1967 (4) TMI 212 - SC - Income Tax

Summary

Issues:
1. Jurisdiction of the Income-tax Officer to issue notice under section 34 of the Act.
2. Assessment of income from undisclosed sources for the year 1950-51.
3. Justification of reducing the addition of income from undisclosed sources from Rs. 1,37,000 to Rs. 50,000 by the Appellate Tribunal.
4. Compliance of the Tribunal with the judgment of the High Court.

Jurisdiction of the Income-tax Officer:
The appellant, a trader, was taxed under the Mysore Income-tax Act for the assessment years ending with 1949-50. The Income-tax Officer issued a notice of reassessment under section 34 of the Indian Income-tax Act for bringing to tax the amount disclosed by the books of account of the assessee for the assessment year 1950-51. The High Court dismissed the petition challenging the notice, which was confirmed in appeal. The Income-tax Officer completed the assessment for 1950-51 and brought Rs. 1,37,000 as income from undisclosed sources. The contention that the notice was without jurisdiction was rejected.

Assessment of Income from Undisclosed Sources:
The Income-tax Officer assessed Rs. 1,37,000 as income from undisclosed sources for 1950-51. The assessee's claim of assets exceeding Rs. 1,55,000 from various sources was rejected. The Appellate Tribunal modified the addition to Rs. 50,000, stating that the assessee failed to explain the source of Rs. 1,37,000 satisfactorily. The Tribunal's decision was based on the offer made by the assessee's counsel, which was deemed unsatisfactory by the High Court, emphasizing that surmises have no place in judicial proceedings.

Reduction of Addition by the Appellate Tribunal:
The Tribunal reduced the addition of income from undisclosed sources from Rs. 1,37,000 to Rs. 50,000. The High Court criticized the Tribunal's decision, stating it was based on no evidence and surmises. The Tribunal's judgment lacked clarity and consistency, relying solely on the offer made by the assessee's counsel. The High Court highlighted the Tribunal's duty to decide based on facts and law, not conjectures or speculation.

Compliance with High Court Judgment:
The High Court directed the Tribunal to dispose of the case conformably with its judgment. The Tribunal was instructed to hear the parties and decide the appeal based on evidence and law. The Tribunal's previous order was considered speculative and lacking reasoning. The High Court emphasized the Tribunal's duty to reconsider the case after hearing both parties and in accordance with the law. The appeal was dismissed, with costs awarded to the Commissioner.