V.G. Oak, C.J. - (1.) THIS is a reference under Section 66 of the Indian Income-tax Act, 1922 (hereafter referred to as the Act). Shri Ram Arora is the assessee. He has been assessed as an individual for the assessment year 1950-51. The relevant accounting period was from December 13, 1948, to August 29, 1949.
(2.) THE assessee carried on business in foodgrains. He had also some business in brick-kiln. He had some income from immovable property. In the present reference we are largely concerned with the assessee's business in foodgrains, There was a scheme for collecting grains for the Government under the Grain Procurement Order of 1944. Cultivators had to bring their quotas of foodgrains to kacha arhatias, who held licences for the purpose. Kacha arhatias brought the grains so collected to purchasing agents appointed by the Government for the purpose. The assessee was such a purchasing agent for procuring foodgrains. The purchasing agents had to maintain prescribed registers. There was some difficulty in collecting foodgrains from cultivators. The assessee, therefore, purchased foodgrains from the open market. The difference in the price in open market and the sanctioned purchase price was known as ''tota money". According to the accounts maintained by the assessee, there was a net loss of Rs. 700 under the foodgrains business. The Income-tax Officer did not accept the accounts furnished by the assessee. It was estimated that the net income of the assessee from foodgrains business amounted to Rs. 30,000. Income-tax was assessed accordingly. The assessment was confirmed in appeal by the Appellate Assistant Commissioner and the Appellate Tribunal in spite of the assessee's protest (hat the figure of Rs. 30,000 as net income from foodgrains business was arbitrary.
(3.) THE assessee applied to the Tribunal for referring certain questions of law to this court. THE application was dismissed by the Tribunal. THE assessee, therefore, applied to this court under Section 66(2) of the Act. That application was allowed by this court. THE court directed the Tribunal to state a case and refer a certain question to this court. In accordance with that direction, the Appellate Tribunal, Delhi Bench "A", has referred the following question of law to this court ; "Whether, on the facts and in the circumstances of the present case, there could be any applicability of the proviso under Section 13 of the Act and whether the Income-tax Officer was justified in applying the same on the basis of the observations of the learned sessions judge ?" Dr. R. R. Misra, appearing for the department, raised a preliminary objection that the present reference is incompetent. He urged that at no stage did the assessee raise the question of applicability of the proviso to Section 13 of the Act. Consequently, no such question can be referred to this court under Section 66 of the Act.;