Income estimation based on material on record is sustainable where accounts do not fully disclose contract income.

The proviso to section 13 of the Income-tax Act, 1922 applies where the assessee's accounts do not fully disclose the contract income, so the books need not be accepted as conclusive. An estimate of profit is supportable when there is material on record, including admissions by the assessee and comparative figures from another year, rather than a mere guess. On the stated facts, the Tribunal's revised estimate for the Srinagar contract was upheld as materially based, and the addition could not be treated as unsupported so as to raise a referable question of law.

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Issues: Whether the proviso to section 13 of the Income-tax Act, 1922 applied on the facts, and whether the Tribunal's estimate of Rs. 6,000 in respect of the Srinagar contract was unsupported by material so as to give rise to a referable question of law.

Analysis: The assessee's books for the relevant contract were not required to be accepted as conclusive where the accounts did not fully disclose the income from the contract. The record showed that the assessee's representative had admitted before the Appellate Assistant Commissioner that full quantitative details of stores worth about Rs. 1,30,000 consumed in execution of the work might not be available. The subsequent year's declared profit rate was also available as supporting material. In these circumstances, the Tribunal was entitled to sustain a revised estimate of profit. The cases relied upon by the assessee were distinguished because they involved rejection of estimates made without material or on pure guesswork, which was not the position here.

Conclusion: The proviso to section 13 was applicable, and there was material before the Tribunal to support the addition of Rs. 6,000. No question of law arose for reference in favour of the assessee.

Ratio Decidendi: Where there is material on record supporting an estimate of income, including admissions by the assessee and relevant comparative figures, the Tribunal's assessment based on such material cannot be treated as a mere guess or as giving rise to a referable question of law.

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