TMI Blog1957 (3) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... unal show that the question of adding an amount as income of the assessee from an undisclosed source arose first in connection with the assessment of income-tax for the assessment year 1940-41 and the assessment of the excess profits tax for the chargeable accounting period 1st September, 1939, to 7th April, 1940. In that year the assessee was first assessed for the purpose of income-tax and the assessment being a best judgment assessment after applying section 13(2) of the Income-tax Act, the Income-tax Officer estimated a sum of ₹ 75,000 as secreted income of the assessee from undisclosed sources. In the corresponding excess profits tax assessment this income of ₹ 75,000 was held to be income from business by the Excess Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 in the income-tax assessment was made on two grounds. One ground was that in spite of the fact that there had been a best judgment assessment in the preceding year 1940-41 the assessee had again failed to produce satisfactory account books so that this year also a best judgment assessment had to be made and the assessee did so knowing that he might be placed this year also in the same position as he was in the preceding year. The second ground was that in the previous year, the amount estimated was ₹ 75,000 as income from undisclosed sources and it could be reasonably presumed that the same amount must have been the income from undisclosed sources during this succeeding year also. Thereafter, there was assessment of excess profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer in the following: Having regard to all the circumstances of the case, the income from undisclosed sources is estimated to be ₹ 75,000. Setting off ₹ 20,033 for the excess profits tax liability it is reduced to ₹ 54,967. There was in the order of assessment of income-tax no finding that this amount was income from business or from any other particular source. When the assessment of excess profits tax was being made by the Excess Profits Tax Officer it was in these circumstances necessary for him to indicate what led him to hold it to be the income from business. No such indication is given and in fact it appears that the Excess Profits Tax Officer wrongly interpreted the order of assessment of income-tax as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not liable to excess profits tax and yet was liable to income-tax. When holding that the assessee had an income of ₹ 75,000 in the subsequent year, which is now in question, it was in these circumstances necessary for the Income-tax Officer or the Income-tax Appellate Tribunal to indicate why it was held that this amount was income from business in this year when the similar amount in the previous year had been assessed to tax on the basis that it was income from some source other than business. This leads to the conclusion that the finding given this year that it was income from business was entirely arbitrary and without any material and in fact in contradiction with the material provided by proceedings of assessment of the precedi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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