1981 (4) TMI 80 - HC - Income Tax

Summary

Issues:
1. Justification of addition of Rs. 80,000 as income from other sources in assessment year 1960-61.
2. Disallowance of interest claim on the said amount in assessment year 1961-62.

Analysis:
The judgment by the High Court of Orissa pertains to a case where the Income-tax Appellate Tribunal referred a question to the court regarding the addition of Rs. 80,000 as income from other sources in the assessment year 1960-61 and the disallowance of interest claim on the same amount in the assessment year 1961-62. The assessee, a registered firm, had filed returns for both years and claimed deduction for interest on loans in the subsequent year. However, during assessment proceedings, the Income Tax Officer (ITO) identified cash credits in the assessee's accounts and a letter was submitted by the assessee accepting the peak amount of Rs. 80,000 as income from unexplained sources without objection. The Tribunal upheld the addition and disallowed the interest claim.

The assessee raised four contentions challenging the Tribunal's decision, including lack of opportunity to address the material used by the Tribunal, late submission of assessment records, failure to produce relevant materials supporting the cash credits' genuineness, and improper disposal of a petition. The High Court noted that the Tribunal's order was passed under a different section of the Income Tax Act, and the reference made by the court might not have been maintainable. However, even if the references were valid, the court found no merit in the assessee's contentions.

The High Court emphasized that the assessee had voluntarily accepted the addition of the peak amount and requested leniency in penalty imposition. The court held that the acceptance of the letter by the assessee precluded it from disputing the assessment later. The interconnected nature of the cash credits and interest claim further supported the Tribunal's decision. The court rejected the assessee's argument of prejudice, stating that the letter was known to the assessee and had been a focal point throughout the proceedings.

In conclusion, the High Court answered the posed question in the negative, affirming the Tribunal's decision to uphold the addition of Rs. 80,000 as income from other sources in the assessment year 1960-61 and the disallowance of interest claim on the same amount in the assessment year 1961-62. The revenue was awarded costs, and a hearing fee was assessed. Both judges, J. K. Mohanty and R. N. Mishra, concurred with the judgment.