NANAK CHANDRA LAXMAN DAS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) M/s. Nanak Chandra Laxman Das, Allahabad, a registered firm, hereinafter referred to as "the assessee" carried on business in the manufacture and sale of bricks. For the assessment year 1963-64, the relevant accounting period being October 26, 1961 to October 31, 1962, the assessee disclosed a net profit of Rs. 27,030 on sales and cartage receipts amounting to Rs. 2,23,399. The ITO did not accept the disclosed profit and, applying a net profit rate of 17 1/2 per cent. on the total receipts, estimated it at Rs. 2,30,000. Ultimately, the Appellate Tribunal sustained the net profit at Rs. 34,500.

(2.) THE ITO further found that during the relevant previous years the assessee had taken some hundi loans. One such creditor was M/s. Jethanand Madan Das, r/o-4/1, Madan Street, Calcutta, and a loan of Rs. 17,000 was shown to have been taken from him on September 5, 1962. On the same date there was a loan of Rs. 25,000 taken from M/s. Amar Mal Mool Chandra, whose residence was the same as that of M/s. Jethan and Madan Das and there was a third loan of Rs. 20,000 taken on the same date from M/s. Govind Das Nichal Das of Calcutta. THE assessee filed a confirmation letter from these creditors but, despite opportunities given, did not produce them before the ITO. Accordingly, the ITO treated the aggregate amount of these loans which came to Rs. 62,000 as the assessee's income from undisclosed sources.

(3.) AT the instance of the assessee and as directed by this court, the Appellate Tribunal drew up a statement of the case and referred the following question for the opinion of this court: