COMMISSIONER OF INCOME TAX Vs. RAM JAISWAL

JUDGEMENT

(1.) THIS is an application filed at the instance of the Commissioner of Income-tax. Allahabad, under Section 256(2) of the Income- tax Act, 1961, with the prayer that the Income-tax Appellate Tribunal, Allahabad, may be directed to refer the following question for the opinion of this court ;

(2.) BRIEFLY stated the facts are that in the assessment year 1S87-88 against the net returned income of Rs. 25,388 the original assessment was completed on a total income of Rs. 53 lakhs which was, however, set aside on appeal by the Commissioner of Income-tax (Appeals)-I, Varanasi, with the direction to make a fresh assessment. In the remand proceedings, the assessment was made an an income of Rs. 38,12,410, which included Rs. 4,61,410 as income from business after giving allowance under Section 80HHC and Rs. 33,51,000 as unexplained investment in the construction of the building known as "Sri Ram Commercial Complex". The assessment was again challenged by the respondent-assessee in appeal before the Commissioner of Income-tax (Appeals), Varanasi. The income assessed under the head "Business" was reduced to Rs. 3 lakhs by the appellate authority subject to relief under Section 8QHHC. In so far as the addition under the head "Unexplained investment" in the construction of the building was concerned, a relief of Rs. 4 lakhs was granted by the appellate authority and thus an addition of Rs. 29,51,000 was sustained under that head. Against the appellate order, two cross-appeals were filed, one by the assessee and the other by the Revenue. In the appeal filed by the assesses it challenged the additions to the returned income which were sustained by the appellate authority, whereas the Revenue challenged the appellate order disputing the correctness of the relief which was allowed to the assessee as stated earlier. The cross-appeals were decided by the Income-tax Appellate Tribunal by its common order. The appellate order in so far as it concerned the business income, was upheld. With regard to the additions under the head "Unexplained investment" the appeal filed by the assessee was allowed and that of the Revenue was dismissed. The Tribunal held that under Section 69 of the Income-tax Act, any addition on account of unexplained investments which are not recorded in the books of account, if any, maintained by the assessee could only he assessed on the basis of the financial year immediately preceding the assessment year in which the investment was made. It held as under :

(3.) LEARNED counsel for the Revenue argued that the Income-tax Appellate Tribunal was not justified in entertaining the additional evidence to the effect that no investment in the construction of the building was made during the financial year relevant to the assessment year in question and, in any case, before entertaining such an evidence an opportunity should have been allowed to the assessing authority.