G KRISHNASWAMI NAIDU Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a Hindu undivided family. Its karta was one V. Govindaswami Naidu. Its income consisted of income from a tannery business and share incomes from a partnership firm by name V. Baluswami Naidu & Co. and another firm by name Nayudu Coffee Supply Company. THE income-tax returns for the assessment years 1948-49 and 1949-50 were filed by Govindaswami Naidu as the karta. THE enquiries made by the Income-tax Officer during the course of the assessment proceedings for the assessment year 1949-50 revealed that a sum of Rs. 53, 142 and another sum of Rs. 1, 060 had been deposited on June 25, 1947, and August 30, 1947, respectively, in the Podukkottai Co-operative Central Bank Ltd., in the name of Dewan Peshkar by and on behalf of Govindaswami Naidu. THEse two deposits totalling Rs. 54, 202 were found to have been utilised for payments of kists for certain abkari contracts for which the licence was in the name of Govindaswami Naidu. Govindaswami Naidu submitted an explanation in which he pleaded that he was a benamidar for one Bakthavathsalu who wanted to bid at the auction for the abkari contract at Pudukkottai and that as that person was not in a position to file a solvency certificate, he sought the help of Govindaswami Naidu to bid in the auction. Bakthavathsalu was examined by the Income-tax Officer.

(2.) THE Income-tax Officer also found that a sum of Rs. 946-12-3 being the interest due on the deposit had been withdrawn by the said Govindaswami Naidu. It was common ground that the receipt of this interest had also not been accounted in the assessee's books of account Not accepting the explanation offered by the said Govindaswami Naidu, the Income-tax Officer added a sum of Rs. 54, 000 as income from undisclosed source to the income returned for the assessment year 1949-50. On appeal by the assessee, the Appellate Assistant Commissioner held that though there was ample evidence for the finding of the Income-tax Officer that the amount belonged to the assessee, since the deposits were made prior to the year of account on June 25, 1947, and August 30, 1947, they could not be assessed in the assessment year 1949-50. In the result, he deleted the sum of Rs. 54, 000 with a direction that suitable action may be taken for assessing the amount in the earlier yearIn the meanwhile, on December 13, 1953, Govindaswami Naidu, the karta, passed away and his only son, Krishnaswami Naidu, became the karta of the Hindu undivided family. THErefore, the notice under section 34 of the Indian Income-tax Act, 1922, was served on Krishnaswami Naidu in respect of the assessment year 1948-49. In response to the notice, a return was filed under protest with a submission that there had been no default on the part of the assessee to place all the materials before the assessing authority. Simultaneously penalty, proceedings under section 28(1)(c) of the Act were. also-initiated against the assessee by a notice dated March 4, 1957. In the proceedings under section 34(1)(a) it was held that the deposits made in the Pudukkottai Co-operative Central Bank Ltd. really belonged to the assessee family. THE assessee appealed to the Appellate Assistant Commissioner against this order under section 34 which was unsuccessful.

(3.) THIS contention was rejected as an after-thought and also on the ground that it had not been proved. THIS conduct in putting forward a false new case at the appellate stage is taken as a ground by the Tribunal in proof of the assessee's guilt in the matter. The learned counsel for the department did not rely on this ground and he could not have relied on this also because section 28 has not been invoked against the assessee for the inaccurate information furnished before the Appellate Assistant Commissioner in the appeal against the order under section 28(1)(c)For the foregoing reasons, we answer the reference in the affirmative and against the assessee with costs. Counsel's fee Rs. 250Reference answered in the affirmative.