TaxTMI 
TaxTMI 
1968 (10) TMI 21
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....ng to the assessee and the second was that its confiscation resulted in a loss which should be set off against the income from undisclosed sources, if any. But in the appeal preferred by the Income-tax Officer, the Income-tax Appellate Tribunal reversed the finding of the Appellate Assistant Commissioner and substituted a finding that the gold was acquired by the assessee out of its income from undisclosed sources. But it directed the addition of a smaller sum of money amounting to Rs. 48,880 which was the value of the gold calculated at a rate lower than the market rate. The assessee then made an application under section 66(1) to the Tribunal in which he wanted six questions to be referred to this court. The Tribunal dismissed that application. But, on an order made by this court under section 66(2), the Tribunal has now referred to this court two questions of law which read : " (1) Whether there was any material before the Tribunal to come to the conclusion that the gold which was the subject-matter in this case was that of the firm ? and (2) Whether the value of the gold which had been confiscated could be included in computing the total income of the assessee for the releva....
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....come of the assessee relevant to the assessment year 1959-60, could not have been so included since its inclusion was possible only with respect to the assessment year 1958-59. What we have said so far would, if nothing else could be said about it, produce the answer to the second question referred to us, in favour of the assessee. But Mr. Rajasekhara Murthy appearing for the department contended that the second question which is before us did not arise out of the order of the Tribunal, and so could not have been either referred by the Tribunal to us under section 66(1) or directed to be referred by this court under section 66(2). It was maintained that the argument that the income could not have been included in the income relevant to the assessment year 1959-60 was not raised before the Tribunal when, it heard the appeal, and so, was not decided by it, and that therefore the question, though a question of law, did not arise out of the order of the Tribunal. We do not agree. The second question before us does not raise any new question of law. It raises only a new aspect of the question of law which was before the Tribunal. What the Tribunal had to decide was whether the income ....
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....s lost as a result of enemy action could when the assessee received from Government compensation for such loss be properly included in the income of the assessee. Such inclusion was possible only under the fourth proviso to section 10(2)(vii) of the Income-tax Act. But that proviso was not in the Act on April 1, 1946, but came into effect only on May 4, 1946, and was not retrospective. It was indisputable that except under that new proviso that sum of money which was included in the assessee's income could not have been included. But that contention was not raised before the Appellate Tribunal nor was any reference made to it in the question referred by the Tribunal to the High Court. But the High Court of Bombay allowed that contention to be raised for the first time on the hypothesis that that question of law was implicit in the question of law which arose from the Tribunal's order. The Supreme Court in the appeal preferred by the Commissioner of Income-tax repelled the argument that the question of law was wrongly allowed to be raised by the High Court for the first time in the reference before it, and, in that context the Supreme Court said this : " But the appellant contends....
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....f of the department did not raise any new question which was not before the Tribunal, but presented a new aspect of a question which was in truth before the Tribunal and had been decided by it. The third decision of the Supreme Court which is on all fours with the case before us is Raja Sharda Narain Singh v. Commissioner of Income-tax. That was a case in which the assessee's father was a big zamindar and after his death in the year 1944 it was noticed by the Income-tax Officer that the assessee had been credited with a sum of two lakhs of rupees in the estate treasury of the assessee. The Income-tax Officer who was not satisfied with the explanation furnished by the assessee included that sum of money in the total income, and, although the Appellate Assistant Commissioner excluded that sum of money, the Appellate Tribunal restored the order of the Income-tax Officer. The assessment year was 1949-50 and the accounting year of the assessee commenced on September 28, 1947, and extended up to September 30, 1948. But since the deposit had been made on November 3, 1947, and the Tribunal had recorded a finding that what was added to the assessee's income was income from undisclosed sour....