TMI Blog1980 (4) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, who is the proprietor of a Kirani Stores, was assessed to income-tax on a total income of Rs. 21,347 for the assessment year 1960-61, for which the relevant previous year was Sanvad 2015, i.e., from November 13, 1958, to October 12, 1959. On noticing in the assessment proceedings for the assessment year 1962-63, that there were cash credits of the amount of Rs. 9,000 in the books of the assessee in the name of one Smt. Gajibai Maganlal in the month of March, 1960, the ITO reopened the assessment of the assessee for the assessment year 1960-61. In reply to the notice under s. 148 of the Act the assessee filed a return declaring the same quantum of income, as he had done originally. His explanation with regard to the sum of Rs. 9, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cash credits. According to the learned counsel, the position with regard to unexplained cash credits under the Act is the same as under the provisions of the Indian I.T. Act, 1922, under which the unexplained cash credits were included as income from undisclosed sources for the previous year, which was the financial year. Thus, according to the learned counsel, s. 68 having merely given recognition to the prevalent legal position could not be treated as a substantive provision of law and s. 68 was, therefore, merely a procedural provision of which the assessee was entitled to take benefit. In support of the contention that in the instant case the cash credits could be included as his income only in respect of the assessment year 1961-62 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act shall apply accordingly ". According to the learned counsel for the assessee, s. 68 being one of the provisions of the 1961 Act, it would also apply to the reassessment proceedings in view of the provisions of s. 297(2)(d)(ii) of the Act. It can no longer be in dispute in view of the decision of the Supreme Court in Govinddas v. ITO [1976] 103 ITR 123, that the words " all the provisions of this Act shall apply accordingly " in cl. (ii) of s. 297(2)(d) of the I.T. Act, 1961, refer only to the machinery provided in the new Act for the assessment of escaped income. They do not import any substantive provisions of the new Act which create rights or liabilities. The Supreme Court has in that case pointed out that the word " accordingly " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome would be the financial year. As pointed out by the Supreme Court in Baladin Ram v. CIT [1969] 71 ITR 427, even under the provisions embodied in s. 68 of the I.T. Act, 1961, it is only when any amount is found credited in the books of the assessee for any previous year that s. 68 will apply and the amount so credited may be charged to tax as the income of that previous year, if the assessee offers no explanation or the explanation offered by him is 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 is not credited in his books, the position would probably not be different from what was laid down when the 1922 Act was in force. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a liability is fastened on the assessee to pay income-tax on the said sum, which is to be treated as the income of the assessee. Section 68, therefore, is very much a substantive provision of law, which is in the nature of charging provision inasmuch as it determines the character of unexplained cash credits and requires such amounts to be taxed as the income of the assessee. It is no doubt true that in Parkar's case [1974] 94 ITR 616 (Bom), Division Bench of this court, while considering the provisions of ss. 69 and 69A of the 1961 Act, has held that those sections are rules of evidence and as such would be applicable to any proceedings if they happen to be on the statute book " on the date when the trial takes place ". It is difficult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of reassessment proceedings governed by the Indian I.T. Act, 1922. We may also point out that the Calcutta High Court has also taken the view that s. 68 of the I.T. Act, 1961, is a substantive provision of law and not a procedural provision. In Sikri Co. P. Ltd. v. CIT [1977] 106 ITR 682, a Division Bench of the Calcutta High Court has pointed out that s. 68 is a substantive section making any sum which was found credited in the books of the assessee in respect of which the assessee offers no explanation or the explanation offered by him is not satisfactory, to be the income of the assessee. In the view which we have taken the sum of Rs. 9,000 was clearly assessable for the assessment year 1960-61 and not for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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