Method of accounting determinations under the proviso to Section 13: factual findings by the assessing officer preclude a High Court reference.

Whether the Commissioner was obliged to refer questions about the assessee's method of accounting under the proviso to Section 13 turned on fact: the assessing authorities, after examining books, found records inadequate to disclose true income and concluded the method prevented ascertainment of true income. The court applied the principle that the assessing officer is competent to determine assessment by estimation where adequate evidence supports factual findings, and held that such factual determinations do not ordinarily raise questions of law requiring High Court reference; the Commissioner's refusal to refer was upheld and the petition dismissed.

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Issues: Whether the Commissioner of Income Tax was obliged to refer to the High Court questions of law raised by the assessee concerning whether the assessee's method of accounting permitted deduction of his true income under the proviso to Section 13.

Analysis: The undisputed facts show that the Income Tax Officer and the Assistant Commissioner examined the books and accounts and found the accounts and records inadequate to disclose the true income, including lack of proper goods accounts and absence of records of purchases and disposals. The Commissioner treated the matter as one of fact, concluding that the evidence before the assessing authorities supported their determination that the method of accounting did not permit ascertainment of true income. The Court relied on established principle that under the proviso to Section 13 the assessing officer is the competent authority to determine whether income can be deduced from the method of accounting, and that where the assessing authorities have acted on adequate evidence and reached factual conclusions, no question of law requiring reference to the High Court arises.

Conclusion: The Commissioner correctly refused to refer the questions to the High Court; the petition for mandamus is dismissed and the decision of the assessing authorities is upheld in favour of the revenue.

Ratio Decidendi: Where assessing authorities, on adequate evidence, find that the method of accounting prevents ascertainment of true income, the proviso to Section 13 vests the assessing officer with the authority to determine assessment by estimation, and such factual determinations do not ordinarily raise questions of law requiring a reference to the High Court.

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