Case: Commissioner of Income Tax, Calcutta Vs. Padamchand Ramgopal

In support of the return made by him, the assessee, a Hindu Undivided Family carrying on business in various items including money lending produced his account books. TheOfficer rejected those accounts as unreliable and assessed the assessee on the basis of best judgment by adding to the income returned by him various sums ranging from Rs. 17,951 for the assessment yearto Rs. 21,536 for the assessment yearThe five assessment years with which we are concerned in this case are7 andax Officer in his order did not give any reason for not relying on the accounts submitted. On appeal, the Appellate Assistant Commissioner after going through the notes prepared by theOfficer found that in his investigation, theOfficer had found that one of the items of interest received by the assessee during the accounting year relating to the assessment yearhad not been brought to account and another entry relating to the receipt of income during that year was not correct. Neither the Appellate Assistant Commissioner nor theOfficer found any mistake in the accounts relating to other accounting years. The two mistakes noticed by the Appellate Assistant Commissioner are insignificant mistakes. Further they afforded no basis for rejecting the accounts for the other years. Both theOfficer as well as the Appellate Assistant Commissioner arbitrarily added to the total income returned half the amount of gross receipts shown by the assessee under the head "interest" during each year as escaped income. The tribunal did not examine the facts of the case afresh. It just adopted the findings of the Appellate Assistant Commissioner. The questions referred to the High Court was whether upon the facts admitted or found by the Appellate Tribunal, it was justified in holding that theOfficer had rightly added an income of Rs. 18050 in the assessment yearRs. 21536 in the assessment yearRs. 18321 in the assessment yearand Rs. 17951 in the assessment yearRs. 20547 in the assessment year

Reasoning: 2. We are in agreement with the High Court that on the facts found by the tribunal, it was not justified in holding that the additions made by theOfficer were in accordance with law. Those additions were arbitrarily made. No reasons were given to reject the accounts relating to the assessment years8. Further the method adopted for determining the escaped income appears to be highly capricious.