Bal Raj Tuli, J.

1. The petitioner-firm is registered under the Partnership Act and the Income-tax Act, 1961 (hereinafter called "the Act"). The firms accounting year was from April 13, 1964, to April 1, 1965, which corresponded to the assessment year 1965-66. For that assessment year, the petitioner-firm returned an income of Rs. 2,02,229, and in support thereof produced its account books which showed its sales of shawls for that year at Rs. 15,77,570, yielding a gross profit of Rs. 2,16,502. The rate of profit worked out to 13.7 per cent. as against 13.4 per cent. for the preceding year. The Income-tax Officer noted that the sales had gone down as compared with the previous years but that the petitioner-firm had made much larger profit in the sale of wool-tops. The sale turn-over of wool-tops amounted to Rs. 2,05,927 on which the gross profit shown was Rs. 64,614. The Income-tax Officer accepted the trading accounts of the petitioner-firm after examining its books and did not doubt that the profits from the sale of wool-tops had been under-stated. The assessment order was made on August 31, 1966.

2. On January 2, 1969, the Inspecting Assistant Commissioner, Jamnagar, addr