1974 (6) TMI 13 - HC - Income Tax

Summary

Issues:
1. Assessment of income from undisclosed sources for the assessment year 1947-48.
2. Existence of evidence or material to support the Tribunal's finding.
3. Applicability of the income assessment to the correct accounting year.

Analysis:

The High Court of Bombay was tasked with determining three questions of law referred by the assessee under section 66(2) of the Indian Income-tax Act, 1922. The primary issue was whether there was sufficient evidence to support the Tribunal's conclusion that a sum of Rs. 1,38,000 constituted the appellant's income from undisclosed sources for the assessment year 1947-48. The contention raised was that this amount should have been assessed for the previous year, 1946-47, based on the declaration made by the assessee under the High Denomination Bank Notes (Demonetisation) Ordinance, 1946. The Income-tax Officer had assessed the sum of Rs. 1,38,000 as income from undisclosed sources for the year 1947-48, which was challenged by the assessee on the grounds of incorrect assessment year.

The court examined whether the sum in question could be assessed for the year 1947-48 or if it should have been assessed for the preceding year, 1946-47, based on the declaration made by the assessee. The court referred to the Supreme Court's decision in Baladin Ram v. Commissioner of Income-tax, establishing that income from undisclosed sources should be assessed based on the ordinary financial year. The court concluded that there was no evidence or material on record to support the assessment of the sum of Rs. 1,38,000 as income from undisclosed sources for the assessment year 1947-48. Consequently, the first question was answered in the negative, rendering questions 2 and 3 moot in light of the primary issue's resolution.

In light of the court's decision on the primary issue, the other questions raised by the assessee did not require further consideration. The court emphasized that the assessee's argument regarding the correct assessment year was valid based on settled legal principles. As a result, each party was directed to bear its own costs, considering the late raising of the issue by the assessee during the proceedings. The judgment highlighted the importance of adhering to established legal principles in income assessment cases and the significance of evidence and material supporting such assessments.