- (1.) THIS case raises a very short point. Messrs. K.S. Rashid and Sons were military contractors, who used to supply to the military messes various commodities of various kinds. The assesses was one of the favorite contractors and had a very large number of contracts. For the assessment year 1941-1942 and the previous year 1940-1941 the assessee produced his books. As regards four of the contracts, the assessee claimed that he had given sub-contracts to others and bad, therefore, to pay the sub-contractors some rebate. The income-tax Department had been accepting in previous years the claim of the assessee that he had been privately sub-letting some of the contrasts as it was not possible for him to look after all the contracts and this had continued ever since 1921-1922 to the assessment year 1940-1941 and even subsequent to the assessment year in question 1941-1942. In the years previous to the assessment year, 1941-1942 and in the years subsequent to the year 1941-1942, the Income-tax Department had always accepted the assessees claim that some of the contracts had been sub-let.
(2.) IN the assessment year in question 1941-1942, the Income-tax Officer required the assessee to disclose the names of the sub-contractors to enable the Income-tax Officer to verify the claim of the assessee that some of the contracts had been sub-let. The assessee refused to disclose the names of the sub-contractors on the ground that under the rules of the military department it was not permissible to sub-let military contracts, and the sub-contractors, if their names were disclosed, might find themselves in trouble. The assessee relied on an order of the then Commissioner of Income-tax, dated 28th November 1934, in a previous assessment where a similar question had been asked and the assessee had refused to answer the question. The Commissioner had observed as follows : "The Income-tax Officer must seek other avenues for the discovery of the names of sub-contractors than the assistance of the assessee." The Income-tax Officer and the Appellate Assistant Commissioner held that the assessee was hound to disclose the names of the sub-con tractors, and inasmuch as be bad refused to disclose the names of the sub-contractors, they had no means of verifying the claim of the assessee that he had sub-let some of the contracts. The Income-tax Officer and the Appellate Assistant Commissioner rejected the claim of the assessee that he had sub-let any of the four contracts and decided to assess him on all the contracts at the same flat rate.
(3.) WHEN the matter came up before the Tribunal, the Tribunal was of the opinion that the assessees claim, that he had sub-let some of the contracts to others, must be accepted. The Tribunal was also of the opinion that the assessee was a very respectable person and in regard to other entries, which were perhaps bigger entries, no mistake was found by the Income-tax authorities. The Tribunal was of the opinion, however, that the assessee was bound to disclose the names of the sub-contractors and as he bad not disclosed their names, the Income-tax Officer was not able to verify the correctness of the return as regards the contracts, which were said to have been sub- let.;