COMMISSIONER OF INCOME TAX Vs. GOVINDAN CHETTIAR S

JUDGEMENT

(1.) THE question in this reference at the instance of the Commissioner of Income-tax is as to the applicability to the facts of the second proviso to Section 34(3) of the Income-tax Act. 1922.

(2.) THE assessee carried on business in Ceylon and by an order dated January 30, 1954, he was assessed to tax on a total income of Rs. 90,378/-, against the admitted income of Rs. 40,378/-. His appeal resulted in enhancement of the total income to Rs. 94,905/-. THE Tribunal confirmed that order and dismissed the assessee's further appeal. In the course of its order the Tribunal observed 'unexplained cash credits to the extent of Rs. 60,051/-' and stated that they did not represent genuine liability. On that basis, according to the Tribunal, the total income amounted to Rs. 1,00,429/-. Its order was dated November 27, 1959. THE Income-tax Officer on the view that there was a finding by the Tribunal in respect of credits in the anamath accounts amounting to Rs. 60,051/- which were spurious and unproved, reopened the assessment under Section 34(1) (a) and (3) and reassessed on January 25, 1961 on a total foreign income of Rs. 1,00,429/-. Differing from the Revenue, the Tribunal in an appeal arising out of the reassessment Order held that its observation in the order dated November 27, 1959 as to the total income of the assessee amounted to Rs. 1,00,429/-was only incidental to its finding that the total chargeable income fixed by the Appellate Assistant Commissioner was not excessive. THE following question has been referred to this Court:--

(3.) CAN it be said that the determination of the total income of the assessee for the assessment year 1951-1952 to be Rs. 1,00,429/- was necessary for the disposal of the appeal, that is to say, to find _ whether the Appellate Assistant Commissioner fixed the total income excessively at Rs. 94,905/-? We are of the view that no such finding that the total income amounted, to Rs. 1,00,429/- was necessary, to arrive at that conclusion, so that the Tribunal' could dismiss the appeal. It is no doubt true that to determine whether Rs. 94,905/- was excessive the Tribunal had to explore into the unexplained cash credits and it had to do it in the nature of things with reference to all such unexplained cash credits which when totalled up came to a total income of Rs. 1,00,429/-. But that is only for the purpose of finding whether there was excessive fixation of the total income by the Appellate Assistant Commissioner, and that Way, the observation of the Tribunal was but incidental to that main question.