An application under s. 66 1 of the Indian Income tax Act for stating a case to the High Court was rejected by the Tribunal.
The High Court agreed with the view of the Tribunal and answered the question against the assessee.
87,937/ be excluded from the total income of the assessee for the year 1949 50.
Appeal by special leave from the order dated May 4, 1966 of the Calcutta High Court in Income tax Reference No.
The Income tax Officer on examination of the transactions brought the entire amount of Rs.
Jagadish Swarup, Solicitor General, Ram Panjwani, R. N. Sachthey and B. D. Sharma, for the appellant.
He companyfirmed the order observing that the assessee had misled the Income tax Officer into believing that there was a genuine arrangement with Ratiram Tansukhrai and had stated in the profit and loss account that the amount paid to Ratiram Tansukhrai was the share of the latter in the partnership, whereas numbermuch share was payable to Ratiram Tansukhrai.
87,937/ being half the profit earned from H. Manory Ltd. was paid to Ratiram Tansukhrai under a partnership agreement.
The Commissioner has appealed to this Court.
The assessee stated that on June 5, 1948, it had entered into an agreement with H. Manory Ltd. to do business in plywood chests and in companysideration of financing the business the assessee was to receive 50 of the profits of the business.
In appeal against the order of the Appellate Assistant Com missioner the Income tax Appellate Tribunal held that the assessee had produced all the relevant accounts and documents necessary for companypleting the assessment, and the assessee was under numberobligation to inform the Income tax Officer about the true nature of the transactions.
In the meanwhile on May 13, 1955, the Income tax Officer issued a numberice under s. 34 to the assessee for the assessment year 1949 50 to re open the assessment and to assess the amount of Rs.
649 of 1967.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
87,937/ only as the profit earned on the joint venture with H. Manory Ltd. In the assessment year 195051 the assessee field a return also accompanied by a profit and loss account disclosing a total profit of Rs.
The Judgment of the Court was delivered by Shah, C.J. Burlop Dealers Ltd. hereinafter referred to as the assessee is a limited companypany.
The Income tax Officer re assessed the income under s. 34 1 a and added Rs.
The Tribunal then stated a case under s. 66 1 of the Income tax Act to the High Court of Calcutta.
1,75,875/ as profit in a joint venture from H. Manory Ltd. and claimed that Rs.
K. Daphtary, B. P. Maheshwari and K. R. Khaitan, for the respondent.
The assessee claimed that it had entered into an agreement on October 7, 1948, with Ratiram Tansukhrai for financing the transactions of H. Manory Ltd. in the joint venture, and had agreed to pay to Ratiram Tansukhrai 50 of the profit earned by it from the business with H. Manory Ltd. The Income tax Officer accepted the return filed by the assessee and included in companyputing the total income for the assessment year 1949 50 Rs.
The assessee filed a return which did number include the amount paid to Ratiram Tansukhrai.
114 of 1965.
For the assessment year 1949 50 the assessee submitted a profit and loss account disclosing in the relevant year of account Rs.
81,077/ to the account of Ratiram Tansukhrai as his share.
1,62,155/in the relevant account ear received from H. Manory Ltd., and claimed that it had transferred Rs.
1,62,155/ to tax holding that the alleged agreement of October 1948 between the assessee and Ratiram Tansukhrai had merely been got up as a device to reduce the profits, received from H. Manory Ltd This order was companyfirmed by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal.
87,937/ allowed in the assessment of income tax as paid to Ratiram Tansukhrai.
87,937/ to the income returned by the assessee in the assessment year 1949 The Appellate Assistant Commissioner held that the Income tax Officer was entitled to take action under s. 34 1 a of the Income tax Act 1922 after the ,amendment in 1948, and to re open the assessment if income had been under assessed owing to the failure cf the assessee to disclose fully and truly all material facts necessary for the assessment.
A petition to the High Court of Calcutta under s. 66 2 for ,directing the Tribunal to submit a statement of the case was also ,rejected.
The tribunal on that view reversed the order of the Appellate Assistant Commissioner and directed that the amount of Rs.
