1956 (5) TMI 37 - HC - Income Tax

Summary

Issues Involved:
1. Competence of a High Court reference on unraised or unconsidered points by the Tribunal.
2. Assessment of cash credits from undisclosed sources for a specific financial year.

Detailed Analysis:

1. Competence of a High Court Reference on Unraised or Unconsidered Points by the Tribunal:
The primary issue addressed was whether a reference to the High Court is competent on a point that was not raised before or considered by the Tribunal. The judgment emphasized that the jurisdiction of the High Court under Section 66 of the Indian Income-tax Act is advisory and limited. It was held that only questions of law that have been raised and dealt with by the Tribunal can be referred to the High Court. The judgment referenced several precedents to support this view, including the Full Bench decision in Seth Gurmukh Singh v. Commissioner of Income-tax, Punjab and the Division Bench judgment in Punjab Distilling Industries Limited v. Commissioner of Income-tax. The court concluded that a question must be raised, considered, and decided by the Tribunal before it can be referred to the High Court, thus answering the first question in the negative.

2. Assessment of Cash Credits from Undisclosed Sources for a Specific Financial Year:
The second issue involved whether cash credits, the nature and source of which were not satisfactorily explained and which surfaced in the financial year 1946-47, were properly assessed as the assessee's income from undisclosed sources for the assessment year 1948-49. The Tribunal had previously upheld the order of the Appellate Assistant Commissioner, who had partially accepted the assessee's explanations and made certain deductions. The Tribunal reduced the sum of Rs. 40,000 by Rs. 20,000 but upheld the rest of the Appellate Assistant Commissioner's order. The High Court examined whether the Tribunal's decision to assess these cash credits in the financial year 1946-47 for the assessment year 1948-49 was legally correct.

The judgment detailed the procedural aspects of appeals and references under the Income-tax Act, emphasizing that the Tribunal's powers are confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal. It was noted that the Tribunal cannot raise a question of law suo motu and must adhere to the prescribed form and time limits for applications under Section 66(1). The court ultimately held that the Tribunal's decision was consistent with the law and that the assessment of the cash credits was proper.

Conclusion:
The judgment provided a comprehensive analysis of the procedural and substantive aspects of references to the High Court under the Income-tax Act. It reinforced the principle that only questions of law that have been raised and decided by the Tribunal can be referred to the High Court. Additionally, it upheld the Tribunal's decision regarding the assessment of cash credits from undisclosed sources, affirming the legality of the assessment for the specified financial year.