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2008] 306 ITR 354 [2010] 188 TAXMAN 263 (KER.) HIGH COURT OF KERALA Commissioner of Income-tax* v. Benhur Trades and Investments (P.) Ltd. C.N. RAMACHANDRAN NAIR AND T.R. RAMACHANDRAN NAIR, JJ. IT APPEAL NO. 13 OF 2001 JANUARY 14, 2008 Section 41(1) of the Income-tax Act, 1961 - Remission or cessation of trading liability - Assessee was engaged in chitty business - Though it did not produce its entire account books, yet Assessing Officer accepted its profit and loss account - He, however, made an addition on basis of a guess work towards undistributed dividend from chitty business by reference to section 41(1) - Whether section 41(1) had application in instant case - Held, no - Whether since addition was based on assumption of certain facts and even terms of chitty business were not referred to by Assessing Officer which would have disclosed whether subscribers who had defaulted payments of subscriptions were entitled to dividend at end of kury as claimed, case was to be remanded to Assessing Officer for fresh assessment after giving an opportunity to assessee to produce accounts and other details - Held, yes P.K.R. Menon and George K. George for the Appellant. T.M. Sreedharan, T.S. Arunkumarand P. Balakrishnan for the Respondent. JUDGMENT C.N. Ramachandran Nair, J. - Even though four questions are raised, actually only two issues are involved which pertain to addition of estimated unpaid dividends from chitty business and estimation of foreman's commission on the date of auction. We have heard counsel appearing for the appellant and counsel appearing for the respondent-assessee. 2. It is clear from the orders of the Tribunal and that of the first appellate authority and the assessment order that the assessee which was engaged in different lines of business including chitty, did not produce entire books of account. If the assessee does not produce books of account to substantiate the return of profit and loss account filed, assessment should have been completed under section 144 as provided under section 145(3) of the Income-tax Act, 1961, and not under section 143(3). However, the Assessing Officer has accepted the profit and loss account and made certain…

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