COMMISSIONER OF INCOME TAX Vs. MANSURALI VALIBHAI DUDHANI

JUDGEMENT

(1.) THE Tribunal has, at the instance of the Revenue, referred the following question for our opinion under S. 256(2) of the IT Act, 1961 (hereinafter referred to as the "Act").

(2.) THE assessee in his return of income for the asst. year 1966 67 disclosed an income of Rs. 2,824. The year of account relating to the said assessment year was Samvat year 2021. According to the assessee, he was carrying on business in grains and grocery. In his capital account for the Samvat year 2021, which he produced before the ITO, the assessee had shown a credit balance of Rs. 72,000 on the first day of the accountings period. He had also credited Rs. 7,596 as net income from agriculture. The household expenses were shown at Rs. 1,480. In the balance sheet filed along with the return, Rs. 76,000 were shown in the home chest account. The ITO completed the assessment under S. 144 of the Act. He found that the cash balance was not genuine. The assessee had filed returns for the asst. yrs. 1966 67 to 1968 69 on the same day, i.e., 1st April, 1969. The ITO was of the view that the aforesaid cash balance was shown only to explain investment made in the subsequent years. In the opinion of the ITO, home chest account and income from agriculture shown by the assessee were not genuine. In the result, he estimated the assessee's income at Rs. 85,000 under S. 144 of the Act. After deducting annuity deposit paid by the assessee, the total income was computed at Rs. 74,370.

(3.) BEING aggrieved by the order of the AAC, the assessee went in appeal before the Tribunal. The Tribunal took the view to the effect that the assessee could not have made such a huge amount of income in the very first year at the very threshold. The Tribunal further observed that the ITO and the AAC had disbelieved the assessee's statement that he was in possession of the cash amount of Rs. 72,000 and held that he had shown the cash balance only to explain the investment made in the subsequent years. The Tribunal observed :