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Issues Involved:
1. Whether there was any material before the Tribunal to hold that the sum of Rs. 20,000 represented the undisclosed income of the assessee firm for each of the assessment years 1954-55 and 1955-56. Issue-wise Detailed Analysis: 1. Material Evidence for Undisclosed Income: The primary question referred to the High Court was whether there was any material evidence before the Tribunal to support the conclusion that Rs. 20,000 represented the undisclosed income of the assessee firm for the assessment years 1954-55 and 1955-56. The assessee firm, a registered entity with seven partners, was found to have remitted large sums of money from its head office in Agartala to its purchasing center in Calcutta, which were not recorded in the account books. The Income-tax Officer (ITO) inferred that these remittances indicated an undisclosed business with a turnover of Rs. 4 lakhs, estimating a 5% income from this turnover, thereby adding Rs. 20,000 to the assessee's total income for each year. This decision was upheld by the Appellate Assistant Commissioner and later by the Tribunal. Upon the assessee's contention that sufficient opportunity was not provided to produce evidence, the Tribunal remanded the case to the ITO for further investigation. The ITO, after examining several witnesses and affidavits, maintained his earlier conclusion. The Tribunal affirmed this decision, leading to the assessee's application for a reference to the High Court. 2. Basis of Conclusions by Income-tax Authorities: The assessee argued that the conclusions by the income-tax authorities were based on mere surmises and lacked material evidence. Specifically, it was contended that there was no evidence to ascertain the amount of remittances, the existence of an undisclosed business with a turnover of Rs. 4 lakhs, or the profit margin of 5% on such turnover. The assessee also claimed a violation of natural justice principles, as the postal records used by the ITO were not shown to them. The department, represented by Mr. Choudhury, contended that no question of law arose from the Tribunal's order and that the findings of fact by the income-tax authorities were not challenged before the Tribunal. 3. Legal Precedents and Principles: The judgment cited several precedents, including Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, which established that while the ITO is not bound by technical rules of evidence, there must be more than mere suspicion to support an assessment under section 23(3) of the Indian Income-tax Act. The Supreme Court's decision in Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax further clarified that a finding of fact is open to attack as erroneous in law if it is unsupported by evidence or is unreasonable and perverse. 4. Application of Legal Principles to Present Case: Applying these principles, the High Court found that the income-tax authorities' conclusion that the assessee had an undisclosed business with a turnover of Rs. 4 lakhs and a profit of Rs. 20,000 was not supported by material evidence. The ITO's reliance on unspecified documentary evidence, not disclosed to the assessee, was particularly problematic. The Tribunal's inference lacked a concrete basis, as the exact turnover and profit margin were not substantiated by the evidence on record. Conclusion: The High Court concluded that there was no material before the Tribunal to justify the addition of Rs. 20,000 as the undisclosed income of the assessee firm. The question was answered in the negative, and the assessee was entitled to costs of Rs. 100 for this reference.
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