HAJEE K ASSAINAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal, Madras Bench "A", under Section 256(2) of the Income-tax Act, 1961 (which will hereinafter be referred to as "the Act"). The question referred is :

(2.) THE assessee is carrying on business in foodgrains with his head office at Changanacherry and a branch at Kottayam. In the course of the proceedings taken for determining the taxable income of the assessee for the assessment year 1956-57 the Income-tax Officer found that there was a cash credit dated 5-2-1130 (M.E.) for Rs. 20,000 in the accounts maintained by the assessee in his head office, the source of which was not properly explained. This credit entry was sought to be explained by the assessee by stating that it represented cash received from his branch at Kottayam but the Income-tax Officer did not accept this, since it was found on verification of the accounts of the Kottayam branch that the cash balance available thereon on 5-2-1130 was only Rs. 6,866 and a debit entry had been made in the branch-accounts relating to the amount of Rs. 20,000 only on 6-2-1130. Hence the Income-tax Officer completed the assessment for 1956-57 treating the amount of Rs. 20,000 as income derived by the assessee from "other sources" during the accounting period. THE assessee appealed to the Appellate Assistant Commissioner. One of the contentions raised by him in the appeal was that the amount in question could not, in any event, be treated as assessable income from other sources for the year 1956-57, since the date of the cash credit entry was 5-2-1130 (22-9-1954), which was outside the relevant accounting period, namely, the year ending March 31, 1956. THE Appellate Assistant Commissioner accepted this contention and held that the sum could be assessed only is the assessment year 1955-56.

(3.) THE Inspecting Assistant Commissioner in his order dated February 20, 1955 (annexure "A"), observed that the explanation put forward by the assessee had already been rejected by the assessing authority and the Appellate Assistant Commissioner in the course of the assessment proceedings and, relying solely on that fact, he held that there had been a deliberate concealment of income by the assessee in respect of the sum of Rs. 20,000 and levied a penalty of Rs. 13,437.