1985 (7) TMI 29 - HC - Income Tax

Summary

Issues:
- Justification of the Tribunal's order regarding the addition of Rs. 30,000 as income from undisclosed sources
- Interpretation of the Tribunal's direction for re-examination of the Rs. 30,000 addition by the Income-tax Officer
- Conflict between the Tribunal's view and the High Court's decision on the assessability of Rs. 34,000 in different assessment years

Analysis:
The case involved a partnership firm engaged in various businesses, including banking. The Income-tax Officer had added Rs. 30,000 as income from undisclosed sources during the assessment year 1961-62. The Appellate Assistant Commissioner partially allowed the appeal, accepting the set-off of this amount against an intangible addition of Rs. 34,000 made for the previous assessment year. Both the assessee and the Department appealed to the Tribunal, which disagreed with the deletion of the Rs. 30,000 addition. The Tribunal upheld the Department's contention, stating that the Rs. 34,000 withdrawn by the assessee should be considered as income for the assessment year 1961-62, contrary to the Appellate Assistant Commissioner's view.

The Department was dissatisfied with the Tribunal's direction for re-examination of the Rs. 30,000 addition and applied for a reference to the High Court under section 256(2) of the Income-tax Act, 1961. The High Court noted that a previous order had clarified that the Rs. 34,000 was assessable as income for the assessment year 1960-61, not 1961-62 as determined by the Tribunal. Therefore, the basis for the Tribunal's decision to re-examine the Rs. 30,000 addition was unfounded, as the High Court's previous ruling contradicted the Tribunal's interpretation.

Consequently, the High Court held that the Tribunal was not justified in directing the Income-tax Officer to determine the amount of peak credit, considering the Rs. 34,000 withdrawn from the bank as assessable in 1961-62. The High Court's decision was based on the conflict between the Tribunal's view and the High Court's clarification regarding the assessability of the Rs. 34,000 in different assessment years. The reference was answered accordingly, with no costs awarded.