LALA SARJU PRASAD Vs. RE

JUDGEMENT

(1.) In compliance with our order dated the of February 11, 1942 the Commissioner of Income-tax, Central and United Provinces, has stated a case and referred a question of law for our decision. We indicated that question of law in our order, and the same question has been referred to us for decision by the learned Commissioner. The question is as follows : Whether the Assistant Commissioner had jurisdiction in appeal to substitute a different method of computation for the method which had been adopted by the Income-tax Officer ? Under the provisions of Section 66(3) of the Act if the Commissioner has refused to state a case on the ground that no question of law arises and the assessee makes an application to this Court, then if we are satisfied that a question of law does arise (it may be substantial question of law or otherwise) we can require the Commissioner to state a case and to refer the question of law that does arise for our decision.

(2.) It was under these circumstances that we directed the Commissioner to state a case, but now that all the facts have come out on a perusal of the various orders of the Income-tax authorities, we think that the question of law in the circumstances of the present case ought to be answered in the affirmative.

(3.) The facts are that the assessee is a Hindu undivided family which carries on business in cloth, sarrafa, money-lending, grain, arahat speculation in gold and silver etc. etc. at Rasra, Ballia and Calcutta. The assessee owns as many as six shops in these places and when the profits for the year 1933-34 were being assessed the Income-tax Officer looked into the accounts of all these six branches and came to the conclusion that the profits were Rs. 32,489/-. In some of the branches the Income-tax Officer calculated the profits on the book is filed by the assessee himself, and he thought that there it was possible to determine the profits after a reference to the books of account. As regards two or three branches he was of the opinion that some profits could be calculated with reference to the books of account but some other profits ought to be added inasmuch as the books of account did not afford sufficient data for calculating the profits, in respect of certain turnover the Income-tax Officer under the proviso to Section 13 of the Act computed the profits in such manner as he thought best and he held the view that a certain standard rate of profit on the sales should be adopted. In this manner he calculated the profits of the various branches and came to the conclusion that Rs. 32,489/- were the profits of the assessee for the year 1933-34.