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TMI Blog1982 (2) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... distributable surplus thus left was Rs. 1,36,277. The statutory percentage for declaration of dividend was 50 per cent. and on this basis the assessee-company should have distributed dividends amounting to Rs. 68,138. However, the actual amount distributed as dividend was Rs. 60,278 resulting in a shortfall of. Rs. 7,860 in the dividend distribution according to the ITO. We may mention here that, although there is to specific statement to that effect in the statement of the case made by the Tribunal, the order of the ITO shows that a sum of Rs. 10,000 was added to the income of the assesses by the ITO as income from undisclosed sources. This amount of Rs. 10,000 represented the amount claimed by the assessee to be a loan, taken on hundi by the assessee. The assessee failed to prove the correctness of this entry in its books of account nor did the alleged creditor come forward to give evidence and hence the amount was treated as the assessee's income from undisclosed sources. The ITO determined the total income of the assessee at Rs. 2,90,000 by his order dated 3lst March, 1962. On an appeal by the assessee, certain additional deductions were allowed by the AAC, but the addition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from this decision of the Tribunal that the aforesaid question has been referred to us. Before considering the submissions advanced before us, we propose to take note of the relevant provisions of law at this stage. Section 23 of the said Act deals with assessment. Section 23A deals with the power to assess companies to super-tax on the undistributed income in certain cases. The relevant portion of s. 23A(1) reads as follows : Where the Income-tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any cornpany within the twelve months immediately following the expiry of that previous year are less than the statutory percentage of the total income of the company of that previous year as reduced by (a) the amount of income-tax and super-tax payable by the cornpany in respect of its total income, but excluding the amount of any super-tax payable under this section (b) the amount of any other tax levied under any law for the time being in force on the company by the Government or by a local authority in excess of the amount, if any, which has been allowed in computing the total income;... the Income-tax Officer shall, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) made on March 30, 1965, levying additional super-tax in respect of the shortfall of Rs. 7,860 by way of dividend distribution, had not been appealed against by the assessee and the said order had become final. It was submitted by him that in view of this, it must be assumed that the said order is a valid order and the ITO was perfectly entitled to rectify the same under s. 154 of the I.T. Act, 1961, as, according to him, the said order disclosed the errors on the face of it. The second submission of Mr. Joshi was that, in the present case, the assessee was not entitled to a notice as contemplated by sub-s.. (2) of s. 23A of the said Act, as the assessee had omitted to disclose its income fully and truly in the returns filed by it. It was submitted by him that as the amount of Rs. 10,000 had been added to the income of the assessee by the ITO as income from undisclosed sources, in the circumstances set out hereinbefore and the said addition had not been disturbed by the AAC, the only conclusion could be that the assessee had not disclosed the true income in the return; and hence the assessee was not entitled to the notice contemplated under sub-s. (2) of s. 23A of the said Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xt to the question as to whether the assessee was entitled to a notice as contemplated under sub-s. (2) of s. 23A of the said Act. In this regard, we have already pointed out that the order of assessment made by the ITO clearly shows that the case of the assessee that he had taken a hundi loan of Rs. 10,000 from one Kanhaiyalal Hirachand has been disbelieved as the assessee failed to prove the correctness of the entry made in its books in respect of this loan and the said amount was treated by the ITO as the assessee's income from undisclosed sources. This addition has not been disturbed by the AAC on an appeal preferred by the assessee. It will, therefore, have to be considered as to whether, in these circumstances, it could be said that the assessee had omitted to disclose its income fully and truly, as contemplated under cl. (iii) of sub-s. (2) of s. 23A of the said Act. If that was the case , the assessee would not be entitled to the benefit of the notice contemplated under the said subsection. Now, we find that this question, although it clearly arose on the record, has not been considered by the Tribunal at all. It appears that both the AAC and the Tribunal proceeded on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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