C.S.P.SINGH, J. - (1.) IN compliance with an order of this Court under section 66(2) of the Indian Income Tax Act, 1922, the Income Tax Appellate Tribunal, Delhi Bench "B" has referred the following two questions for our opinion : - (i) Whether there was any material before the Tribunal for estimating the total turnover at Rs. 7,00,000/ - ? (ii) Whether there was any material before the Tribunal for fixing the rate of profit for miscellaneous goods at 17.5% -
(2.) THE assessee is a partnership firm consisting of four partners viz. Om Prakash son of Shri Hakim Rai, Mulkraj son of Shri Shanker Das, Bishamber Nath son of Shri Sanji Ram, and Lakhani Hashmat son of Shri Shaukiram. This partnership was formed by an oral agreement on 20th July 1953, and, thereafter, a deed was executed on 30 -9 -53. The assessment year involved in the present reference is 1956 -57, the previous year being the financial year ended on 31st March, 1956. The assessee firm in the accounting year carried on the business of manufacture of leather boards. The raw material i.e. leather spilt for manufacturing the leather boards was imported from foreign countries. Formerly, the assessee had only one place of business i.e. the factory, but on 22 -9 -1955, a shop was opened and separate books of account for the shop in respect of the sale of leather splits etc. was opened. In the accounting year, according to the books of the assessee, there were sales of Rs. 3,76,911/ - in the factory and Rs. 18,832/ - at the newly opened shop, which comprised of cuttings, waste leather and leather splits. So far as the sale of leather boards was concerned, according to the assessee, the same was made exclusively to Bata Shoe Company Ltd. Calcutta.
(3.) ONE Ballomal give information to the Income Tax Officer that the assessee firm had suppressed its sales, and acting on this information, the Income Tax Officer examined a number of persons including Ballomal, in respect of suppressed transaction, and estimated the sales of the assessee at Rs. 15 lacs. An amount of Rs. 6 lacs was allocated to the sales of leather board and Rs. 9 lacs to other sales. Rejecting the account book version of the assessee, he applied a rate of 26% on the sale of leather boards and 25% on the other sales. In appeal before the Appellate Assistant Commissioner, the turnover estimated by the Income Tax Officer at Rs. 15 lacs was reduced to Rs. 10 lacs, but the sale of leather boards estimated by the Income Tax Officer was maintained. He reduced the sale of other articles from 9 lacs to 4 lacs. The rate of profit on the aforesaid sales applied by the Income tax Officer was upheld.;