GANGADHAR BAIJNATH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee, a partnership firm, advanced two loans, one of Rs. 97,00,000 on May 1, 1946, and the other of Rs. 5,10,000 on May 10, 1946, to M/s. Bagla Jaipuria and Company. On October 17, 1946, Messrs. Bagla Jaipuria and Company paid a sum of Rs. 1,77,232 to the assessee on account of interest on the two loans.

(2.) THE Income-tax Officer, proceeding on the consideration that the assessee followed the mercantile system of accounting, assessed Rs. 1,60,000 of the total amount of interest as income for the assessment year 1947-48 and the balance, Rs. 17,232, as income for the assessment year 1948-49. Upon appeal by the assessee against the assessment for the assessment year 1947-48, the Appellate Assistant Commissioner held that the sum of Rs. 1,60,000 was not taxable as income for that assessment year as it could not be said to have accrued during the previous year ending October 17, 1946. He excluded that sum from the assessment.

(3.) THE question is whether the aforesaid proviso enables the Income-tax Officer to ignore the bar of limitation when making an assessment of escaped income for any assessment year or does it enable him to do so only in respect of that assessment year which was the subject-matter of appeal or revision in which the finding or direction was give. THE question was clouded by controversy until the Supreme Court resolved the controversy recently in Income-tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwan Das, where in the majority judgment Subba Rao J. pointed out :