TaxTMI 
TaxTMI 
1983 (3) TMI 27
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....00 and Rs. 32,344 ?" I may take the facts from the statement of the case. The assessment year involved is 1958-59. The method of accounting followed by the assessee is admittedly the mercantile system. The assessee is a dealer in foodgrains, sugar and other goods. The ITO found that in the original assessment in this case, the turnover had been disclosed at Rs. 3,67,560. Later on, certain books of accounts were seized by the sales tax authorities and on the basis of that, an assessment was made by the ITO by estimating the profits on the suppressed business. This assessment was set aside in appeal by the Tribunal, which had directed the books to be examined and a balance-sheet to be prepared. As the balance-sheet was not filed before the ITO and as no day-to-day stock register was produced before him and also as the applicability of the provisions of s. 145 was not disputed as stated before the AAC, the ITO proceeded to assess the income by adopting a rate of gross profit of 5 per cent. However, while making an addition, the ITO took the view that the gross profit shown by the assessee at Rs. 1,12,910 on a turnover of Rs. 29,22,074 was not correct gross profit. According to him,....
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....uld be considered for assessment only in the assessment year 1957-58. The AAC held that in respect of the income from undisclosed sources, the accounting year should be taken as business year and on this basis, he deleted the addition of Rs. 20,000 and Rs. 11,000 from the assessment. The AAC, for the reasons given in his order, also deleted the addition of Rs. 32,344. Regarding the amount in the account of Smt. Sarbati Devi, the AAC agreed with the submission advanced on behalf of the assessee and deleted that addition also. With regard to the addition of Rs. 4,712 which was shown as " Cash from Home ", the AAC held that this amount should be taken as having been received from trading income which had not been fully shown in the books. He, therefore, deleted this addition also. A copy of the order of the AAC has been marked annex. B to this statement of the case. Thereafter, the Department as well as the assessee both appealed against the order of the AAC and both the matters were heard together by the Tribunal. The Tribunal considered the question regarding reducing the gross profits by the amount of sales tax and the Tribunal held that the gross profit shown by the assessee at....
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....nd the AAC had deleted the addition on the ground that various additions have been made to the trading results and a further profit of Rs. 5,352 had been added by the AAC out of the goods transferred by the old firms. The Tribunal agreed with the AAC that the profit from the old firms had not been credited in the books and, therefore, it could have been credited directly in the capital account. The Tribunal, therefore, confirmed the deletion of these additions. Thus, in the result, the Tribunal allowed in part the appeal of the assessee and the appeal of the Department. A copy of the order of the Tribunal has been marked annex. C to the statement of case. Learned counsel appearing for the Department has contended that registered dealer under the Bihar Sales Tax Act is authorised to collect sales tax on the sales made by him from the customers and if the amount collected belongs to the Sales Tax Department, then that amount is neither an income nor an expenditure. It is only the excess amount which will be income or the shortfall will be the liability of the assessee. The learned counsel appearing for the Department has contended before us that, in the instant case, the sales tax....
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....l was correct in holding that the amount of sales tax liability had not to be excluded from the gross turnover to arrive at the gross profit disclosed in the trading account. Coming to the second point, the learned senior standing counsel for the Department submitted that this was a proceeding under s. 147 of the I.T. Act, and in view of this, all the provisions of the new Act would apply. The learned senior standing counsel submitted that all the provisions of the new Act would apply in a case where a proceeding was reopened under s. 1 48 and, therefore, submitted that the provisions of s. 68 would also apply and the credit appearing in the books of assessee in the previous year would be assessable to tax in the assessment year 1958-59. In my opinion, there is no force in the submission advanced by the learned senior standing counsel appearing for the Department. It may be pertinent to note that there was no provision in the 1922 Act corresponding to s. 68 of the Act. None the less, this section gives statutory recognition to the principle that the cash credits which were not satisfactorily explained may be assessed as income. But, it has now been well settled that in two re....