TaxTMI 
TaxTMI 
1959 (10) TMI 33
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.... We shall, therefore, confine ourselves as far as possible to the facts relevant to these questions. 2. The assessee, P. Abdul Khader, is a resident of Bangalore City. In the beginning of 1943, he obtained a contract from the Southern Command, Bangalore, for the supply of milk. In the month of March of the same year, he entered into another contract with the Sourthern Command for the supply of live goats, sheep, mutton and beef, for a period of six months from 1st April, 1943, to 30th September, 1943, at the Coramandal Centre in the Mysore State. In May, 1943, still another contract was entered into with the same authority for the supply of live goats, sheep, mutton and been for the period June 5, 1943, to September 30, 1943, at Madras, St. Thomas Mount, Jalarpet and Tiruvellore centres. The following table gives the rates at which the assessee agreed to supply the stuff: Per 100 Ib. of Madras Saint Thomas Mount. Tiruvellore. Jalarpet. Coramandal. (1) (2) (3) (4) (5) Rs. A. P. Rs. A. P. Rs. A. P. Rs. A. P. Beef 25 0 0 25 0 0 12 12 0 11 14 0 Mutton 50 0 ....
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....h the assessee's own employees, as well as from dealers. The purchases made through own employees were recorded in the books on the basis of statements rendered by them but they were not independently vouched and were not also supported by any accounts maintained by those employees. The average prices of animals purchased through employees and from dealers are given below: Number. Amount Average price. (1) (2) (3) (4) Rs. A. P. Rs. A. P. Cattle purchased from dealers 1,055 33,601 0 0 30 14 5 Cattle purchased through employees. 5,498 1,68,578 0 0 30 10 7 Goats and sheep purchased from dealers 21,993 2,43,778 0 0 11 1 4 Goats and sheep purchased through employees. 75,381 1,43,341 0 0 13 12 9 While in case of cattle which are used for supply of been there was practically no difference in prices between those purchased through dealers and employees, such difference in the case of goats and sheep was marked and worked up to 25 per cent. 4. The books of account produced by the assessee contained the follow....
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....erned, the profit shown by him in the beef section was also accepted. He, however, did not accept the results in live animals and meat sections and held that the purchase through agents which were not supported by any vouchers or books of prime entry could not be accepted. It is significant that there was little or no difference in prices of cattle used for applying beef purchased through dealers and employees, whereas such difference in the case of goats and sheep came to nearly 25 per cent. The excess price claimed on account of purchases through employees calculated on the basis of average figures shown in paragraph 3 above came to Rs. 2,05,609. He also referred to several cash credits mentioned in paragraph 4 above and held that several credits which totalled Rs. 1,97,828 were not genuine and that they represented a portion of the excess prices claimed to have been paid on account of animals purchased from the assessee's own employees. He, accordingly, added the sum of Rs. 2 lakhs to the book version. The income from animals and meat supply contract was computed at Rs. 1,50,912 arrived at as under: Loss returned Rs. Rs. 65,280 Less- &nb....
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....d, contended that when the Appellate Assistant Commissioner accepted the genuineness of the accounts he should not have retained the addition of one lakh. 8. The Tribunal, for the reasons stated in its consolidated order I.T.A. Nos. 3607 and 3608 of 1951-52, dated 30th June, 1951, a copy whereof is marked annexure 'A' and forms part of the case, held that the book results could not be accepted as the bulk of purchases were not proved and that there was no valid reason for the alleged heavy loss in the mutton supply contract, as the assessee was in an advantageous position of making his purchases in muffassal places. The Tribunal also found in the statement furnished by the assessee that out of a total supply of 8,41,002 lbs. of mutton he had purchased 1,44,307 lb. of mutton for Rs. 49,037 working out to an average of 5 annas 6 pies per lb. as against the contracted supply price of 8 annas per lb. This, in the opinion of the Tribunal, was a clear indication of the profitableness of the contract. It also came to the conclusion that Sara Bibi could not have possessed such large funds as urged by the assessee and finally it held that as the case was one where the proviso to ....
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....year of account. At a later stage some evidence was brought before the Appellate Assistant Commissioner to show that his sister had sent a lawyer's notice demanding a share of profits which were alleged to have been promised to her for financing him to the extent of Rs. 63,000 but curiously enough she was completely satisfied when the assessee gave her a reply that her money was safe and it would be returned with some compensation. The necessity for a lawyer's notice when she had that utmost confidence in her brother is rather baffling. His sister, who met with disappointment in married life, and who was without issues, was looked after by the assessee for well nigh a quarter of a century. But it is surprising that such a loved sister, in the late evening of her life, demanded of her brother her alleged investment of Rs. 63,000 and was satisfied when he said that her money was safe. Shortly afterwards, she breathed her last leaving no will, or instructions as to how her wealth should be disposed of. Under such circumstances, we are unable to give credence to the wealth ascribed to her. It may be that she had about Rs. 10,000 with which she was helping her near relatives or ....
