SUBRAMANIA CHETTY S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) PURSUANT to the directions of this court dated 30th March, 1970, the Income-tax Appellate Tribunal, Madras Bench, has referred the following questions of law for the opinion of this court:

(2.) THE facts are simple. THE assessee carries on business in oil seeds. For the year ending March 31, 1960, relevant to the assessment year 1960-61, the assessee filed a return disclosing an income of Rs. 6,154. THE assessment was completed accepting the income returned by the assessee. Bat later the Income-tax Officer found that the assessee had made certain purchases from Messrs. Narothmal and Company and Messrs. P. Vasanthalal and Company, to the extent of Rs. 14,515 and Rs. 33,255, respectively, and that though they had been recorded in the books of the assessee as credit purchases, they had been actually purchased by payment of cash through banks. In view of this, he reopened the assessment proceedings under Section 147(b) of the Income-tax Act. After issuing a notice under Section 148 of the Act to the assessee, the Income-tax Officer directed the assessee to explain the sources for cash payment to the bank and to offer explanation as to why the purchases had been shown as credit purchases, while actually they had been paid for in cash. In spite of repeated opportunities given to him the assessee did not produce any evidence for the purchases and the Income-tax Officer, who had obtained the dates of the purchases from Messrs. Vasanthalal and Company and Messrs. Narothmal and Company, came to the conclusion that the assessee himself paid for those purchases from his income from undisclosed sources. Consequently, he added a sum of Rs. 47,770 being the total of these two amounts as income of the assessee from undisclosed sources in the relevant year.

(3.) THE contention of the learned counsel for the assessee is that the Appellate Assistant Commissioner directed the Income-tax Officer to enquire into the credit-worthiness of the four persons thereby indicating that the Appellate Assistant Commissioner accepted the fact that the said four persons had advanced monies to the assessee and that, therefore, it was not open to him at a later stage to reject the evidence of those four persons and come to the conclusion that they had not advanced monies in the present case. We are not able to accept this argument. THE above extract from the order of the Appellate Assistant Commissioner does not restrict in any sense the scope of the enquiry to be conducted by the Income-tax Officer. As a matter of fact, the entire case of the assessee was that he had borrowed monies from the four persons referred to already and only with reference to that contention the Appellate Assistant Commissioner directed the Income-tax Officer to conduct an enquiry and send a report. THEre is absolutely nothing in the order of the Appellate Assistant Commissioner dated March 17, 1965, restricting the scope of the enquiry or even impliedly showing that he had accepted the case of the assessee that he had borrowed monies from the said four persons.