COMMISSIONER OF INCOME TAX Vs. K PALANIAPPAN

JUDGEMENT

(1.) THE following questions of law have been referred to .us in pursuance of the directions of this court in T. C. P. No. 255 of 1983, dated November 1, 1983 :

(2.) WHETHER the assessee's statement in a proceeding under a different statute that the aforesaid credit represents undisclosed profits of some earlier years has overriding" effect and must be taken as constituting a satisfactory explanation for the source thereof, within the meaning of Section 68 of the Income-tax Act, 1961 ?"

(3.) MR. R. Janakiraman, learned counsel for the assessee, on the other hand, submitted that the credit entry cannot be looked into in isolation, but it must be viewed in the light of the surrounding circumstances of the case and the necessity for the assessee to make the credit entry. He referred to the provisions of the Voluntary Disclosure Act and submitted that though the declaration filed by the assessee was rejected, not due to the situation created by the assessee, but due to the fact that the declaration reached the Department beyond the time, the declaration made by the assessee would constitute a relevant piece of evidence to show that the credit entry represented the income during the earlier years. He submitted that it was on the basis of the inducement offered by the Government of India, that the assessee came forward with the disclosure and there is nothing to discredit the statement made by the assessee that it represented the income of the earlier years. The Tribunal, according to learned counsel for the assessee, after perusing all the records came to the conclusion that the assessee could not have earned the income of Rs. 50,000 during the relevant previous year for the assessment year 1976-77 and the credit entry represented the income of the earlier years. He, therefore, submitted that the finding was arrived at on the basis of the evidence and, therefore, this court should not interfere with the finding of the Appellate Tribunal.