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.... his livelihood in a small way when such a lot of wealth was awaiting him. There is no explanation for the balance of Rs. 9,000. Neither the Income-tax Officer nor the Appellate Assistant Commissioner accepted the explanation. The Tribunal's finding is that there is no evidence that the assessee was in possession of Rs. 50,000 on March 7, 1944, to credit in his personal account in the books of account. 5. (iii) Credits in the brother's account. These are as under: Name. Date. Credit. Date. Debits. (1) (2) (3) (4) (5) Rs. A. Rs. A. Mohamed Ibrahim, brother of assessee. 14-7-1943 12,643 15 7-8-1943 5,000 0 15-7-1943 5,765 0 25-8-1943 28,828 15 20-7-1943 3,145 0 13-12-1943 1,000 0 20-7-1943 3,370 0 ... ... 23-7-1943 7,670 0 ... ... 23-7-1943 2,235 0 ... ... 34,828 15 34,828 15 (iv) the entries in the charcoal account credits are as under: Date. Amount. Rs. 7-9-1943 10,000 10-9-1943 30,000 10-3-1944 10,000 &nbs....
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....month this large sum of Rs. 35,000 was withdrawn from Mohamed Ibrahim's account, went into the Bank of Mysore and again came back into the assessee's books in the charcoal account. No explanation has been offered for these hasty withdrawals and re-deposits. As regards this, the Tribunal's finding is that the assessee was unable to explain the nature and source of the sum of money for Rs. 34,000 originally deposited in Mohamed Ibrahim's account and later transferred through Bank of Mysore account to charcoal account in the assessee's books. There was absolutely no explanation for the balance of Rs. 16,000 to make up the total of Rs. 50,000 in the charcoal account. The entries in the books of account of the assessee show that the credits in the brother's account represented value for supply of sheep and goats made by him to the assessee. There is no reference to such appeals by the brother in the affidavit or the statement on oath made before the Income-tax Officer. It was open to the assessee to prove that the monies were withdrawn and deposited in the Bank of Mysore in the name of the brother or himself by producing evidence from the bank. In the absence of ....
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.... Rs. 65,280 and a further inadmissible sum of Rs. 16,192, the Income-tax Officer arrived at the net figure of Rs. 1,50,912. On appeal, the Assistant Commissioner took the view that there was no justification to add the sum of Rs. 2,00,000 to arrive at an estimate of the assessable income of the assessee for the assessment year in question. The Assistant Commissioner reduced the amount to Rs. 1,00,000. Both the assessee and the Department appealed to the Tribunal against the order of the Assistant Commissioner. On a review of the entire evidence, the Tribunal held that the evidence on record justified the addition of a sum of Rs. 1,72,721. In arriving at that figure the Tribunal came to the conclusion, that the unexplained credits in the books of the assessee amounted to Rs. 1,53,000, after accepting his explanation for a credit of Rs. 10,000, in the name of his sister Sara Bibi. On application by the assessee to this court under section 66(2) of the Act, the Tribunal was directed to refer the following questions for the determination of this court: "1. Whether on the facts and in the circumstances of this case, there is any material to justify the rejection of the accou....
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.... been proved. Considering the poor circumstances in which the family started, it was difficult to accept the assessee's plea, either that his sister had large moneys of her own, or that his brother Ibrahim had large moneys of his own which he could advance to the assessee. It should also be noticed that while the Income-tax Officer virtually took the same amount of Rs. 34,000 into account twice, once as having been advanced by Ibrahim, and again as having been invested by the assessee himself, that error was rectified, and only one such item has been taken into account in arriving finally art Rs. 1,53,000, as the unexplained cash credits which the Tribunal held to be bogus credits. The second portion of the second question does not arise for a specific answer now, in view of the specific findings recorded in the further statement of the case. Taking the whole of the second question, our answer to it is against the assessee. That answer covers all the credits. Once again we have to point out that our answer to the second question only helps us to answer the first question. The first question in form raises only the validity of the rejection of the accounts of the assessee ....
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....extent justify the rejection of the book results. The there were also the features adverted to both by the Income-tax Officer and by the Assistant Commissioner in relation to the supply of mutton, which, in effect, the Tribunal accepted. To supply mutton under the contracts the assessee had to get animals and slaughter them. In addition, he used to buy mutton. The Income-tax Officer was of the view that the purchase price of animals was highly inflated. No doubt, the assessee referred to the retail price for mutton fixed by the authorities of the Moore Market at Madras. But the departmental authorities and the Tribunal agreeing with them declined to take that as the guiding factor, because that related to the retail price at Madras. The assessee was a wholesaler, and from his own books it was found that he had purchased mutton at a little over five annas, far less than eight annas which at one time was the prevailing retail market rate in the Moore Market. There was certainly material on which the Tribunal could ultimately rest its conclusion, that the purchase price of animals to be slaughtered, so that the mutton could be supplied by the assessee, was inflated. It may not be nece....