COMMISSIONER OF INCOME TAX Vs. BABBAN PANDEY

JUDGEMENT

(1.) MY learned brothers Jagdish Sahai and Beg JJ. have, after a good deal of controversy, agreed upon the following question to be referred to a third judge for opinion in this case:

(2.) THE facts giving rise to this reference have been fully stated in the dissenting orders of my learned brothers, but I would recount the same very briefly here. THE assessee in this case is a dealer in medicines and in its return for the assessment year 1960-61 it declared a total sale of Rs. 3,86,329 with a gross profit thereon of Rs. 21,149. THE Income-tax Officer did not accept the gross profit as disclosed by the assessee and made an addition thereto amounting to Rs. 22,634. THEre was, in the business books of the assessee, a cash deposit of Rs. 6,531 in the name of his son, Krishna Mohan. THE Income-tax Officer rejected the explanation of the assessee that the amount represented the aggregate of gifts received by his son, Krishna Mohan, at the time of his tilak ceremony and he added the sum of Rs. 6,531 to the total income of the assessee as his "income from an undisclosed source". It may be stated here that there was another item of deposit amounting to Rs. 7,329 which also was treated by the Income-tax Officer as the assessee's income from an undisclosed source. I am not required to give any opinion in point as both Sahai and Deg. JJ. have agreed that the amount should be excluded from the assessment.

(3.) SAHAI J. took the view that, although the Tribunal found that the assessee's version with regard to this amount of Rs. 6,531 was not correct, the Tribunal was constrained to exclude the amount in view of the decision of the Andhra Pradesh High Court in the case of Maddi Sudarsanam Oil Mills Co. v. Commissioner of Income-tax, [1959] 37 I.T.R. 369, 371 (A.P.). The relevant observations in that case which were quoted by SAHAI J. are as follows: