- (1.) This is an appeal by special leave from a judgment of the High Court of Judicature at Calcutta answering a Reference by the Income-tax Appellate Tribunal under S. 66 (2), Income-tax Act, 1922, hereinafter referred to as "the Act".
(2.) The appellant. is a registered firm consisting of two brothers as partners with equal shares., The firm was carrying on business at Calcutta as bullion merchant.; dealing mainly in silvery and kept its books of account on the mercantile basis. In the course of the year of account 1997 (Ramnavami) corresponding to 1941-42, 582 bars of silver (some from the old stock in hand at Calcutta and some purchased elsewhere during the year)' were sent to Bikaner where the partners resided, and their value at cost was credited in the books of the firm. In the assessment of the firm for the year 1942-43, it was alleged that the said silver bars had been sold to the partners for their domestic use ) but the Income-tax authorities held that the alleged sale was not" genuine and that the said silver bars still formed part of the stock in trade of the firm at the close of the previous year 1997. and they accordingly included in the taxable' profits a sum of Rs. 2,20,887 as the excess arising from the valuation of the said 582 bars at market price on the closing day. They were valued at, market rate at which the lest of the closing stock, at Calcutta was valued in the books of the firm.
(3.) On appeal the Appellate Tribunal, on a consideration of all the facts and circumstances of the case recorded its finding as follows : "All there circumstances make it clear to us that the action of the Income-tax authorities in treating the stock of silver bars in Bikaner as part of the stock-in-trade of the Calcutta business was amply justified. The appellant on account of the panic in Calcutta had to remove the valuable stock-in-trade to a safe place in Bikaner just as many other Calcutta businessmen did at that time. The partners of the firm then noticed the upward trend of the silver market, and decided to take advantage of the camouflage afforded by the entries in the books of account and the story of sale to partners, so that the profit of the year of account could be substantially reduced artificially." The appeal was accordingly dismissed. The application by the firm under S. 66 (1) of the Act asking for a reference to the High Court of six questions as questions of law arising out of the order of the Tribunal was also rejected.;