SHIV NARAIN SARRAF Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a statement of a case submitted to this court by the Income-tax Appellate Tribunal, Allahabad Bench, under section 66(2) the question formulated by the Bench is :

(2.) THE statement relates to the assessment years 1949-50 and 1951-52. THE assessee does the business of sarrafa and of speculation. Its accounting year for this business is the Diwali year. In its accounts of the Diwali year relevant to the assessment year 1948-49, there were certain cash credit entries, THE Income-tax Officer found that the amount of the entries was its income and included it in the assessment for 1948-49. THE assessee took up the matter up to the Tribunal and it maintained the assessment. Though the Income-tax officer had treated the income as from an undisclosed source, the Tribunal held that it was its income from the disclosed business It held that its main business was sarrafa business and the concealed income must have been from it and later observed that there was no doubt as to the source of the concealed income. Since the Diwali year was the accounting year for the business, the Tribunal held that the concealed income had rightly been included in the assessment for 1948-49. It distinguished Commissioner of Income-tax v. Darolia (P.) Sons on the ground that the income in that case had been not from the disclosed business but from an undisclosed source and, consequently, it could not be treated as income derived in the accounting year selected by the assessee for its disclosed business. THEn it proceeded further on the assumption that the income had not been from the disclosed business but from an undisclosed source and held that even then it was rightly included in the assessment for 1948-49 because previously also the assessee had allowed itself to be assessed on undisclosed income as if the Diwali year was the accounting year.

(3.) QUESTION answered in favour of the assessee.