TRILOKCHAND CHUNILAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case, at the instance of the assessee, the following question has been referred to us for our opinion by the Income -tax Appellate Tribunal

(2.) IN the instant case we are concerned with the assessment year 1965 -66, the relevant previous year being the financial year 1964 -65. The assessee is a Hindu undivided family and carries on business of constructing buildings and doing the work of maintenance of buildings, inter alia, for railways. This work was being done in Ratlam Division of Western Railway. The assessee did not maintain books of accounts. In the absence of the books of accounts, the Income -tax Officer estimated net profit at the rate of 15 per cent. on total receipts for the assessment year 1965 -66. In the total receipts of the assessee, the Income -tax Officer included the value of materials such as cement, iron, etc., supplied by the railway authorities and after arriving at the total figure, he calculated the net profits at the rate of 15 per cent. He worked out the net profit at Rs. 1,02,149 and the total taxable income was computed at Rs. 93,270.

(3.) AGAINST the decision of the Appellate Assistant Commissioner, the assessee went in appeal before the Tribunal and contended that the net profit should be calculated at 10 per cent. of the total receipts and this basis of 10 per cent. should have been adopted by the Income -tax Officer and the Appellate Assistant Commissioner. The Revenue filed cross -objections contending that the rate of net profit adopted by the Appellate Assistant Commissioner was low and it further contended that the value of the materials supplied by the railway authorities should have been included in the total receipts of the assessee. The Tribunal by its order partially allowed the appeal filed by the assessee and also partially allowed the cross -objections filed by the revenue. The Tribunal held that the value of the materials supplied by the railway authorities should be included in the receipts for the purpose of ascertaining the net profits by applying the percentage rate. The Tribunal also held that instead of 12.5 per cent. the profit should be calculated on the basis of 10 per cent. Thereafter, at the instance of the assessee, the above -mentioned question has been referred to us for our opinion.