T.L.VENKATARAMA AIYAR, J.

T(1) THIS is an appeal against the judgment of the High court of Nagpur in a reference under s. 66(1) of the Indian Income-tax Act, 1922, hereinafter referred to as the Act.

(2) THE appellant is the sole proprietor of a firm called Bansilal Abirchand Kasturchand, which carries on business as money-lenders, dealers in shares and bullion and commission agents in Bombay, Calcutta and other places. He is a resident of Bikaner, and manages the business at the several places through agents. During the relevant period, the agent of the firm at Bombay was one Chandratan, who held a power-of-attorney dated 13/05/1944, conferring on him large powers of management including authority to operate on bank accounts. During the period, 15/11/1944, to No 23/11/1944, the agent withdrew from the firms bank account sums aggregating to Rs. 2,30,636.40, and applied them in satisfaction of his personal debts incurred in speculative transactions. On 25/11/1944, the cashier of the firm sent a telegram to the appellant informing him of the true state of affairs. Thereupon, the appellant went to Bombay on 3/12/1944, and on the 4th, cancelled the power-of-attorney give