Shah, J. - (1.) These are two appeals filed with special leave under article 136 of the Constitution.
(2.) Appeal No. 407 of 1958 is filed against the order of the Income-tax Appellate Tribunal, Calcutta Bench, Calcutta, dated December 7, 1955, refusing to state a case under section 66 (1) of the Income Tax Act, 1922. Appeal No. 408 of 1958 is filed against the order of the High Court of Judicature at Calcutta dated March 22, 1957, dismissing summarily an application under section 66 (2) of the Income Tax Act for a direction to the Appellate Tribunal to state a case. These appeals have been filed with special leave restricted to "the question relating to the transactions in sovereigns only". In the course of the assessment proceedings before the income-tax authorities, diverse contentions were raised, but in view of the restricted leave, we will refer only to the "transactions in sovereigns from the Bombay branch" of the appellant and to no others.
(3.) The appellant is a deal in gold and silver and other commodities and had his head office at Calcutta. In the year of account Samvat year 2002 and 2003 (November 4, 1954, to October 23, 1946) corresponding to the assessment year 1946-47, he also carried on business at branch offices at Bombay, Karachi and other places. In the year of account, out of 1,80,997 sovereigns purchased by the appellant in his Bombay branch 1, 66,188 pieces were dispatched to Karachi, 14,309 pieces were sold locally in Bombay and 500 pieces were dispatched to Calcutta. The Income-tax Officer (Non-Companies, I. T. cum. E. P. T.), District Calcutta, by his order from transactions in sovereigns at Rs. 56,901. It was the appellants case that 1,66,188 pieces of sovereigns were dispatched by him at cost price to his Karachi office, and were not sold and that by the sale of 14,309 pieces in Bombay, he had earned a profits of Rs. 6,462-4-0. The appellant produced before the Income-tax Officer the journal of the Bombay branch showing the reccord relating to dispatch of 1,66,188 sovereigns to the Karachi branch, and the commission and the transport charges etc. incurred in that behalf. The appellant also produced before the Income-tax Officer his "Noondh" showing the record of the transactions as entered in the books. In the view of the Income-tax Officer, the "gross profit of Rs. 6,462 shown on the total sales of the value of Rs. 1,13,80,331 at the rate of .06% was very low." He observed : "No cash memos are available either for purchase or sales. Assessee was asked to give the addresses of certain parties from whom sales and purchases were made but he expressed his inability to do so. It is however observed that mostly sales have been made to Karachi office and the margin of profit is likely to be much less." ;