Law: Income Tax Act, 1922

Section: 13

Income-tax Act (XI of 1922)---S.13, proviso - Assessee a medical practitioner maintaining accounts properly--Income-tax Officer rejecting book results on ground that stock register of medicines concerned to assessee's clinic was not maintained and profits disclosed were low-Such method of accountancy accepted by I. T. O. in past year-Assessee's plea that stock register showing day to day consumption of medicines in clinic was not possible to be maintained as not controverted by Department-Held, Assessee was at liberty to choose any method of accounting and so long income, profits and gains could pro­perly be deduced therefrom I.T.O. was not entitled to reject it to assess under proviso to S. 13 without giving definite finding about defects, deficiencies, irregularities and falsities in accounts merely because stock register was not maintained. (194) 2 I T R 305 ; (1974) 30 Taxation 27 ; (1954) 26 1 T R 159 ; (1982) 45 Taxation 140 and (1954) 16 1 T R 159 ref. JUDGMENT SALEEM AKHTAR, J.-The assessee has filed this application under section 66(I) of the Income-tax Act, raising the following questions: (1) Whether to the facts and circumstances of the case there was any material or evidence to support the action of the Income-tax Officer in rejecting the book results particularly as he himself has found that books of accounts were properly maintained and the purchases were vouched and verifiable ? (2) Whether in the facts and circumstances of the case the Tribunal was legally justified in upholding the addition of Rs. 35,000 out of medicine purchases even though as much as Rs. 37,862 represented machines purchased for patients and charged in the bills ? (3) Whether in the facts and circumstances of the case the disallowance of Rs. 35,000 out of medicine purchases arbitrary and cap­ricious ? The applicant is an individual deriving income from medical practice. He started his clinic in the name of Saeed Clinic in the middle of financial year 1966-67. The applicant had employed method of accounting whereby receipts were entered only when actual payment was received, but for purchases made either on behalf of the clinic or on behalf of the patients the amount used to…

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