S KUPPUSWAMI MUDALIAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE questions that stand referred under section 66 of the Indian Income Tax Act, 1961 are as follows :

(2.) RS. 27, 500 - Value of 7, 182 skins not proved short RS. 28, 500 In respect of the year ended March 31, 1948, the previous year for the assessment year 1948-49, an addition of RS. 23, 730 was made by the Income-tax Officer on the ground that the gross profit shown by the assessee was deficient. Thus, there was an addition to the assessable income of the assessee in the two assessment years 1947-48 and 1948-49 of a total sum of RS. 52, 230.The assessments for the years 1949-50 and 1950-51 were made by the officer on March 29, 1950, and March 21, 1951, respectively. In the assessment of the latter year he included a sum of RS. 27, 625 as income from other sources not explained by the assessee, and which income was kept outside his books of account. He had advanced between January 7, 1950, and February 10, 1950, RS. 35, 000 to Abdul Shukkur Sahib & Co. Thereafter the Income-tax Officer received information that the assessee had lent a sum of RS. 40, 000 on a mortgage in the name of his brother, Murugesa Mudaliar, on August 29, 1948, which was within the "previous year" for the assessment year 1949-50. The officer also came to know that the assessee's wife and married daughter had advanced the sums of RS. 15, 000 and RS. 10, 000 respectively as and for their share capital in the firm of S. Kuppuswami Mudaliar and Co. on February 10, 1950. With this information in possession the officer initiated proceedings under section 34 of the Act and issued appropriate notices to the assessee for re-opening the assessment of the years 1949-50 and 1950-51. The assessee objected but the Income-tax Officer by his orders dated July 24, 1956, and August 28, 1956, found that income had escaped in the relevant years in question and, accordingly, added the sum of RS. 40, 000 in the assessment for the year 1949-50 and RS. 25, 000 for the assessment year 1950-51.

(3.) THE department preferred appeals to the Income-tax Appellate Tribunal. THE Tribunal however reached the conclusion that the assessee had failed to disclose the sources for the mortgage loan and other advances and that the order of the appellate authority deleting the addition of Rs. 52, 230 in all was erroneous and unsustainable. It is this order which has given rise to the present reference.