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The Commissioner of Income-tax, Calcutta Vs. Padamchand Ramgopal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtSupreme Court of India
Decided On
Case NumberCivil Appeals Nos. 2570 — 2574 of 1966
Judge
Reported in(1970)3SCC866
ActsIncome Tax Act, 1922 - Section 66(2)
AppellantThe Commissioner of Income-tax, Calcutta
RespondentPadamchand Ramgopal
DispositionAppeal Dismissed
Excerpt:
.....basis of best judgment after rejecting the accounts as unreliable — income tax officer and appellate assistant commissioner finding insignificant mistakes in accounts relating to one year and making additions arbitrarily -- neither the appellate assistant commissioner nor the income tax officer found any mistake in the accounts relating to other accounting years. both the income tax officer as well as the appellate assistant commissioner arbitrarily added to the total income returned half the amount of gross receipts shown by the assessee under the head “interest” during each year as escaped income. the question referred to the high court was whether upon the facts admitted or found by the appellate tribunal, it was justified in holding that the income tax officer had..........in his order did not give any reason for not relying on the accounts submitted. on appeal, the appellate assistant commissioner after going through the notes prepared by the income tax officer found that in his investigation, the income tax officer had found that one of the items of interest received by the assessee during the accounting year relating to assessment year 1953-54 had not been brought to account and another entry relating to the receipt of income during that year was not correct. neither the appellate assistant commissioner nor the income tax officer found any mistake in the accounts relating to other accounting years. the two mistakes noticed by the appellate assistant commissioner are insignificant mistakes. further they afforded no basis for rejecting the accounts.....
Judgment:

K.S. HEGDE, J.

1. These appeals by certificate arise from the decision given by the High Court of Calcutta in five references made by the Income Tax Appellate Tribunal, Bench “B”, Calcutta under Section 66(2) of the Indian Income Tax Act, 1922. The High Court has answered the questions referred to it in favour of the assessee. In support of the return made by him, the assessee, a Hindu Undivided Family carrying on business in various items including moneylending produced his account books. The Income Tax Officer rejected those accounts as unreliable and assessed the assessee on the basis of best judgment by adding to the income returned by him various sums ranging from Rs 17,951 for Assessment Year 1956-57, to Rs 21,536 for Assessment Year 1954-55. The five assessment years with which we are concerned in this case are 1953-54, 1954-55, 1955-56, 1956-57 and 1957-58. The Income Tax Officer in his order did not give any reason for not relying on the accounts submitted. On appeal, the Appellate Assistant Commissioner after going through the notes prepared by the Income Tax Officer found that in his investigation, the Income Tax Officer had found that one of the items of interest received by the assessee during the accounting year relating to Assessment Year 1953-54 had not been brought to account and another entry relating to the receipt of income during that year was not correct. Neither the Appellate Assistant Commissioner nor the Income Tax Officer found any mistake in the accounts relating to other accounting years. The two mistakes noticed by the Appellate Assistant Commissioner are insignificant mistakes. Further they afforded no basis for rejecting the accounts for the other years. Both the Income Tax Officer as well as the Appellate Assistant Commissioner arbitrarily added to the total income returned half the amount of gross receipts shown by the assessee under the head “interest” during each year as escaped income. The Tribunal did not examine the facts of the case afresh. It just adopted the findings of the Appellate Assistant Commissioner. The question referred to the High Court was whether upon the facts admitted or found by the Appellate Tribunal, it was justified in holding that the Income Tax Officer had rightly added an income of Rs 18,050 in Assessment Year 1953-54, Rs 21,536 in Assessment Year 1954-55 Rs 18,321 in Assessment Year 1955-56 and Rs 17,951 in Assessment Year 1956-57 and Rs 20,547 in Assessment Year 1957-58.

2. We are in agreement with the High Court that on the facts found by the tribunal, it was not justified in holding that the additions made by the Income Tax Officer were in accordance with law. Those additions were arbitrarily made. No reasons were given to reject the accounts relating to Assessment Years 1954-55. 1955-56, 1956-57 and 1957-58. Further the method adopted for determining the escaped income appears to be highly capricious.

3. In the result these appeals fail and the same are dismissed. Respondent was ex parte. No costs.


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