Ajit Kumar Sengupta, J. - (1.) The assessee has income from transport business, house property and other sources. For the assessment year 1962-63, the assessee received total bills amounting to Rs. 3,93,545 inclusive of a sum of Rs. 1,09,185 representing cost of materials supplied by the Government for construction of a polytechnic institute at Maldha. As no books of account were maintained by the assessee, the Income-tax Officer proceeded with the computation invoking Section 145 of the Income-tax Act, 1961. After including a sum of Rs. 13,027 to the total receipts, he applied a rate of 13.7 per cent. on the total receipts of Rs. 4,06,572 subject to a deduction of depreciation on trucks. Gross income prior to the adjustment of depreciation was arrived at Rs. 55,700. Total income was computed at Rs. 56,549 as against the income returned at Rs. 15,157.
(2.) Being aggrieved, the matter was taken in appeal to the Appellate Assistant Commissioner and it was contended on behalf of the assessee that the addition of Rs. 13,027 to the total receipts and the inclusion of the cost of materials supplied by the Government were not justified. A certificate from the Executive Engineer, Public Works Department, Jalpaiguri Division, was produced in support that no profit was allowed to the assessee on the cost of materials supplied by the Government. Further, it was claimed that the materials supplied were available even in the market at a cheaper rate and as such, even assuming for argument's sake, the assessee had no scope of making any profits from the sale of those commodities (cement and M. S. rods). Accordingly, the Appellate Assistant Commissioner directed the Income-tax Officer to exclude the sum of Rs. 1,09,185 being the cost of materials supplied from the total receipts as computed by the Income-tax Officer for ascertaining the profits at the flat rate of 13.7%.
(3.) The Department preferred appeal to the Tribunal. The Tribunal upheld the order of the Appellate Assistant Commissioner with the following observations : "7. As regards the Departmental appeal against the exclusion of the cost of materials, etc., we find from the order of the Appellate Assistant Commissioner that a certificate from the Executive Engineer, P.W.D., Jalpaiguri Division, was filed with the Appellate Assistant Commissioner justifying the assessee's claim that no profit was allowed to the contractor on the cost of materials supplied by the Government. This clearly vindicates the assessee's position so far as the nature of the particular contract jobs for which the materials were supplied is concerned. In the circumstances, we find that the Appellate Assistant Commissioner was fully justified in excluding the cost of materials from the gross receipts. As regards the other amount of Rs. 13,027, it represents a payment on account of security deposit and, as such, this amount too had been correctly excluded from the gross receipts as calculated by the Income-tax Officer.";