S P JAISWAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) These appeals by grant of special leave are directed against the judgment of the Punjab and Haryana High Court, answering the question posed in favour of the Revenue and against the assessee. The Income-tax Appellate Tribunal (Chandigarh Bench) referred the following question to the High Court for being answered under Section 256 (1) of the Income-tax Act, 1961 namely:-

(2.) For the Assessment Year 1963-64 the assessee brought the reference made by approaching the High Court under Section 256 (2) of the Act to the effect:

(3.) The assessee is the Managing Director of the Karnal Distillery Company Limited, Karnal. As per the books of accounts of the company said assessee had a deposit of Rs. 1,74,639.00 on 3-4-1962. The aforesaid amount was debited to the credit of Messers Modern Property Dealers, Karnal, the partnership firm consisting of two sons and daughter of the assessee. The said partners had 1/3rd share each in the partnership. The aforesaid amount was shown to the credit of three partners in equal shares, in the books of accounts of Messers Modern Properly Dealers. On 1-4-1963 the aforesaid amount was shown in the accounts of Messers Modern Property Dealers to have returned to the assessee and further on the very same day it was also shown that the assessee gave the said amount as loan equally to the three partners of the Messrs Modern Property Dealers. During the Assessment Year 1963-64, the assessee had shown the interest derived from the aforesaid so-called loan amount in his return but later on a revised return was filed deleting the aforesaid amount. The Assessing Officer, however, came to the conclusion that the interest derived from the aforesaid amount has to be taken as an income of the assessee and accordingly the assessment order was passed. The assessee challenged the said order in appeal before the Income-tax Appellate Commissioner and then in second appeal before the Tribunal but lost in the forums. The assessee approached the Tribunal for making a reference under Section 256 (1) of the Act and the Tribunal having declined, the assessee got the matter referred to by approaching the High Court under Section 256 (2) of the Act,