TMI Blog1972 (9) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal by special leave against the judgment of the High Court of Kerala in a reference under section 66(2) of the Indian Income-tax Act, 1922 (to be hereinafter referred to as " the Act "). The material facts of the case, as could be gathered from the statement of the case, may now be stated. One Sunkunni, belonging to the Ezhava community of South Malabar, had five sons by name Kannan Kunhi, Chathunni, Velayudhan, Pappu and Ramakrishnan. Kannan Kunhi is the eldest son. He was a permanent resident of Ceylon. He had a business in toddy in Ceylon in partnership with others. On August 17, 1950, a business in toddy was started in Kerala. The licence for this business was in the name of Kannan Kunhi. On the same day there was a credit entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t application was rejected by the Tribunal. Subsequently the assessee moved the High Court under section 66(2) of the Act and the High Court was pleased to direct the Tribunal to state a case and submit the question " whether, on the facts and in the circumstances of the case, the addition of Rs. 60,813 or any portion thereof as the income of the assessee family from undisclosed sources during the previous year ended March 31, 1951, relevant for the assessment year 1951-52 is valid and justified in law ? " The Tribunal accordingly stated the case and submitted the aforementioned question to the High Court. The High Court has answered that question in the negative and in favour of the assessee. Aggrieved by that decision, the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Ceylon and savings from agricultural property. This explanation did not receive any consideration by the Appellate Tribunal. All that it stated about the matter is contained in one sentence appearing in paragraph 37 of its order and it reads : ' The assessee had no proper and satisfactory explanation for the source of these amounts '. The Income-tax Officer dealt with this matter as follows : ' Other sources : Income from undisclosed sources. An amount of Rs. 46,563 has been brought into the books for the new toddy business. The assessee was asked to explain the nature and source of these funds. The explanation furnished is not at all satisfactory, and so I will treat this amount as income from undisclosed sources '. " B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation. That explanation has not been examined at all. Similarly the assessee's explanation that he was having income from the agricultural property has not been examined. The Appellate Assistant Commissioner also did not choose to examine the explanation given nor did the Tribunal care to go into that explanation. It just brushed aside that explanation with the observation : " that the assessee had no proper or satisfactory explanation for the source of these amounts ". In our opinion, the department authorities as well as the Tribunal had arbitrarily rejected the explanation given by the assessee. Under these circumstances we do not think that we will be justified in going into the niceties of the law, whether the High Court was justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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