Issues involved: The judgment involves the issue of whether a sum of Rs. 3,82,750 could be treated as the assessee's income from undisclosed sources for the assessment year 1971-72.
Factual Position and Tribunal's Findings: The assessee claimed to have purchased raw material from Kalpana Enterprises, but investigations revealed discrepancies. The alleged seller could not be produced, and inquiries indicated non-existence of Kalpana Enterprises at the provided address. The bank account opened by Chedi Lal, who withdrew the amount, was linked to a different address than the one on the bills. Despite suspicions, the Tribunal held that the purchases were genuine based on the materials presented.
High Court's Analysis: The High Court observed that relevant materials were not considered by the Tribunal. It highlighted that the alleged sellers were found to be non-existent entities and that Chedi Lal was a petty employee introduced by Satya Pal Jain. The Court emphasized that the purchases were not made from Kalpana Enterprises as claimed by the assessee, and the Tribunal's conclusions were erroneous and contrary to the evidence on record.
Legal Principles and Conclusion: Citing legal precedents, the Court stated that a question of law arises when a finding is based on improper rejection of evidence or is contrary to the facts. It noted that the Tribunal's reliance on partly irrelevant materials vitiated the decision. Ultimately, the Court ruled in favor of the Revenue, concluding that the Tribunal's decision was not based on relevant material and was against the assessee.
Judgment Outcome: The reference application was disposed of in favor of the Revenue, upholding the treatment of the sum of Rs. 3,82,750 as the assessee's income from undisclosed sources for the assessment year 1971-72.
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