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TMI Blog1976 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... From the statement of the case the following facts appear: The relevant assessment year is 1964-65. The assessee, M/s. Assam Forest Products (P.) Ltd., is a limited company. The original assessment for the assessment year 1964-65 was completed on May 26, 1965, under section 143(3)/147 of the Act and the total income was assessed at Rs. 1,77,460. The assessee introduced in its business a sum of Rs. 60,000 purporting to be a loan from M/s. Surekha Jute Company. The Income-tax Officer has pointed out that enquiries were made subsequent to the completion of the original assessment proceedings and it was found that there was no such company as Surekha Jute Company. On further enquiries it was found that there was a jute concern styled, Surekha Jute Company, owned by Bidyananda Surekha. The Income-tax Officer also found on enquiries that the said credit in the books of the assessee was not genuine but the amount represented concealed income of the assessee. The Income-tax Officer held that the assessee did not disclose the real nature of the source of the said amount and thus by omission and failure on the part of the assessee to disclose fully and truly all material facts necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the records that the balance-sheet showed unsecured loan of Rs. 60,000 from M/s. Surekha Jute Company Ltd. Later on, the Income-tax Officer discovered that there was no such company called M/s. Surekha Jute Company Ltd., but one Bidyananda Surekha was doing business under the name and style, Surekha Jute Company. The Appellate Assistant Commissioner, therefore, held that the correct material facts were not disclosed before the Income-tax Officer at the time of the original assessment, inasmuch as the assessee had given a false name, namely, M/s. Surekha Jute Company Ltd., which was subsequently found to be a bogus company. The Appellate Assistant Commissioner, therefore, held that the proceedings were validly started under section 147(a) of the Act. The Appellate Assistant Commissioner also found that the credit of Rs. 60,000 was made in a wrong name and obviously was not loan from an outsider. He has, therefore, held that it was rightly treated as income of the assessee from undisclosed sources. Thus, the assessee's appeal was dismissed by the Appellate Assistant Commissioner. The assessee then preferred an appeal from the order of the Appellate Assistant Commissioner bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance with the provisions of sub-section (3) of section 142 of the Act and on that ground the Tribunal set aside the order of the Appellate Assistant Commissioner relating to the confirmation of cash credit of Rs. 60,000 and directed the Appellate Assistant Commissioner to make enquiry on the lines indicated in its order. On the above facts, the above-mentioned two questions of law have been referred. Section 147(a) of the Act reads as follows: "47. Income escaping assessment.-If- (a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or ...... he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year) ........." In the instant case, the relevant asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that according to ledger folio No. 262, cash loan of Rs. 60,000 was taken from Surekha Jute Co. Ltd., on December 20, 1963, and interest was payable from December 20, 1963, to December 31, 1963, to the extent of Rs. 150 and thus the balance came to Rs. 60,150. Thus, even in the examination note the Income-tax Officer believed the loan to be from Surekha Jute Co. Ltd. It appears that as the loan was shown to have been taken from Surekha Jute Co. Ltd., the Income-tax Officer did not feel the necessity of making further enquiry and accepted the loan as genuine and it was due to this that in the original assessment this amount was not treated as income from undisclosed sources. It appears that enquiries were made subsequent to the completion of the original assessment proceedings and the Income-tax Officer found that there was no such company as Surekha Jute Co. Ltd., and, on enquiry, the Income-tax Officer also found that there was a jute concern styled, Surekha Jute Co., owned by Shri Bidyananda Surekha." The Tribunal also has observed: " From the aforesaid documents, it is evident that after the report and statement of account for the year ended 31st December, 1964, was prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a duty to disclose fully and truly all material facts necessary for his assessment. In the instant case, the printed balance-sheet, which is generally relied upon by the authorities, shows that this unsecured loan of Rs. 60,150 was taken from Surekha Jute Company Ltd. and the Income-tax Officer cannot be blamed to have shut his eyes if he accepts this item as genuine on seeing it on the printed balance-sheet. If there was any mistake, that is, if Surekha Jute Company Ltd. has not been correctly printed in the balance-sheet but it should have been Surekha Jute Company, then it was the duty of the assessee to point it out at the time of assessment. Now, the argument that since in their ledger the particular loan was shown in the account of Surekha Jute Company, the Income-tax Officer ought to have accepted Surekha Jute Company Ltd. as shown in the balance-sheet, as Surekha Jute Company cannot absolve the assessee from the duty of disclosing fully and truly all material facts necessary for its assessment which would debar initiation of the proceeding under section 147(a) in the instant case. Putting definitely wrong things in the balance-sheet which is very likely to mislead and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted that the interest due on this loan of Rs. 60,000 in subsequent years were paid by cheques, etc. But it should be remembered that the reference court is not an appellate court and the findings of fact arrived at by the Tribunal in its order are binding on the reference court and there cannot be reappreciation of evidence by the reference court in the light of subsequent findings of the Tribunal in subsequent assessment orders. Though the Tribunal held that the initiation of the proceeding under section 147(a) was valid, it held that addition of Rs. 60,000, as sustained by the Appellate Assistant Commissioner relating to the cash credit in question, was unjustified for non-compliance of section 142(3) and accordingly it set aside the order of the Appellate Assistant Commissioner relating to the confirmation of cash credit of Rs. 60,000. The Tribunal also directed the Appellate Assistant Commissioner to make further enquiry regarding this sum of Rs. 60,000 on the lines indicated in its order. The Tribunal has held that there was no sufficient material before it to decide whether the loan of Rs. 60,000 was genuine or spurious. The Tribunal also has held that in the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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