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Issues Involved:
1. Authority of the Tribunal to take fresh evidence and consider the correctness of the assessment on the merits. 2. Material for holding that the sum of Rs. 73,000 was concealed income. Detailed Analysis: 1. Authority of the Tribunal to Take Fresh Evidence and Consider the Correctness of the Assessment on the Merits The primary argument from the assessee was that the Tribunal lacked the authority to take the evidence of the Ruler of Sakti on commission and to consider the correctness of the assessment. The assessee's counsel contended that the appeal was confined to two grounds: the remand by the Appellate Assistant Commissioner for further examination and the acceptance of fresh evidence not produced at the assessment stage. However, the Tribunal, under section 33(4) of the Income-tax Act, has the authority "to pass such orders as it thinks fit" upon the appeal, provided both parties are given an opportunity to be heard. The Tribunal's jurisdiction extends to the correctness of the assessment imposed by the Income-tax Officer, and it was within its rights to issue a commission for the examination of the Ruler of Sakti and decide the assessment's merits. Therefore, the first question was answered in favor of the Income-tax Department and against the assessee. 2. Material for Holding that the Sum of Rs. 73,000 was Concealed Income The Tribunal found that the assessee failed to prove the source of Rs. 73,000, which was encashed in high denomination notes. The onus was on the assessee to prove the source and nature of the money received during the accounting year. The assessee presented a declaration and certificates from the Ruler of Sakti stating that the amount was deposited in 1942 and converted into high denomination notes by the Ruler. However, the Tribunal disbelieved the Ruler's evidence for several reasons: - The improbability of carrying such a large amount in small currency notes during a panic. - The unlikelihood of accepting high denomination notes from the Ruler after the Demonetization Ordinance was promulgated, knowing they were not legal tender. - The absence of any certificate from the Ruler in January or February 1946 confirming the encashment. - The fact that the assessee did not retrieve the money until after the Ordinance was promulgated, despite being a businessman who would not keep such a large amount idle. The Tribunal concluded that the Ruler's evidence was false and the story of carrying liquid cash to Sakti in 1942 was a myth. Thus, the assessee did not discharge the onus of proving the source of Rs. 73,000, and the amount was rightly added to the assessee's income for taxation. The High Court, respecting the Tribunal's finding as a question of fact, found no jurisdiction to interfere unless the Tribunal acted without material or applied a wrong legal principle. The second question was answered against the assessee and in favor of the Income-tax Department. Conclusion: The Tribunal was within its jurisdiction to take fresh evidence and assess the merits of the case. The sum of Rs. 73,000 was correctly held as concealed income based on the Tribunal's factual findings, which were supported by material evidence. The High Court upheld these conclusions, emphasizing the limited scope of its jurisdiction in interfering with the Tribunal's factual determinations. The reference was answered accordingly, with costs awarded to the Income-tax Department.
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