1954 (12) TMI 27

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ross profit of Rs. 8,814 and a net profit of Rs. 402 from the business of vermilion and sindoor. The Income-tax Officer rejected the account books of the assessee on the ground that there was no manufacturing account or any stock account maintained by the assessee and verification was impossible. The Income-tax Officer therefore estimated the net profit of the assessee at Rs. 10,877 at a flat rate of 25 per cent. on the amount of the sale. The Income-tax Officer also noticed unexplained cash credits in the account books of the assessee as follows:- "A/c Godabari Devi, wife. 27-11-45 Rs. 1,000 A/c Ramawatar, son. 22-11-45 Rs. 7,000 A/c Surajmal, son. 22-11-45 Rs. 7,000 Total   Rs. 15,000 The ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... an undisclosed profit for the accounting year corresponding to the period from 4th November, 1945, to 24th October, 1946, and not the financial year 1945-46. It was contended by the learned counsel that the onus was upon the assessee to give an explanation as to the source and nature of the cash credit and in the absence of a satisfactory explanation the Income-tax authorities were entitled to presume that the cash credit was a secret income from the same source of business, viz., the business of sindoor and vermilion. I am unable to accept this argument as wholly correct. It is of course a well-established principle that in respect of an amount of cash received during the accounting year the burden of proof is upon the assessee to show po....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....hich is best in the know of the appellant himself. These cash credits appear at the very start of the accounting year, and it is also extremely unlikely that they had their origin in the business, as disclosed in the accounts of the appellant. Therefore, the Income-tax Officer's treatment of the two amounts separately must be upheld." The argument of the assessee before the Appellate Assistant Commissioner was that the cash credit should not be added to the estimated profit of the vermilion account for the purpose of being taxed. The contention was based upon the principle that in respect of the same business the Income-tax Officer cannot, in the first instance, make an estimate of the profit and after making such an estimate make an....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....income of the assessee not from the business of sindoor and vermilion but from some other source. On this basis of fact the Tribunal was correct in holding that the previous year for the income of Rs. 15,000 was the financial year according to section 2(11)(a) of the Income-tax Act. For it is admitted that in respect of this amount of Rs. 15,000 there is no account maintained by the assessee and there is no option exercised on his part. In the absence of any system of accounting adopted by the assessee and in the absence of any option on his part the only course open to the Income-tax authorities was to take the financial year ending on 31st March, 1946, as the "previous year" for the amount of Rs. 15,000. It is clear that the view taken by....