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TMI Blog1968 (8) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 34. A fresh notice under section 34 was issued in October, 1951. On October 16, 1952, a revised assessment order was passed and the total income of the assessee was computed at Rs. 85,817 which included a sum of Rs. 49,696 as income from undisclosed sources. On March 31, 1953, the Income-tax Officer served on the assessee another notice under section 34 in respect of the same assessment year 1944-45. On March 18, 1954, a revised assessment was made in which was included a sum of Rs. 32,000 as the assessee's income from undisclosed sources, being the alleged investment of the assessee in the sarpat and bamboo business prior to February 18, 1944. The total income of the assessee was computed at Rs. 1,17,817. The income from undisclosed source which came to be included in this computation amounted to Rs. 81,696. The assessee filed appeals against the assessment order dated October 16, 1952, contending, inter alia, that there had been no escapement of any income and that in any case the first revised assessment dated October 16, 1952, was barred by time under section 34(1)(b) of the Act as the provisions of section 34(1)(a) did not apply. The second revised assessment wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see in that business. were his revenue income, he could not have proceeded under section 34 because the income could not have been assessed in the assessment year 1945-46. It could be assessed in the assessment year 1944-45. The income appearing by way of deposits in the sarpat business could be assessed only as income from some undisclosed source and the previous year for income from undisclosed source for which the assessee had not elected any previous year would be the financial year. The investments were made in the financial year relevant for the assessment year 1944-45 and were not made in the financial year relevant for the assessment year 1945-46. The Income-tax Officer had, therefore, no choice but to resort to section 34 of the Act. " The Tribunal, however, found, as is apparent from its order dated March 21, 1957, that the unexplained investment which was really the income of the assessee from undisclosed source was Rs. 27,875 instead of Rs. 32,000. The Tribunal called for a report on certain other matters with which we are not concerned and which were disposed of by a subsequent order dated August 31, 1958. On a petition filed under section 66(1) of the Act the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Officer had knowledge of the assessee's interest in the firm, Ramnarain Durga Prasad, on May 12, 1947, when the assessment for the year 1945-46 was made. Thus, the escapement, if any, has not resulted from any default or omission on the part of the assessee. The High Court had disposed of this contention by observing that there was no finding in the order of the Appellate Tribunal that the income from the said firm was not known at the time when the return was filed. It was admitted that the return filed by the assessee did not disclose that the assessee enjoyed income from his share in that firm. It was no longer open to the assessee to press this contention particularly when the burden lay upon him to show that the Income-tax Officer was aware that the assessee received income from his share in that firm. Mr. Manchanda has not been able to persuade us to take a different view in the matter. The real challenge on behalf of the assessee before us has been to the amount which was included as income from undisclosed source in the revised assessment order made in March, 1954, being the capital which had been invested in the business of sarpat and bamboos. This amount, as fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bishan Dutt v. Commissioner of Income-tax the previous year of the assessee for the assessment year 1945-46 in respect of his cloth business was July 4, 1943, to June 26, 1944. In the account books of that business for that period a sum of Rs. 9,800 appeared as credit in the suspense account on September 2, 1943. The Income-tax Officer, in the absence of a satisfactory explanation, held this amount to be income from undisclosed source. The view expressed by the High Court was that there being nothing to show that any accounts in respect of the undisclosed source of income existed or were maintained or that the assessee exercised any option under section 2(11)(i)(a) in respect of such accounts, the only course open to the department was to tax his income from undisclosed source on the basis of the financial year being the previous year. On that basis the amount could be taxed only for the assessment year 1944-45 and not for the assessment year 1945-46. On similar facts the Calcutta High Court expressed the same view in Jethmal Lakhani v. Commissioner of Income-tax. By now it appears to be well settled and no decision, even of a High Court, has been cited to the contrary that in suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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