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Issues involved:
The judgment addresses the questions of whether the assessment of a sum of Rs. 10,000 in the hands of the assessee as income from undisclosed sources was correct, and whether this amount could be brought to tax in the assessment year 1967-68 despite the provisions of section 68 of the Income-tax Act. Assessment Year 1967-68: The court held that the assessment of the sum of Rs. 10,000 in the hands of the assessee as income from undisclosed sources was correct based on the Supreme Court judgment in Jamnaprasad Kanhaiyalal v. CIT [1981] 130 ITR 244, which overruled the Delhi High Court decision in Rattan Lal v. ITO [1975] 98 ITR 681. Application of Section 68: The issue revolved around whether the amount of Rs. 10,000 could be taxed in the assessment year 1967-68 or 1966-67. The wife disclosed the amount under the Voluntary Disclosure Scheme in 1966, and the credit was made in the assessee's book. The AAC and the Tribunal concluded that the amount was taxable in the assessment year 1966-67, as it was in existence in March 1966 and not earned during the financial year related to 1967-68. Explanation and Taxation Year: The Tribunal accepted the explanation that the amount existed in March 1966, and therefore, could not be taxed in the assessment year 1967-68. The court emphasized that if the explanation is satisfactory, Section 68 does not apply, and the amount should be taxed in the correct year based on the facts found in each case. Conclusion: The court answered the questions by affirming that the amount was taxable in the hands of the assessee but in the correct assessment year of 1966-67, not 1967-68. The judgment highlights the importance of a satisfactory explanation for cash credit entries and the relevance of determining the correct taxation year based on the facts of the case.
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