Profit from molasses permits, obtained and sold by the assessee, was not a casual and non-recurring income and was therefore liable to be taxed in the hands of the assessee.

Ramaswami, J.

1. In this case the assessment year is 1947-48 and the accounting year is the financial year ending with 31-3-1947. On 1-3-1947 the assessee was ap-pointed as a grain stockist at Begusarai. The assessee carried on the grain business till December, 1947. He maintained account books which showed that for the period from March to December, 1947 the income from the grain business was Rs. 1,833. On 12-3-1947 the Commissioner of Excise had granted two permits for molasses in the name of the assessee. One permit was for 1400 maunds from Hussainpur Sugar Mills and the other permit was for 4000 maunds from Sasamusa Sugar works. The Income-tax Officer learnt this fact in consequence of the statement made by the Minister of Revenue in the Bihar Legislative Assembly on 13-10-1947. The Minister disclosed in the course of his statement that per-sons to whom molasses permits had been given had made huge profits. The Income-tax Officer issued a notice upon the assessee under Sec.22(2), Income-tax Act. The Income-tax Officer also issued a notice under Sec.22(4) of the Act requiring the assessee to produce all the accounts maintained for its business. The assessee did not comply with the terms of these notices, but on 15-6-1949 the manager of the Hindu undivided family Bisheshwar Singh appeared before the Income-tax Officer and produced the following letter :

To

The Income-tax Officer, Mongnyr.

Dear Sir,

I did secure two recommendation letters for molasses from the Excise

Commissioners Office, Patna, but I was unable to obtain molasses from the

Sugar Mills, I gave both the recommendation letters to Md. Sabir Ali,

brother-in-law of Mr. A. p. A. Hamid, I. G. of Police. I do not know till to

date for what price he sold the molasses, but I learnt as a rumour only that

one of the recommendation letters in the name of Hussainpur Sugar Mills was

not honoured by the Management.

This is the correct statement of fact, but I must be income taxed simply

because I had obtained two recommendation letters for the molasses; to cut the

matter short you may assess me on Rs. 5000/-. This I am suggesting because I

do not wish to compromise the posi tion of anybody else. It is better to take

the brunt personally than to involve others.

Begusarai Yours faithfully

15-6-49 Sd/- Bisheshwar Singh

The Income-tax Officer made enquiry and found that there was no Government control over the price of molasses in the market and that the per mit holders indulged in black marketing. He also found that the assessee had built a big residential house and a dozen stalls at an estimated cost of forty to fifty thousand rupees. The Income- tax Officer estimated that the assessee had made a net income of Rs. 61,450 from trafficking in the molasses permits. He found the commission on the rice business to be Rs. 1,838. In the result the assessee was held liable to pay tax on a total income of Rs. 63,288. The assessee preferred an appeal to the Appellate Assistant Commissioner but the appeal was dismissed. The assessee took a further appeal to the Appellate Tribunal which held that the profits of the assessee from the molasses permits should be estimated at the rate of Rs. 7 per maund and not at the rate of Rupees 11/12/- per maund as the Income-tax Officer ordered. The Tribunal accordingly reduced the estimated profit from the molasses permits to a sum. of Rs. 37,500. As regards the grain business the Tribunal held that the income from 1-3-1947 to 31-3-1947 was Rs. 498. The Tribunal therefore held that the assessee was liable to pay income- tax on a total income of Rs. 37,998.

2 As ordered by the High Court the tribunal has stated a case on the following questions of law :

"(1) whether in the circumstances of the case the assessee, Sri Bisheshwar Singh was liable to be assessed in the year 1947-48? and (2) Whet