COMMISSIONER OF INCOME TAX Vs. SREEDHARAN K

JUDGEMENT

(1.) THE assessee, K. Sreedharan, was a partner in two firms, Sreedharan & Co. and Kavitha Trading Company. He was also associated with the company M/s. Sreedharan & Co. (P.) Ltd., in which there appeared five cash credits of Rs. 50,000 each on January 1 and 5, 1980, March 15 and 28, 1980, and Rs. One lakh on March 3, 1980, aggregating to Rs. 3 lakhs. In completing the assessment under the Income-tax Act for the year 1980-81, the assessing authority held that these credits have not been satisfactorily explained by the assessee and, accordingly, treated them as his income liable to tax. THE assessment was affirmed in first appeal, but on second appeal, the Tribunal, by its order annexure C, accepted the assessee's explanation in relation to these credits and deleted the amount from the assessment.

(2.) THE assessee's explanation for these cash credits was that he had substantial receipts from the firms, Sreedharan & Co. and Kavitha Trading Company, during the assessment year 1976-77 and that the cash credits came out of those receipts. In fact, an application had been made to the Settlement Commission which was admitted on July 30, 1979, offering further amounts for assessment for that year. THE final order of the Settlement Commission was passed on June 22, 1984, as per annexure F, making still further additions to the income offered for assessment. Thus, the firm, Sreedharan and Co., had offered an amount of Rs. 7 lakhs for assessment, over and above the amount of Rs. 11,70,460 disclosed and returned, of which the assessee's 50% share amounted to Rs. 3,50,000. THE Settlement Commission made a further addition of Rs. 5,57,000 as additional income, of which the assessee's share came to Rs. 2,78,500. THE firm, Kavitha Trading Company, had offered for assessment an amount of Rs. 11 lakhs as against Rs. 10,00,850 disclosed and assessed. THE assessee's 25% share of the additional amount offered was Rs. 24,785. THE Settlement Commission made a further addition of Rs. 1,04,000 as additional income and disallowance of excess depreciation of which the assessee's share came to Rs. 26,000.

(3.) THE Tribunal, thereupon, referred the following question of law as arising out of its order :