1967 (4) TMI 19 - SC - Income Tax

Aspect of the question not considered by the Tribunal but it has considered the larger part of the question - appeal of assessee is allowed

Summary

Issues:
1. Refusal to direct the Income-tax Appellate Tribunal to state a case under section 66(2) of the Indian Income-tax Act, 1922.

Analysis:
The Supreme Court heard an appeal against the judgment of the Allahabad High Court, which had refused to direct the Income-tax Appellate Tribunal to state a case under section 66(2) of the Indian Income-tax Act, 1922. The case involved the assessment of an appellant's income, specifically focusing on the inclusion of a sum of Rs. 2 lakhs in the total income of the appellant-assessee for the assessment year 1949-50. The Income-tax Officer contended that the sum was the revenue income of the appellant from undisclosed sources. The Appellate Assistant Commissioner initially excluded the sum from assessment but was later overruled by the Appellate Tribunal. The Tribunal found that the sum was indeed the revenue income of the appellant for the relevant accounting year. The appellant sought to challenge this decision by applying under section 66(1) of the Income-tax Act, but the Tribunal rejected the application on the grounds that the findings were factual. The appellant then approached the High Court under section 66(2) with specific questions related to the assessment year and the undisclosed income source. The High Court rejected the application, leading to the appeal before the Supreme Court.

The appellant's counsel argued that questions regarding the assessment year and the source of undisclosed income should have been referred. The Supreme Court agreed that questions related to the assessment year and the nature of the undisclosed income should have been considered for reference. The Court noted that the Appellate Tribunal had addressed the issue of the income's relevance to the accounting year but had not specifically considered the aspect of the undisclosed income source. Despite the absence of explicit mention of certain aspects in the Tribunal's order, the Court held that if an aspect of a question arises from the Tribunal's decision, it can be subject to reference. The Court found merit in the appellant's argument that serious legal questions arose from the Tribunal's order, necessitating a reference to the High Court.

In conclusion, the Supreme Court allowed the appeal, directing the Appellate Tribunal to refer the question of whether the sum of Rs. 2 lakhs was assessable in the relevant assessment year based on the accounting year and the source of the undisclosed income. The Court also ordered that the costs incurred in the appeal would be part of the overall costs in the case.