TaxTMI 
TaxTMI 
1958 (3) TMI 71
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....ld them. The company also purchased dyes and chemicals, dyed them in their own karkhana by engaging coolies and sold the dyed cloth in the market. They also purchased dyed cloth in the market, got them printed and sold them. Besides these, the assessee firm bought and sold readymade dyed and printed cloth, besides selling mill and handloom cloth undyed and unprinted. A return for the account year "Vyaya" ending with March 22, 1947, was submitted by the assessee which showed an income of Rs. 30,859 from the business, Rs. 840 from the other sources. The assessee was called upon to produce his account books and he produced a day book and a ledger. In the statement enclosed to the return, a sum of Rs. 30,676 was shown as the gross profit on ....
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....issioner could not be interfered with and, therefore, dismissed the appeal. Thereupon, the assessee applied for a reference by the Tribunal to the High Court of the questions of law arising in the case. The High Court directed, on 13th July, 1955, the Tribunal to state the questions of law arising in the case and hence this reference. The questions that have been referred to us are: "1. Is the assessment made by the income-tax authorities without disclosing to the assessee the materials on which the assessment was made valid? 2. Is the assessee precluded from raising that plea in view of his conduct in the various stages of these proceedings? 3. Whether the assessment made on the basis of a flat rate is legal? and 4. To what ....
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....ot comparable cases and were distinguishable on various grounds. The Income-tax Officer cannot be said to make an assessment to the best of his judgment if he is not guided by the dictates of justice and fair-play. Natural justice demands that he should draw the attention of the assessee to the particular cases the authority had in view. The income-tax authority is not competent to make a random assessment based on his private enquiries which may not be revealed to the assessee. Local enquiry and the placing on record a note of the results of such enquiry are essential to sustain an ex parte assessment. If the Income-tax Officer proposes to act upon information collected by him independently on private enquiries, he should disclose to the a....
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.... its conclusions. The facts of the case before us do not show that any attempt was made by the Income-tax Officer to draw the attention of the assessee to the material collected by him on private enquiry and which formed the basis for his conclusions. He merely rest content on the circumstance that in the year of account the manufacturers of dyed and printed cloth like the assessee made bumper profits shooting up to 50% and over. It was all the more necessary in a business of the kind that the. assessee firm was doing that the information gathered with regard to other manufacturers should have been placed before the assessee, because in a business of this kind there could be no two truly comparable cases. The assessee's business cons....