Law:

Section:

Income tax Assessment Oil merchant Additions to yield of oil disclosed by assessee on basis of average yield of other merchants Duty of I. T. O. to disclose substance of data and to provide opportunity to assessee to explain. The assessee firm traded in oils and cotton and also carried on business as commission agents and owned and ran oil mills. In assessing the profits of the assessee for the assessment year 135817, the Income tax Officer found the yield of seed from ground nut and of oil and cake from the seed as worked out by the assessee to be low as compared to the yield disclosed by the other merchants in the line, and to the yield as disclosed by the assessee he added certain amounts on the basis of the average yield shown by other millers. This decision of the Officer was successively affirmed on appeal by the Appellate Assistant Commissioner and the Appellate Tribunal. On a reference to the High Court of the question whether the Income-tax Officer indicated to the assessee his intention to assess on the basis of the average yield shown by other millers and whether a reasonable opportunity was given to the assessee to adduce evidence in rebuttal thereof; Held, (i) that it was incumbent on the Income tax Officer to have apprised the assessee of the data on which he based his conclusions and further to have called for an explanation in this regard from the assessee ; i.e., the Income tax Officer should have given the assessee an opportunity to satisfy him as to why his statement should be believed ; (ii) on the facts, that there was nothing on the record to show that the assessee had been apprised of the data on which the Officer based his decision or was given an opportunity to explain as to how the yield was low as compared with the yield shown by other merchants. Though it is not necessary for the Income tax Officer to disclose all the information, perhaps confidential, which he gathers with regard to the accounts of the other merchants, natural justice demands, that the substance of the information should be given to the assessee so that he may be put in possession of full particulars of the case he is expected to meet and he should be given…

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