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TMI Blog1970 (11) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that past intangible additions made in the case of an assessee should be taken into account in considering the unexplained investment made by it ?" The assessment year in question is 1964-65, the relevant previous year being the financial year ending March 31, 1964. The facts relevant for returning the answer to the questions referred to us, lie in a narrow compass. The assessee is a Hindu undivided family, carrying on business in hardware pipes, etc. It has its head office it Ladwa and a branch at Yamuna Nagar. A partial partition, of the family was effected on March 31, 1964, whereby the capital of both the shops was pooled together and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of partition. In pursuance of that, direction the Income-tax Officer passed an order under section 171 of the Act recognising a partial partition of the family with effect from April 1, 1964. He also recorded the finding that the capital of Rs. 92,245 had been divided among the members of the family after setting apart a sum of Rs. 12,235 for the marriage of the minor daughters in the family. This amount of Rs. 92,245 included the sum of Rs. 51,463.45 contributed by Yamuna Nagar branch as capital. As before, he treated the sum of Rs. 20,004.35 as the assessee's income from undisclosed sources and adding that amount to the disclosed income an order of assessment was made on December 31, 1966. The assessee filed an appeal before the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear but also in the earlier assessment years. The departmental representative objected to the admissibility of this new contention at that stage. The Tribunal, however, held that the contention sought to be raised by the assessee was legal in nature and should be allowed to be raised. The Tribunal decided to allow the assessee to raise this contention because in several decisions it had been held that intangible additions made to the assessee's income represented his real income and such income had been taken into account while considering any unexplained investment of the assessee. The Tribunal, however, pointed out that, in the absence of any information regarding the amount of intangible additions and in the absence of an opportunity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's income. The Appellate Assistant Commissioner reversed this order. The department appealed and when the Tribunal expressed the view that the burden of proof was on the assessee, the assessee raised for the first time a new point that, as the credits arose in the financial year 1947-48, they could not be taxed in the assessment year 1949-50, but only in 1948-49. The Tribunal permitted the assessee to raise this new ground and further declined to give a direction under section 34(3) of the Act that the sum may be taxed in 1948-49. On a reference to the High Court it was held: "That, on the facts as stated by the Tribunal, the contention raised in the present case was one purely, in law, on the facts as they existed all along before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee and, thus, the requirement of that rule was satisfied. We are, therefore, of the opinion that the answer to the first question has to be returned in the affirmative. As regards the second question, we are unable to understand why the assessee cannot take advantage of the past intangible additions made in its income while explaining the sum of Rs. 20,004 which was treated by the Income-tax Officer and the Appellate Assistant Commissioner as income from undisclosed sources. It is true that before the Income-tax Officer and the Appellate Assistant Commissioner this plea was not taken. It may be that the assessee was not aware of the legal position, that is, that it was entitled to take advantage of the intangible additions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held by their Lordships in those cases was that it was open to the Income-tax Officer to assess an amount as the income of the assessee from undisclosed sources when the assessee was unable to prove the source of that income and it was not necessary for the Income-tax Officer to prove that source. In none of those cases the matter of permitting the assessee to explain the source of the credits in his accounts as the intangible additions made in the previous year was in question. In our opinion as the income-tax authorities made additions to the assessable income of the assessee in the previous year as income from undisclosed sources, the assessee is entitled to take advantage of those added incomes to explain the source of what is consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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