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Issues:
1. Whether the Department was entitled to include the amount deposited by Kishundutt as secreted profits of the firm? 2. Whether the addition of the sum amounted to double taxation? Analysis: The case involved an application under Section 66(2) of the Income-tax Act, where the Appellate Tribunal was asked to state a case regarding the inclusion of a certain amount in the income of the assessee. The assessee, a Hindu undivided family, had shown income from property and business in its return. The Income-tax Officer assessed the income from property and the profits of the business at flat rates due to unreliable books. The assessee claimed certain losses from speculative transactions to be set off against the income. Among these losses was an amount of Rs. 3,500, alleged to be deposited by Kishundutt. The Income-tax Officer treated this amount as undisclosed profits, leading to a dispute whether it constituted double taxation. The Assistant Commissioner found that the amount of undisclosed profits was Rs. 3,500, reduced from an initial claim of Rs. 4,800, as the latter was deposited in the month prior to the relevant accounting year. The assessee argued that including this amount as undisclosed profits would result in double taxation since it was already part of the business profits assessed at a flat rate. However, the Income-tax authorities found that the explanation provided by the assessee regarding the deposits by Kishundutt was untrue. The authorities considered the amount as gains from speculative transactions, supported by circumstantial evidence and the presence of benami accounts. The judgment clarified that the inclusion of the Rs. 3,500 as undisclosed profits was not a case of double taxation, as the amount was not previously accounted for as profits from ordinary trading transactions. The Income-tax Officer was justified in attributing this amount to gains from speculative transactions based on the evidence. Therefore, the question was answered in favor of the Income-tax Department, and they were awarded costs of Rs. 250. Both judges, AGARWALA, C.J., and MEREDITH, J., agreed on the decision, and the reference was answered accordingly.
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