KUTTIKRISHNAN NAIR P Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee in these two references has been doing money-lending as well as manufacturing and selling gun-powder. Though he had been assessed to income-tax for the years 1942-43 and 1943-44, during the subsequent five assessment years he has paid no such tax. He had failed to send his returns for the assessment year 1944-45; but had at the request from the Income-tax Officer, filed, on March 31, 1944, his profit and loss accounts for the respective previous years, and the officer had dropped the matter, because the income had then appeared not to be assessable. For the succeeding four years the statement of the case shows the assessees total income and the dates of the orders, whereby they were not assessed, to be as follows :

(2.) IT appears that another Income-tax Officer, while scrutinising the account books for the assessment year 1949-50, had noticed in the ledger certain credit and debit entries in favour of the assessees mother and his sister and the assessees clerk had informed the officer that there were similar entries in the account books for earlier years. The officer naturally obtained copies of such entries and called the ladies to explain the sources for the amounts. The ladies explained these to be out of their past savings; but the officer was not satisfied by the aforesaid explanations. Accordingly, proceedings under section 34 of the Income-tax Act were started as regards the five assessment years, for which the assessee had not been taxed; and in response to the notices, the returns filed earlier by the assessee were again adopted. The Taxing Officer thereafter found that income had escaped assessment. He has rested his decision on the relevant entries in the account books being in difference ink, as well as on the explanation of the mother, who is stated to have advanced the money to the sister, being unsatisfactory, mainly because she appeared to have had no source from which Rs. 45,500 could have accumulated, that being the total amount of what had been gifted to her daughter during the five assessment years. The assessee failed in his appeal before the Appellate Assistant Commissioner, who was not convinced about the soundness of the legal arguments urged on behalf of the assessee.

(3.) EACH of the aforesaid questions covers the undisclosed income for each of the three assessment years of 1944-45, 1946-47 and 1947-48, the amounts mentioned in each being the addition the taxing authorities had held to be the concealed income for the relevant year. It will be seen that there are no questions for the assessment years 1946-47 and 1948-49, mainly due to the appeals for these years having been completely allowed and after the subsequent corrections by the Tribunal the period for the assessees application to refer having expired. The assessee, however, had under article 226 invoked the jurisdiction of the Madras High Court, claiming the aforesaid correction by the Appellate Tribunal to be without jurisdiction as the Income-tax Act to ask the Tribunal to correct its mistake. The learned judges found the ground urged in support of the application to be not sufficient and the decision has been reported : vide Kuttikrishnan Nair v. Income-tax Appellate Tribunal. It follows that the decision also becomes relevant for purposes of our answer to the second question in Reference No. 18 of 1957. It is further clear that the remaining four question in both the references must be dealt together.