KEDAR NATH MODI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN respect of the asst. year 1964 -65, in pursuance to an order passed under S. 256(2) by the Allahabad High Court, the Tribunal has stated the case and referred the following two questions to this Court :

(2.) BRIEFLY stated, the facts are that pursuant to the reopening of the assessment under S. 147(a) of the IT Act, 1961, the ITO added a sum of Rs. 10,000 on an estimated basis as representing the income of the assessee from undisclosed sources. According to the ITO, the assessee with his wife, five children and two servants, went to Kashmir in May 1963 and remained there for more than a month. The total expenses which were shown in the books of account of M/s Modi Spinning & Weaving Company Limited including air travel, expenses on car and expenses on driver and food were indicated at Rs. 1,863. That company had filed a letter indicating that all the expenses of the assessee and his family during their stay in Kashmir were incurred by the assessee himself. The ITO found from the assessment records of the assessee and his wife that they had withdrawn only Rs. 1,500 and Rs. 600 respectively during the month and therefore the assessee must have met the holiday expenses from out of his income from undisclosed sources. Considering the standard of living of the assessee and his status and the fact that he and his family had stayed in a house -boat and had made their own arrangement of food for a period of more than a month, the ITO estimated the expense of the assessee at Rs. 10,000 which was added to his income as income from undisclosed sources.

(3.) APPEAL to the AAC having failed, the assessee filed a second appeal to the Tribunal. The Tribunal partially allowed the appeal and held as follows :