DANIEL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee, who is a dealer in grocery, salt and jaggery, also owns an oil mill, which he had leased on rent to a partnership between himself and his two brothers; and his accounting year for the asst. year 1952 53 extended over the period of 19= months, i.e., from 16th Aug., 1950, to 31st March, 1952. He had, for the year, furnished return showing a net income of Rs. 6,737; but the ITO, Alleppey Circle, had added to it a further sum of Rs. 24,128 14 0 under the head "other sources of income". This has been done because the said sum had been shown in the assessee's personal account as cash credited on 3rd Sept.,1951; and the explanation for not treating it as part of the earlier income has been rejected. That explanation is that the entry was made in order to adjust what had been earlier shown as debits in the accounts of three fictitious persons.

(2.) THE assessee's account books for the earlier year contained credit items of Rs. 24,128 14 0 in favour of these three persons. These have been given in tabular form in the statement of the case and may be usefully quoted.

(3.) AN application under S. 66(1) of the IT Act having been rejected by the Tribunal, the assessee came to this Court, and the following two questions were directed to be referred by the Division Bench, and have been so referred :