1987 (3) TMI 166 - AT - Income Tax

Summary

Issues Involved:
1. Assessment Year for Rs. 83,000
2. Applicability of Section 69A vs. Section 68
3. Nature and Source of Rs. 83,000

Issue-wise Detailed Analysis:

1. Assessment Year for Rs. 83,000:
The primary issue in this appeal is whether the amount of Rs. 83,000 should be assessed in the assessment year 1983-84 or 1984-85. The Income-tax Officer (ITO) held that the cash of Rs. 83,000 was income assessable under section 69A and it fell for assessment in 1983-84. The Commissioner of Income-tax (Appeals) and the Tribunal, however, found that the amount should be assessed in 1984-85, as it was an undisclosed receipt from a disclosed business, and thus the previous year relevant to that known source must be adopted.

2. Applicability of Section 69A vs. Section 68:
The assessee argued that the credit appeared in the books of account on 14-12-1982, falling in the accounting period Diwali 1982 to Diwali 1983, and hence Section 68 should apply, making the assessment year 1984-85. The ITO, however, invoked Section 69A, asserting that the financial year would be the accounting year. The Tribunal agreed with the department that Section 68 would not be applicable since the partner's admission established that the cash was available on 13-12-1982, making the book entry irrelevant. Therefore, Section 69A was rightly invoked.

3. Nature and Source of Rs. 83,000:
The ITO inferred that the cash belonged to the firm and was its undisclosed income, accumulated from unaccounted sales. The Commissioner of Income-tax (Appeals) and the Tribunal found that the amount represented the suppressed sales of the business. The Tribunal noted that the assessee offered an explanation that the cash represented sales not recorded in the books, and this explanation was accepted as the nature and source of the money. The Tribunal emphasized that the cash was an undisclosed receipt of a disclosed business, and thus, the previous year for the suppressed receipts must be the previous year of the business itself, i.e., Diwali 1982 to Diwali 1983, relevant to the assessment year 1984-85.

Conclusion:
The Tribunal concluded that the amount of Rs. 83,000 should be assessed in the assessment year 1984-85, as it was an undisclosed receipt from a disclosed business, and the previous year relevant to that known source must be adopted. The appeal was allowed in part.