TMI Blog1982 (5) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... e's income from undisclosed sources, but falling within the financial year 1960-61 having not been brought to tax in the assessment year 1961-62 could not be brought to tax for the assessment year 1962-63 ?" There is a slight typographical mistake in question No. 1, as it appears, in the dates. It should be the books of the assessee for the year ending 31st December, 1961, and not " 31st January, 1961 ", and there is a similar mistake in question No. 2. The assessment year under consideration is 1962-63. The assessee is a private limited company, which carried on business in purchase and sale of iron goods. The accounting period under consideration according to which the books of account were maintained by the assessee is the year ended 31st December, 1961. On going through the books of accounts relating to the accounting period ended 31st December, 1961, the ITO noticed credits in eleven different accounts. He proceeded to enquire into the credits and eventually came to the conclusion that the assessee was not able to tender satisfactory explanation. The relevant accounts considered have been detailed in the order of assessment. Eventually, the ITO brought to tax an amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit of Rs. 55,928 alone (subject to verification by the ITO) would be assessable in the assessment year 1962-63. Being aggrieved, the Revenue went up in appeal before the Tribunal and placed reliance on the provisions of s. 68 of the I.T. Act, 1961, and it was argued that all the credits appearing in the books of account for the calendar year 1961 were assessable only in the assessment year 1962-63. According to the Revenue, in view of the express provisions of s. 68, the decision of the AAC was clearly wrong. This plea was opposed by the assessee, and in support of the finding of the AAC, on behalf of the assessee, reliance was placed on the decision of the Supreme Court in the case of Baladin Ram v. CIT [1969] 71 ITR 427, and the decision of the Calcutta High Court in the case of Keshtra Mohan Roy v. ITO [1971] 81 ITR 15. The submission on behalf of the assessee, in brief, was that the credits which occurred in the financial year 1961-62 could not be considered in the assessment year 1962-63. The Tribunal was of the view that the entire credits were considered by the ITO as unexplained and assessed under the head " Other sources and though such credits occurred in the accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een brought to tax in the earliest assessment year in which income became assessable to tax, the Tribunal was of the view that such income could not be brought to tax in a later year. According to the ITO, as far as this assessment year was concerned, and even after the decision of the AAC, the credits in the three accounts represented income from undisclosed sources and in respect of credits prior to 1st April, 1960, the earliest assessment year in which such credits could be considered would not be the assessment year now under consideration, i. e., 1962-63. In that view, the Tribunal was of the opinion that the AAC was justified in the view that he had taken. Thus, the Tribunal upheld the order of the AAC. From the aforesaid decision of the Tribunal, the questions as indicated above have been referred to this court. We have noticed the relevant facts. In order to appreciate the questions, it would be necessary to refer to certain provisions of the Act. Under s. 2(9), " assessment year " means the period of twelve months commencing on the first day of April, every year. " Previous year " is defined under s. 3 of the 1961 Act, as the financial year immediately preceding the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Act by any person for the assessment year ending on the 31st day of March, 1962, or any earlier year, the assessment of that person for that year shall be made in accordance with the procedure specified in the 1961 Act. The Supreme Court in the case of Baladin Rain v. CIT [1969] 71 ITR 427, observed that it is now well settled that the only possible way in which income from an undisclosed source could be assessed or reassessed was to make the assessment on the basis that the previous year for such an income would be the ordinary financial year. Even under the provisions embodied in s. 68 of the I.T. Act, 1961, it was only when any amount was found credited in the books of the assessee for any previous year that the section would apply, and the amount so credited might be charged to tax as the income of that previous year, if the assessee offered no explanation or the explanation offered by him was not satisfactory. On the other hand, if the undisclosed income was found to be from some unknown source or the amount represented some concealed income which was not credited in his books, the position would probably not be different from what was laid down when the 1922 Act was in fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught about any change in law seems to be correct. Section 68 reads as follows: 'Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.' If the assessee offers no explanation for the sum found credited in his books, the sum so credited has got to be added to the income of the assessee. To that extent there is no difficulty in saying that previously the law was exactly the same. But if an explanation is offered which, in the opinion of the Income-tax Officer, is not satisfactory then also section 68 provides that the cash credit can be added to the income of the assessee. In this regard also, if I may say so, a departure does not seem to have been made from the law laid down authoritatively by the Supreme Court in various decisions. The matter ultimately comes to the Tribunal. The question of law is said to be arising out of the order of the Tribunal and it has to be con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal was in error in holding that the sums found in the books of the assessee for the year ending 31st December, 1961, could not be brought to tax for the assessment year 1962-63. Similarly, we answer the second question by saying that, on the facts and in the circumstances of the case, and on a correct interpretation of s. 68 of the I.T. Act, 1961, the Tribunal was in error in holding that the cash credits in the books of the assessee for the previous year ending on 31st December, 1961, could not be brought to tax for the assessment year 1962-63. In our opinion, we must add that the moment a sum is found credited in the books for which no explanation is offered by the assessee or the explanation offered by the assessee is unsatisfactory whether the credits introduced in the assessee's books represented the income of the assessee from undisclosed sources in the earlier year could not be brought to tax is not relevant and germane to these questions. Thus, we answer the questions as indicated above and in favour of the Revenue. In the facts and circumstances of the case, the parties will pay and bear their own costs. SUHAS CHANDRA SEN J.-I agree. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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