reasons stated in the relating to 1944-45 assessment he held that during these years also full amount of sales had not been accounted for. The ITO made certain additions by estimating the rate of profit at 33.1/3 per cent on sales, whereas the assessee had shown a gross profit at the rate of 20 per cent and 19 per cent respectively. On appeal, the AAC confirmed this order. On further appeal to the Tribunal, the estimate was reduced to 28 per cent. On appeal: HELD Following the decision in Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775, the appeal was allowed and the decision of the Tribunal was set aside and case was remanded to the Tribunal. Note: The case was decided in favour of the assessee. CASES REFERRED TO Dhakeshwari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC). N.C. Chatterjee and Veda Vyas for the Appellant. C.K. Daphtary, G.N. Joshi and R.H. Dhebar for the Respondent. JUDGMENT Mehr Chand Mahajan, CJ.-This appeal concerns the same assessee as Appeal No. 217 of 1953 since reported at [1954] ( 26 ITR 775 ) and relates to the…

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