Law: Income Tax Act, 1922

Section:

(a) Income-tax----Income from undisclosed sources---Finding that assessee had earned from dealings in customs clearance permits---Estimate of profits based on evidence---Assessment was justified---Indian Income Tax Act, 1961. The assessee was a registered firm having branches at various places. For the assessment years 1966-67 and 1967-68, the Income-tax Officer made additions to its income treating it as a beneficiary of customs clearance permits issued in the name of French India Traders. The Tribunal came to the conclusion on the basis of the materials and evidence on record, that the assessee was a beneficiary. The Tribunal found that the exploitation took place amounting to Rs.20 lakhs and it took note of the general practice, that no one would like to openly associate with the exploitation as the exploitation by any other person other than the owner of the permits would be considered as an infringement of the permits. Therefore, the Tribunal came to the conclusion that in the nature of the exploitation, a certain amount of secrecy should be surrounding the transactions and taking into account all other factors, particularly, the interest of the assessee and the fact that the permits were not standing in the name of the assessee, the Tribunal estimated that out of total receipts of Rs.12 lakhs, 50 percent. could be attributable to the assessee. The estimate was also supported by the entries in the accounts of LGA, which was a partner of the assessee wherein two major amounts had been found and the Tribunal, therefore, came to the conclusion, that when the two amounts were taken into account, the profit of exploitation of customs clearance permits could roughly be estimated to be Rs.6 lakhs and on the basis of its own estimate arrived at on the materials on record, the Tribunal held that Rs.1,50,000 should be assessed for the assessment year 1966-67 and the balance of Rs.4.5 lakhs should be assessed for the assessment year 1967-68. In the assessment year 1967-68, an amount of Rs.60,000 shown as credits in the name of D.R. was included in the total income of the assessee. The Tribunal found that there was an admission by the creditor that the transaction was…

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