ASWATHIAH AND BROS B V Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee, who is a manufacturer of agarbathies, made a return of his income for the asst. yr. 1958-59 disclosing Rs. 23,718 as the aggregate income from his business. THE ITO declined to accept it and, acting under the proviso to s. 13 of the IT Act of 1922, estimated his profits at 30% of the turnover resulting in an addition of Rs. 25,792 to the gross profits disclosed by the assessee. THE opinion of the officer was confirmed on appeal both by the AAC and later by the Tribunal. THE assessee moved the Tribunal under s. 66(1) to refer the following question to this Court :

(2.) THE Tribunal dismissed the application on the ground that no question of law arises out of the appellate order. THE assessee then moved this Court under sub-s. (2) of s. 66 to direct the Tribunal to refer the very same question to this Court. After hearing both the counsel for the assessee as well as the Department, this Court by its order dt. 10th Aug., 1962, directed the Tribunal to refer to this Court the question suggested by the assessee with a certain modification. THE question as formulated by this Court and now referred by the Tribunal reads as follows :

(3.) IF the proviso to s. 13 applies to this case, then ordinarily the only question that would remain would be one of fact, viz., whether the estimate made by the authorities or the Tribunal was or was not possible on an examination of the material on record. But the error of law pointed out on behalf of the assessee is that, whereas at all stages the estimate was based on what are described as comparable cases, at no stage was the assessee put on notice of the same and given an opportunity to persuade the authorities or the Tribunal that the conditions of trade obtaining in such comparable cases were different from the conditions of his own trade and that therefore the measure of profits in those cases should not be looked into for estimating the profits of his own trade.