9911796707
TMI Blog1982 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's income from undisclosed source ? The facts are not at all in controversy on the statement of the case submitted by the Tribunal. The matter relates to the assessment year 1959-60, for which the relevant accounting period was Diwali year ending Sambat 2015. The assessee is the karta of a Hindu undivided family (for short, " HUF ") which carries on business in cloth. The assessment in the instant case was completed under s. 147(a)/143(3) of the Act. The assessment, inter alia, included a sum of Rs. 24,621 added back as the assessee's income from undisclosed sources. The total income computed was Rs. 26,501. A copy of the assessment order has been marked annex. A forming part of the statement of the case. The assessee went up in appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 15,521 could not also have been included in the proceedings for the assessment year 1959-60 more or less on the same reasoning, on the basis of which the AAC had excluded the sum of Rs. 9,100. It was further urged on behalf of the assessee that the credit being on the first day of the accounting period could not, by any stretch of imagination, be treated as the income of that year. On behalf of the Revenue, it was contended before the Tribunal that the proceedings being related to the assessment year 1959-60 which were commenced after the new Act (1961 Act) had come into force, the terms of s. 297(2)(d)(ii) of the Act would apply. It was argued that the case would be covered by s. 68 of the Act, inasmuch as the credit appeared in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barking upon the question as to whether the provision of s. 68 of the Act is merely a machinery section by way of procedure or affects substantive rights/liabilities of an assessee, we shall advert to later. The first question which we propose to deal with is as to whether the Tribunal was right in its approach in saying that since the assessee's income for the whole year had been Rs. 1,057 only and the ITO had not made any addition by way of extra profit though certain disallowances out of expenses had been made, the assessee could not possibly have earned a sum of Rs. 15,521 in the course of one day and that whether the Tribunal was justified in deleting the addition of the aforesaid amount. While discussing this aspect of law, it may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y holding that it was a matter of mere procedure or the machinery for the purpose of assessment and not a substantive right or liability either conferred on or chargeable against the assessee. Cases in this regard are unanimous and no decision has struck any discordant note. In this connection, reliance has been placed in the case of Bhogilal Virchand v. CIT [1981] 127 ITR 591 (Bom), wherein it was held by a Bench of the Bombay High Court that the effect of s. 68 of the Act is that statutorily a sum which is found credited in the books of the assessee maintained for any previous year in respect of which either the assessee offers no explanation or the explanation offered by him is not accepted by the ITO, is to be charged to income-tax as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the new Act which are made applicable are those relating to the machinery of assessment only. When an identical question was raised for consideration before a Bench of the Karnataka High Court, it was held in the case of CIT v. L.N. Satyanarayan Setty [1981] 129 ITR 226 (Kar), that s. 68 could not be invoked with a view to include the income from undisclosed sources which arose in August, 1958, in the assessment year 1960-61 and the logic proceeded upon the same lines that s. 68 was in the nature of a substantive provision in the Act. In the case of Govinddas v. ITO [1976] 103 ITR 123 (SC), it was held by the Supreme Court that the words " all the provisions of this Act shall apply accordingly " in cl. (ii) of s. 297(2)(d) of the Act m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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