DHAKESHWARI COTTON MILLS LIMITED Vs. COMMR OF INCOME TAX WEST BENGAL

JUDGEMENT

(1.) The appellant is a public limited joint stock company incorporated under the Indian Companies Act, 1913, with its registered office at Calcutta. It carries on the business of manufacture and sale of cotton yarn and piece-goods On the 28th of July, 1944, the Income-tax Officer issued a notice to it under section 22(2) of the Indian Income-tax Act calling upon it to file the return of its income for the assessment year 1944-45 (account year being 1943-44), Before the expiry of the due date due for filing the return the account books of the appellant company together with the documents relevant to the accounts, were taken into custody by the Sub-Divisional Officer, Narayanganj and it is alleged that these remained in the custody of the court of the Sub-Divisional Magistrate till January 1950, when they were handed back to the appellant.

(2.) It seems that no further action in the matter was taken by the department till the year 1947. During that year the company requested the department to revive the proceedings. The proceedings having been revived the appellant company furnished the return of its income for the assessment year 1944-45 on the 16th March, 1948. This return, however, was not a complete document as without the assistance of the books the profits could not be computed according to the provisions of law. On receipt of the return the Income-tax Officer issued a notice under Section 23(2) of the Act calling upon the company to supply further information on a number of points and to prepare certain statements indicated in the notice. This requisition had to he complied with by the 19th March, 1948.

(3.) The sum and substance of these decisions is that the Income-tax Officer estimated the gross profit on sales at 40 per cent. by a pure guess, while the Tribunal reduced it to 35 per cent. by applying some other rule of thumb. It is not clear from either of these judgments on what material these estimates were based.