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Issues Involved:
1. Whether there was any material before the Tribunal to conclude that the sum of Rs. 40,000 encashed by the assessee's wife belonged to the assessee and was therefore income from undisclosed sources. 2. Whether the sum of Rs. 90,000, held to be the assessee's income from undisclosed sources, is liable to excess profits tax assessment. Issue-Wise Detailed Analysis: 1. Material Before the Tribunal Regarding Rs. 40,000: The primary issue was whether there was sufficient material for the Tribunal to conclude that Rs. 40,000, encashed by the assessee's wife, belonged to the assessee and was thus income from undisclosed sources. The assessee, a Hindu undivided family firm, had defective account books, necessitating an estimated assessment. The Income-tax Officer added Rs. 90,000 to the estimated income, which included Rs. 40,000 encashed by the assessee's wife, Sreemati Narbadi Agarwalla. The Tribunal and the taxing authorities rejected the assessee's claim that the Rs. 40,000 was his wife's stridhan, as there was no evidence to support this. The Tribunal noted that the assessee admitted having no further evidence to produce. The onus was on the taxing authorities to prove that the amount belonged to the assessee, and the Tribunal found that there was material to support this conclusion. The circumstances, such as the assessee's habit of concealing income and the lack of a plausible source of income for his wife, led to the finding that the Rs. 40,000 was indeed the assessee's income from undisclosed sources. 2. Liability of Rs. 90,000 to Excess Profits Tax: The second issue was whether the Rs. 90,000, held to be the assessee's income from undisclosed sources, was liable to excess profits tax. The Tribunal's finding that the Rs. 90,000 represented income from undisclosed sources was a factual determination that could not be disputed. The Department could not treat this sum as income from the assessee's business for excess profits tax purposes while simultaneously treating it as income from undisclosed sources for income-tax purposes. The Tribunal emphasized that the Department could not estimate the total income and then add items of income that come to its notice. The addition of Rs. 90,000 to the estimated income of Rs. 61,803 was based on the premise that it was from an undisclosed source, not the business. Thus, there was no evidence to support the claim that the Rs. 90,000 was business income, and the onus was on the Department to prove otherwise. Consequently, the sum of Rs. 90,000 was not liable to excess profits tax. Conclusion: The High Court answered the first question in the affirmative, confirming that there was material before the Tribunal to conclude that the Rs. 40,000 encashed by the assessee's wife belonged to the assessee. The second question was answered in the negative, determining that the Rs. 90,000 held to be the assessee's income from undisclosed sources was not liable to excess profits tax. The reference was disposed of accordingly, with parties bearing their own costs.
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