1981 PLP 1 (PTD)

Nemo for Respondent. Date of hearing: 11th November, 1980. SAAD SAOOD JAN, J.‑This is a reference by the assessee under section 66, subsection (1) of the Income‑tax Act.

2. The assessee is a practising lawyer of Rawalpindi. For the assessment year 1971‑72 he filed a return declaring gross professional receipts in the amount of Rs. 32,

693. These receipts were made up of following items: (i) Fee of Rs. 28,733, received from WAPDA in one case. (ii) Fees amounting to Rs. 3,960 from other professional work. The Income‑tax Officer noticed that in the immediately preceding year the fees collected by the assessee for professional work amounted to Rs. 9,

000. He also noticed that if in the assessment year under consideration the fee obtained from the WAPDA. was left out there was a fall in the earning of the assessee. This, he observed, was not acceptable particularly in view of the fact that the expenses claimed in the assessment year under question had risen to Rs. 10,426 from Rs. 1,270, which were declared in the immediately preceding year. He also thought that a large fee in one particular case could not make all that difference. He thus came to the conclusion that the assessee had suppressed his income from other professional work and for that reason he rejected the declared version. He then computed the income of the assessee by raising the amount of fees earned from other professional work to Rs. 9,000, that is, the amount declared by him in the immediately preceding year, and by adding this amount to the fee which he had admittedly received from WAPDA. The income thus estimated came to Rs. 37,733.

3. The assessee was dissatisfied with the treatment meted out to his case by the Income‑tax Officer and he went in appeal before the Income‑tax Appellate Tribunal. In the Tribunal his explanation for the fall in his professional income was that the Government had introduced the Assistant Commissioner Scheme which had resulted in the transfer of the work formerly done at the District Headquarters to the Tehsil offices. This explanation was rejected by the Tribunal on the ground that he had not cited any parallel cases showing that other lawyers, too, working at the District Headquarters had similarly suffered in their practice by this change. Accordingly, the Tribunal rejected the appeal. The assessee has now come to this Court and formulated the following two questions for decision:‑-- (i) Whether on fact and in the circumstances of the case the Tribunal misdirected itself in law in upholding the estimate of the receipt fit Rs. 37,733 against Rs. 28,733, declared on the assumption that ate assessee would be taking other case as usual without having found any omission or suppression of receipts and whether the determination is not vitiated as being arbitrary without any material and illogical assumption and presumption. (ii) Whether on facts and in the circumstances of the case the Tribunal was right in holding that the assessee's returned version could be rejected because he had not been able to cite any parallel case.

4. It is contended on behalf of the assessee that he had placed all his relevant books of accounts before the Income‑tax authorities but they had not found any fault in them. Consequently, they were not competent to reject the same. We are unable to accept this contention for even if the Income‑tax authorities are unable to find any specific fault in the books of, accounts they are competent to reject them if from the ambient circumstances it appears to them that the entries made therein are not reliable. References in this context is invited to Miss Assia v. Income‑tax Appellate Tribunal P L D 1979 S C 949 and Sultan Textile Mills Ltd. v. Commissioner of Income‑tax 1970 P T D

878. In this particular case the Income‑tax authorities found if the fee obtained from WAPDA was left out the income from his other professional work as declared by the assessee was less than half of what he had himself mentioned in his returns in the immediately preceding year. Despite this fall in his general practice he had shown his expenses at a figure which was many times more than the corresponding figure declared by him in the preceding year. A lawyer whose practice had been badly affected by the administrative changes would not normally be increasing his expenses even if in one particular case he received a large fee. There was thus an inherent contradiction in the position adopted by the assessee. In the circumstances the decision of the Income‑tax authorities to reject the declared version does not appear to be arbitrary, whimsical or injudicial.

5. Before the Tribunal the assessee took up the position that his practice had suffered on account of the administrative changes. The Tribunal asked him to substantiate his assertion with reference to other cases where the lawyers similarly placed had also suffered on account of these changes. This does not appear to be an unreasonable request considering, as already pointed out, that the version declared by the assessee with regard to his income had been found to be unreliable.

6. The learned counsel for the assessee next contended that the additions made by the Tribunal and the Income‑tax Officer to the declared income were entirely arbitrary and were thus hit by the rule laid down in Rajput Metal Works v. Commissioner of Income‑tax P L D 1976 Lah. 223 and Bursh Ware, Lahore v. Commis sioner of Income‑tax (T. R. 112 of 1972). In both these cases the view taken was that while making an estimate of the income of the assessee the Income -tax Officer was required to evolve a basis and that he could not just take leap into the dark. This does not appear to be the case here. As already pointed out while computing the income of the assessee the Income‑tax authorities, had taken his income of the assessee in the immediately preceding year into) account. This was a relevant consideration as will appear from the observations made by the Privy Council in Commissioner of Income‑tax v. Shop Badridas Ram Rai A I R 1937 P C

133. We cannot, therefore, hold that in computing the income of the assessee the Income‑tax authorities had acted arbitrarily or capriciously.

7. For the reasons stated above we answer the first question in the negative and the second question in the affirmative. As there has been no appearance on behalf of the Commissioner there will be no order as to costs in this reference. Reference answered.