TaxTMI 
TaxTMI 
1990 (12) TMI 49
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....ny in which the public are not substantially interested. It manufactures sodium sulphate. It was incorporated on August 30, 1960, and started manufacturing on January 1, 1962, on which date it took over a partnership firm known as Solar Chemicals which was carrying on the said business and was assessed thereon up to the assessment year 1962-63. The first assessment year for the assessee was 1963-64, the relevant accounting year being the calendar year 1962. Assessment was completed in the first instance but later it was reopened under section 147, since it was found that there were some fictitious loans and some unexplained share capital appearing in the balance-sheet for the said year. In response to a notice under section 148, the assesse....
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....ction had to be strictly complied with. The assessee found it difficult to prove the genuineness of the hundi loans ; it offered them for assessment since it did not deem it desirable to contest the said issue. From this, said the Tribunal, it could not be inferred that the assessee had admitted that the said hundi loans, or for that matter even unexplained capital, represented its concealed income. Yet another ground given by the Tribunal was that the hundi loans and unexplained capital were included in the assessment under the head "Other sources" and not under the head "Business income" and, therefore, could not have been taken into consideration for determining the profit of the assessee. The last ground given by the Tribunal was that i....
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....or exemption. Development allowances are some of the examples of artificial rules. What the Supreme Court meant was that, in applying section 104, the Income-tax Officer must have regard to the actual profit determined on commercial principles and not the assessable income determined in accordance with the provisions of the Act. This does not, however, mean that book profits alone must be looked into although book profits are certainly to be looked into being relevant material. Now, the assessee pleaded certain hundi loans but, during the reassessment proceedings, he gave up that plea and offered the said amount to be included in his income. Can it be said that the said amount does not constitute actual income ? Would it be reasonable to sa....