1982 (8) TMI 24 - HC - Income Tax

Summary

Issues involved: Determination of whether the Appellate Tribunal was justified in deleting the amount of Rs. 1,45,000 assessed as income from undisclosed sources for the assessment year 1963-64.

Summary:
The High Court of Madhya Pradesh considered a case where the Appellate Tribunal had deleted an amount of Rs. 1,45,000 assessed as income from undisclosed sources. The Income Tax Officer (ITO) had treated the cash credits found in the account books as income from undisclosed sources, but the assessee contended that these credits represented income from earlier years already taxed. The Tribunal accepted the assessee's explanation based on the Supreme Court decision in Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457, emphasizing the need to ascertain the true nature of cash credits based on the specific facts of each case. The Tribunal noted that the assessee had disclosed additional income in previous assessments and had confessed to carrying on business in the name of a benamidar. Considering all circumstances, the Tribunal concluded that the cash credits were not income earned in the relevant year but from earlier years already taxed.

The Department argued that the assessee could not claim the cash credits as income from undisclosed sources after initially pleading their genuineness before the ITO. However, the High Court referred to the decision in Addl. CIT v. Ghai Lime Stone Co. [1983] 144 ITR 140 (MP), which allowed an assessee to present alternative pleas before the Appellate Assistant Commissioner (AAC) for the first time. The High Court distinguished this approach from the Madras decisions cited by the Department, namely S. Ahmed Khabeer Rowther v. CIT [1977] 106 ITR 984 and CIT v. Banarsilal Dhawan [1977] 109 ITR 360. Ultimately, the High Court ruled in favor of the assessee, upholding the Tribunal's decision to delete the assessed amount of Rs. 1,45,000 as income from undisclosed sources for the relevant assessment year 1963-64.