TMI Blog1957 (7) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... which the assessee has failed to explain ? 2. The facts out of which this reference arises are as follows: The assessee was being assessed on his income in the accounting year 1946-47. He was found to have encashed high denomination notes of the value of ₹ 66,000. He encashed notes of the value of ₹ 40,000 on 24th January, 1946, and the remaining, viz., ₹ 26,000, on 25th January, 1946. The Income-tax Officer in dealing with these notes held them to be income from an undisclosed source. In giving his finding he observed as follows: Rs. 26,000 income concealed from the sales of high denomination notes as explained......... We are not concerned with ₹ 40,000, and we need not refer to them any further. In de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that ground No. 3 which had been overlooked should be re-tried and a decision should be given. In the prayer it is quite clearly stated by the assessee that the mistake was sought to be rectified under section 35 of the Income-tax Act and/or otherwise a reference should be made under section 66(1) of the Income-tax Act to the High Court for the determination of the legal question whether this income could be taken in the accounting year 1946-47. 4. When the matter came before the Appellate Tribunal it gave its decision by an order made on 20th October, 1953. The interim application for rectification of the so-called mistake was allowed, and in the penultimate paragraph of its order the Appellate Tribunal stated as follows: We acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the Appellate Tribunal to rectify mistakes, if any, in the order which had been previously passed in the appeal. 6. The two questions clearly disclose that the first is a question of competence of the Appellate Tribunal and the second relates to the facts of the case, that is to say, whether the assessment year in respect of ₹ 26,000 was the correct year or not. We have been taken through the provisions of sections 33 and 35 of the Income-tax Act. It was admitted before us that the Income-tax Appellate Tribunal does not possess any power of review. Shri Thakkar, who appeared for the assessee, contended, however, that no review was involved inasmuch as it was at its best a rectification of an obvious error on the previous occa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occasion : For want of proof, therefore, the amount has been rightly added as the assessee's income from undisclosed sources. Emphasis is laid upon undisclosed and it shows that it is not the regular business of the assessee which was the case in the two Patna cases cited before us by Shri Thakkar Commissioner of Income-tax v. Meghu Sao Jhandhu Sao [1955] 27 ITR 371 and Commissioner of Income-tax v. P. Darolia Sons [1955] 27 ITR 515. In our opinion, this was a matter which was governed by section 2(11) of the Income-tax Act, and in the absence of an option exercisable by the assessee the income could naturally be taken only in the previous year of accounting and not in the year within which the Appellate Tribunal by its firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed source shows that a source other than the normal business of the assessee is in view. Therefore, the conclusion of the Appellate Tribunal in the second order that the income must be taken in the previous accounting year was quite correct and was quite clear. There was thus an error in putting it in the accounting year 1946-47, which we think the Appellate Tribunal was authorized under section 35 of the Income-tax Act to rectify. We rely upon the decision of the Bombay High Court in Sidhramappa v. Commissioner of Income-tax [1952] 21 ITR 333 where the powers of rectification were considered by Chagla, C.J., and Tendolkar, J. We respectfully agree with the observations of the Chief Justice that the section should be interpreted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the affirmative. That being so, the order of the Tribunal passed on the second occasion would stand, and there would be no need to answer the second question, which, as will be seen from what we have stated above, must be answer ed as the Appellate Tribunal itself has decided in the second order. We answer the reference, therefore, in the following words: Question (1): Yes (but under section 35 of the Income-tax Act). Question (2): There is no need to give a decision on this point. 13. We think that there should be no award of costs because the mistake was an inadvertent one, which was corrected by the Tribunal, and the reference was made because the Tribunal was probably not aware of its own powers or was at any rate in doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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