COMMISSIONER OF INCOME TAX Vs. VALLIAMMAL D SMT

JUDGEMENT

(1.) AT the instance of the Department, the Tribunal referred the following two questions, for the opinion of this Court, under s. 256(1) of the IT Act, 1961, hereinafter referred to as the 'Act'.

(2.) THE assessee is carrying on moneylending business. For the asst. yr. 1974-75, the ITO determined the assessee's total income at Rs. 59,050 by his order, dt. 30th September, 1976. Later the CIT (Admn.) called for the records and scrutinised the order along with the connected records in the case of M/s. Dhandayuthapani Films. On such scrutiny, he noticed that the said M/s. Dhandayuthapani Films owed a sum of rupees one lakh to the assessee as disclosed in the details given by it, but whereas the assessee herein had not disclosed this amount in her balance sheet. THE CIT held that the order passed by the ITO, without verifying this investment, was erroneous insofar as it was prejudicial to the interests of the Revenue. THE CIT issued a notice under s. 263 of the Act to the assessee requiring her to show cause as to why this sum of Rupees one lakh should not be treated as her undisclosed income.

(3.) A scrutiny of the income-tax records of the assessee as well as the other connected file of M/s. Dhandayuthapani Films disclosed the fact that the latter owed a sum of Rupees one lakh to the assessee as disclosed in the details filed by it. This investment as advance of Rupees one lakh did not find a place in the balance sheet and other details filed by the assessee. This sum of Rupees one lakh advanced on 7th January, 1974 appears to have been escaped from the notice of the ITO, according to the CIT. Therefore, completion of the assessment for 1974-75, without verifying this investment, which has been omitted to be shown by the assessee was considered as erroneous insofar as it is prejudicial to the interest of the Revenue. Hence the jurisdiction under s. 263 of the Act was invoked.