Law:

Section:

Income-tax Act, 1922 -- Sections 13, 23 -- Rejection of accounts -- Unexplained cash credits -- Accounts rejected and additions made to the declared income -- Assessee's failure to give plausible explanation in regard to cash credits -- Further addition to total income as income from sources unconnected with the known source of business -- Whether sustainable in law -- Held yes -- Assessment -- Estimation of gross profits of business and then adding to it unexplained cash credits shown in books -- Not permissible -- Part of cash credits only capable of accommodation in addition made on estimates -- Balance can be added as income from undisclosed source, if same cannot be plausibly explained by assessee -- Corresponding Sections: Income-tax Ordinance, 1979 -- Section 32(1) -- ORDER The order was passed by SHAH ABDUR RASHID, Judicial Member. ---This is department's appeal from the order dated 26th September, 1966, of the Appellate Assistant Commissioner of Income-tax, Peshawar Range, Peshawar whereby assessment for the charge year 1963-64 made by the Income-tax Officer, A-Ward Peshawar, was modified and the amount shown as cash credits in the books of accounts which had been included in the income of the assessee (as Association of Persons) was reduced by Rs. 15,000. 2. For the relevant year the assessee derived income as commission agent of dry fruits and dealer of the imported motor spare parts. Besides certain other defects in the books of account, which it is not necessary to state here, there was in the commission account an unexplained cash credit to the tune of Rs. 5,000 in the name of the mother of one of the members of the assessee which the Income-tax Officer, after rejecting the book version, added to the income of the assessee from this source. This addition having been upheld by the Appellate Assistant Commissioner is not the subject matter of the present appeal by the department. 3. In the motor spare parts account the assessee had shown gross profits of Rs. 3,735 on sales of Rs. 15,000 which conceded a rate of 24%. Here too the book version was not accepted by the Income-tax Officer as the sales were not verifiable and the G.P. rate shown was low…

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