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of <h1>Appeal dismissed, income inclusion upheld, flat rate applied for profit calculation.</h1> <h3>Feroz Shah Versus The Income Tax Commissioner, Punjab And N.W.F.P.</h3> The appeal was dismissed on the merits, upholding the inclusion of Rs. 90,618 in the appellant's income for the year 1926-27 and the application of a flat ... - Issues Involved:1. Competency of the appeal.2. Inclusion of Rs. 90,618 in the appellant's income for the year 1926-27.3. Application of a flat rate of 32 1/2 % for profit calculation.Issue-Wise Detailed Analysis:1. Competency of the Appeal:The objection to the competency of the appeal was that no appeal to His Majesty in Council lies from the refusal of the High Court to require the Commissioner to state a case. The court noted that such an appeal is not authorized by the Indian Income Tax Act itself and must be justified under clause 29 of the Letters Patent of the Lahore High Court. However, this issue became academic as the appeal failed on the merits, and the court refrained from expressing any opinion on it.2. Inclusion of Rs. 90,618 in the Appellant's Income for the Year 1926-27:The appellant, a timber merchant, contended that the sum of Rs. 90,618 should not be included in his income for the year 1926-27 as the hundis for this amount were received in April 1927. The Income Tax Officer included this amount, stating that the appellant's system of accounting required its inclusion in the accounts of 1926-27. The Assistant Commissioner and the High Court upheld this view, finding that the appellant's books were normally kept on a mercantile system, where sales are recorded when effected, regardless of cash payment. The appellant's departure from this system for the Rs. 90,618 was deemed unjustified. The court found that there was sufficient evidence supporting the Income Tax Officer's finding, including inconsistencies in the appellant's explanations and the timing of entries in his books.3. Application of a Flat Rate of 32 1/2 % for Profit Calculation:The appellant objected to the flat rate of 32 1/2 % applied by the Income Tax Officer to calculate his profits, arguing that it was excessive. The Assistant Commissioner dismissed this objection, noting that the same rate had been applied in previous years without objection and there was no proof that the profit rate was lower. The High Court agreed, stating that the amount of the flat rate is for the Income Tax Officer to determine. The Commissioner, upon further inquiry, found no reason to interfere with the Income Tax Officer's finding. The court upheld this view, affirming that the principle of assessment at a flat rate was not contested, and its amount was a factual determination for the Income Tax Officer.Conclusion:The appeal was dismissed on the merits, with the court finding sufficient evidence to support the inclusion of Rs. 90,618 in the appellant's income for 1926-27 and the application of a 32 1/2 % flat rate for profit calculation. The competency of the appeal was not fully argued and was left undetermined as it became a moot point. The court advised that the appeal be dismissed with costs.
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