MUNNALAL MURLIDHAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE material facts bearing on this reference are as follows. THE assessee is a registered firm. It carried on business as a commission agent in catechu. During the relevant previous year, ending on Chait 2007 (S.Y.), a cash deposit of Rs. 17,000 was found in the books of the assessee on September 10, 1949. THE amount was credited to the account of one Abdul Sattar Abdul Ghani. THE amount was withdrawn on October 11, 1949. THE Income-tax Officer, in the course of his assessment of the assessee-firm for the year 1950-51, noticed this deposit and asked the assessee to explain the nature and source thereof. THE assessee's explanation was that Abdul Sattar and his son, Mohammad Ismail, were carrying on business at Moolganj in Kanpur. Mohammad Ismail was well known to the partners of the assessee-firm. When Mohammad Ismail was going home in Kutch he deposited' the sum of Rs. 17,000 with the assessee-firm and he took back the amount on his return therefrom. THE assessee stated in its written explanation that if its explanation in point was not accepted then notice might be issued under Section 37 of the Indian Income-tax Act, 1922 (hereinafter referred to as "the Act"), to the party concerned at its cost. THE Income-tax Officer, it appears, paid no heed to the request made on behalf of the assessee and he completed the assessment under Section 23(3) of the Act on a total income of Rs. 92,672 including the sum of Rs. 17,000 which was treated as the income of the assessee from undisclosed sources.

(2.) AN appeal to the Appellate Assistant Commissioner proved futile. The assessee then preferred an appeal to the Tribunal. The Tribunal, however, dismissed the appeal of the assessee in point holding as under :

(3.) IN reply to this notice the assessee submitted its explanation to the INcome-tax Officer on October 22, 1954, by means of a letter. IN paragraph 5 of this letter the assessee stated as follows :