Law:

Section:

Section 145, read with section 144 of the Income-tax Act, 1961 [Corresponding to section 13, read with section 23(4) of the Indian Income-tax, 1922] - Method of accounting - Estimation of profits - Assessee firm engaged in business of dyeing, printing and selling cloth disclosed gross profit at rate of 18 per cent of total turnover - ITO rejected accounts submitted by assessee and relying upon certain private enquiries in similar cases enhanced rate of profit to 50 per cent of turnover - Tribunal upheld ITO's order - Whether since authorities below had not drawn attention of assessee to material collected by them on private enquiry, impugned order passed by them was to be set aside and case was to be remanded back to Tribunal with direction to disclose material gathered from private enquiries to assessee and give him full opportunity to place any relevant material to meet substance of private enquiry - Held, yes [Case remanded] FACTS The assessee-firm was engaged in the business of dyeing, printing and selling cloth. In the return filed for the accounting year under consideration, the assessee firm had shown gross profit which was worked out to only 18 per cent of the turnover. However, the ITO rejected the accounts submitted by the assessee on grounds that (a) no stock register was produced and large stocks of cloth appeared to him to have been suppressed, (b) the expenditure shown as having been incurred in dyeing and printing was fanciful, (c) the quantity of cloth dyed and printed had not been shown, (d) a number of unexplained cash credits were shown and (e) the books contained entries of fictitious purchases and sales. As the account books could not be relied upon, he came to the conclusion that the assessee's income could be determined only on the basis of the income made by similar businessmen. Therefore, on the basis of independent enquiries made by him, he was of opinion that in the year under account manufacturers of dyed and printed cloth made bumper profits going up to 50 per cent accordingly the ITO assessed the assessee. On appeals both AAC and the Tribunal confirmed the order of ITO. On reference : HELD The proviso to section 13 empowers the ITO…

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