1958 (3) TMI 70 - HC - Income Tax

Summary

Issues:
1. Whether the Income-tax Officer can add two separate amounts to the estimated profits of the assessee for the year.
2. Whether undisclosed profits from known and unknown sources can be added together to the estimated profits of the assessee.
3. Whether the objection not raised before the lower authorities can be considered at a later stage.

Analysis:
1. The case involved a dispute regarding the addition of amounts to the estimated profits of the assessee for the year. The Income-tax Officer had made two additions: one for estimated profits and the other for undisclosed cash credits. The Appellate Assistant Commissioner modified the estimates, but the Tribunal upheld the additions. The court held that if the additions are traceable to two distinct heads, one from the business activities and the other from undisclosed sources, they are legally sustainable. The court distinguished cases where the cash credits were part of the undisclosed profits of the same business, stating that such additions would not be permissible.

2. The judgment referenced cases where the Income-tax Officer added amounts for undisclosed profits from known and unknown sources. The court highlighted that if the Income-tax Officer had already estimated undisclosed profits of the business and then added a further sum as profits from undisclosed sources, both additions could be justified. The court rejected the argument that adding cash credits to the estimated profits was impermissible if they were from the same business, emphasizing the distinction between undisclosed income from known and unknown sources.

3. Additionally, the court addressed the issue of raising objections at different stages of the proceedings. The court noted that the objection regarding the addition of amounts was not raised before the lower authorities but was brought up later. The Tribunal had already considered and rejected similar contentions. The court emphasized that for a question of law to arise, it must be raised before the Tribunal. Since the objection was not raised at the appropriate stage, the court held that there was no scope to consider it at a later stage.

In conclusion, the court answered the questions in the affirmative, ruling against the assessee and directing them to pay the costs of the Department. The judgment provided a detailed analysis of the principles governing the addition of estimated profits and undisclosed amounts, emphasizing the importance of raising objections at the appropriate stages of the proceedings to have legal questions considered.