(The Judgment of the Court was delivered by the Honourable Chief Justice.)
The Commissioner of Income-tax, Madras, referred for decision of this Court under the provisions of Section 66(2) of the Indian Income-tax Act, 1922, the following question :
'Whether there was any material before the Assistant Commissioner to justify his conclusion that the petitioners business profits could not properly be deduced from the accounts maintained by him.'
It is abundantly clear from the orders of the Income-tax Officer and the Assistant Commissioner on appeal that there were ample materials before the Income-tax Officer to justify the order which he made. The assessee is the largest manufacturer and dealer in cigars and beedies in Vellore. He returned an income of Rs. 14,988 for the year of assessment, 1936-37. On an examination of the books, the Income-tax Officer found they were entirely unreliable and they could not be made the basis for any method of accounting. The Income-tax Officer has set out in detail his reasons for having to disregard the accounts, and the learned Advocate who appears for the assessee has rightly conceded that the reasons given by the Income-tax officer for the rejection of this account cannot be objected to. In these circumstances, the Income-tax authorities had to estimate what was the income of the assessee for the period mentioned. They assessed him on the sum of Rs. 26,500 which was based on the average rate of profits made by other manufacturers of cigars and beedies and also on the profits which the assessee had made in previous years. No just exception can be taken to the estimate arrived at, and the answer we give to the reference is in the affirmative. The assessee having failed, he must pay the usual costs, Rs. 250.
Reference answered in the affirmative.