SARDAR BHAGAT SINGH PAHAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner was assessed to income-tax for the assessment years 1958-59 to 1962-63, by the Income-tax Officer, C-I Ward Bombay THE income from two sources of business, a cinema business and a labour contract business, was considered for the purpose of assessment, for all the years except the assessment year 1962-63, when the labour contract business was discontinued. As the petitioner did not produce any books of account in respect of either business, the Income-tax Officer estimated the income from each source, in respect of each assessment year, taking a net profit of 30 per cent. before allowance for depreciation in respect of the cinema business and a net profit of 12 1/2 per cent. in respect of the labour contract business, and made the several assessment. THE income so assessed was Rs. 27,733 for the assessment year 1958-59, Rs. 61,100 for the assessment year 1959-60, Rs. 40,322 for the assessment year 1960-61, Rs. 20,262 for the assessment year 1961-62, and Rs. 28,595 for the assessment year 1962-63. THE petitioner challenged the assessments in appeal before the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner, the contention of the petitioner was that the rate of profit applied by the Income-tax Officer the case of the labour contract business to the estimate of the income determined by him was excessive. THE petitioner cited two cases which, it said, were comparable. A rate of 5 per cent. had been adopted in respect of the contracts in those cases. THE Appellate Assistant Commissioner found that one of the cases related to a petty earth work contract undertaken in the decoit invested area of the Chambal Project where the contractor found it difficult to obtain labour at normal rates and had consequently to pay higher rates, and the other case was that of a building sub-contractor doing sub-contract work in Bombay. Considering the nature of the work carried on by the petitioner and the margin of profits disclosed by similar contractors the Appellate Assistant Commissioner reduced the rate of profit to 10 per cent. He also interfered with the income estimated by the Income-tax Officer and reduced it to the figure returned by the petitioner. As regards the cinema business, the Appellate Assistant Commissioner reduced the estimate of receipts determined by the Income-tax Officer. He also reduced the rate of profit to 25 per cent. THE petitioner than applied in revision to the Commissioner of Income-tax, Bombay. Upon the request of the petitioner the cases were transferred to the Commissioner of Income-tax, Uttar Pradesh-1. During the pendency of the revision applications, the petitioner filed an affidavit and written arguments thereafter before the Commissioner. He also applied for a personal hearing. On May 11, 1966, the Commissioner disposed of the revision applications by a common order. After considering the rates applied by the Income-tax Officer and the Appellate Assistant Commissioner, be observed :

(2.) I have carefully gone through the contentions raised by the assessee in the revision petitions as well as in then written arguments submitted thereafter. Having regard to all the facts of the case, the nature and the extent of the petitioners business, I am of the opinion that the estimate of income as adopted by the Appellate Assistant Commissioner is somewhat excessive. I would allow the following further reductions in the total income as determined by the Appellate Assistant Commissioner. <FRM>JUDGEMENT_342_ITR70_1968Html1.htm</FRM>

(3.) THE other contention of the petitioner is that the Commissioner relied upon material prejudicial to the petitioner without an opportunity to the petitioner to meet it. Upon a perusal of the impugned orders there is nothing to show that the Commissioner relied upon material which was prejudicial to the petitioner and which the petitioner had had no opportunity earlier to meet.