COMMISSIONER OF INCOME TAX Vs. P K NARAYANAN

JUDGEMENT

(1.) PURSUANT to the direction of this court under section 256(2) of the Income-tax Act, 1961 (briefly "the Act"), the Income-tax Appellate Tribunal referred the following common questions relating to the assessment years 1979-80 and 1980-81 for the opinion of this court :

(2.) FOR these assessment years, certain additions were made by the Assessing Officer on the basis of the materials seized on January 29, 1982, when a search under Section 132 of the Act was carried out at the residence of the assessee. The additions finally upheld by the Appellate Tribunal are as follows :

(3.) ON the basis of these details, the assessee was called upon to explain by the Assessing Officer why 50 per cent. of the profit relating to the years in question, be not treated as his income. The assessee denied having owned the toddy business. The assessee also stated that toddy being an excise item, abkari business could not be carried on by any person without a valid licence and that no excise licence was granted in favour of the assessee for the years in question. The assessee urged that the Revenue should have enquired as to who carried on the abkari business and that if abkari business was carried on by a firm then the assessment could have been made only on the firm as per the procedure and that 50 per cent. profits from the toddy business could not be straightaway included in the hands of the assessee for either of the assessment years. The Assessing Officer rejected the contention of the assessee and found that 50 per cent. income from the toddy business was of the assessee.