Law:

Section:

Section 143 of the Income-tax Act, 1961 [Corresponding to section 23 of the Indian Income-tax Act, 1922] - Assessment - Additions to income - Whether if two additions are traceable too two distinct heads, namely, one attributable to business activity of assessee and is thus undisclosed profit from known source, and other to profits from undisclosed source i.e., some profit earning activity of assessee which is altogether unknown, they are legally sustainable - Held, yes - Whether, however, it will not be permissible for revenue authorities to estimate gross profits from business and again to add to it cash credits shown in books in some disguise, as part of income of same business - Held, yes FACTS The assessee was a dealer in the manufacture and sale of ground nut kernel and cake. In the return it had claimed huge amount as purchase. However, there was no vouchers to support for those transactions. The assessee decorticated ground-nuts and obtained kernel. No books were maintained to show the daily quantity of kernel pressed and the quantity of oil and cake obtained. Similarly, there was no record showing the kernel obtained by decorticating the ground-nuts. In these circumstances and having regard to case of other dealers similarly situated the ITO estimated the gross profits of the assessee at 10 per cent which resulted in the addition of Rs. 31,551. Besides this, he added Rs. 73,000 as secret profits for cash credits in the names of assessee's relatives and friends. On appeal, the AAC thought that the fair estimates to be adopted was the rate of 76, 42 and 50 per cent for yielding kernel, oil and cake respectively which would make only an addition of Rs. 14,222 to the profits disclosed by the assessee. As regards the other head, the AAC upheld the additions only to the extent of Rs. 37,400. In the instant reference the question referred for consideration was that whether on the facts, and in the circumstances of the case, the Tribunal was justified in sustaining both the additions as deficit yield and as cash credits, and whether they did not amount to double taxation. HELD In the instant case, the ITO had not added the two items under the head of profits…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492