The lower rates of profit were placed in cases of other liquor company tractors and that in the circumstances, the rate of net profit for both the shops should be 7 on estimated sales of Rs.6,25,000 for Lakhi Bagh shop and of Rs.
The Inspecting Assistant Commissioner was further of the opinion that the addition made by the Income tax Officer was due to number production of the material data which the assessee firm ought to have produced for proper determination of its income.
On this basis the Inspecting Assistant Commissioner levied a penalty of Rs.8,300 under section 271 1 c read with sec tion 274 2 of the Act.
The Income Tax Officer estimated the sales at Rs.7,60,000 being Rs.6,50,000 in Lakhibagh shop and Rs.
1,00,000 for the Magra shop.
In arriving at the net profit 8, the Income tax Officer had made the allowance for expenses and purchases at 92 of the sales at Rs.7,60,000 i.e. at Rs.6,99,200 which companyered all the ex penses and purchases found reasonable.
The Tribunal numbered the facts.
The penalty order was vacated on this basis.
From this decision of the Tribunal under section 256 1 , a reference was sought to the High Court on the following question Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in cancelling the penalty imposed under section 271 1 c ?
It may be numbered that subsequent to the order of the Inspecting Assistant Commissioner, that is to say on 26th September, 1968, the quantum appeal was heard and partly allowed by the Appellate Tribunal.
The Inspecting Assistant Commissioner further numbered that the sales and expenses were unverifiable.
535 of 1970.
The Inspecting As sistant Commissioner was, therefore, of the opinion that the assessee firm was grossly negligent and had number discharged the onus of proving that the said difference between the income returned and the companyrect companye did number arise from any gross or wilful neglect on the part of the assessee and as such, in view of the Explanation to section 271 1 , the provisions of section 271 1 c were clearly attracted.
In companyformity with the other orders referred to by the Tribunal in the impugned order, it was held by the Tribunal that in the instant case, the Inspecting Assistant Commissioner had erred in his finding and therefore, the penalty order was cancelled.
It may number be inappropriate in view of the companyten tions urged before us, to refer to the order of the Inspect ing Assistant Commissioner for the assessment year 1965 66 under section 271 1 c read with section 274 2 of the Act.
From the Judgment and Order dated 24.9.
For the assessment year 1965 66, the Income Tax Officer, as numbered by the Inspecting Assistant Commissioner, rejected the book result showing sales of companyntry liquor at Rs.5,82,234 and the profit margin at 4 for lack of verifia bility of sales and expenses and low margin of profit.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The assessee went up in appeal before the Tribunal.
1,10,000 in Magra shop, and adopted the net profit rate at 8 thereby companyput ing the profit at Rs.60,800 and the total income was companyput ed at Rs.60,936 after addition of Rs.
By its order dated 26th September, 1968 the Tribunal held that when viewed in the light of the licence fee paid by the assessee, estimates of the turnover were on the high side.
It is the case of the appellant that 80 of the income finally assessed is Rs.40,600 which is much higher than the income returned at Rs.30,138.
1971 of the Allahabad High Court in Income Tax Appeal No.
The Tribunal was of the opinion that on this finding numberquestion of law arose and as such there was numberscope for reference of the said question to the High Court.
In view of this order, the income finally deter mined for the assessment year was Rs.50,750.
The assessee, a firm of two partners was at the relevant time a licence vender of companyntry liquor.
2083 of 1972.
Ms. Rachna Gupta and S.K. Bagga for the Respondent.
The High Court by the order impugned dismissed an application under section 256 2 of the Income Tax Act, 1961 hereinaf ter called the Act .
C. Manchanda and Mrs. A Subhashini for the Appellant.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This appeal arises out of the decision of the Allahabad High Court dated 24.9.1971.
For the assessment year 1965 66, the Income tax Officer rejected its account books on the ground that sales and expenses were number verified and the margin of profit shown was low.
