CHHEDILAL DILASARAM Vs. COMMISSIONER OF INCOME TAX LUCKNOW

JUDGEMENT

(1.) THE assessee is a Hindu undivided family carrying on money lending and Sarafa business. It also derives income from property and dividends. On October 30, 1952, it was assessed on its total income for the assessment year 1949-50, the relevant previous year being the year ended March 31, 1949. During the assessment proceedings for the assessment year 1950-51, the Income-tax Officer noticed two cash credit entire in the account books relating to the money lending business, one of Rs. 6,000 made on March 6, 1949 and the other of Rs. 19,000 made on March 11, 1949. The assessee explained that the sums credited represented moneys withdrawn previously in 1930 and 1937 but the Income-tax Officer did not accept the explanation. He added the amount of Rs. 25,000 as income from undisclosed sources in the assessment for the assessment year 1950-51. Against the addition the assessee appealed unsuccessfully to the Appellate Assistant Commissioner. In second appeal before the Income-tax Appellate Tribunal, there was a difference of opinion between the Accountant Member and the Judicial Member, who while agreeing that the amount represented income taxable in the hands of the assessee, could not agree as to the assessment year respecting which it was liable to be taxed. The President of the Tribunal, upon reference, made to him, held that the amount of Rs. 25,000, could not be assessed in the assessment year 1950-51. In the result on December 16, 1954 the Tribunal made an order excluding the amount of Rs. 25,000 from the assessment for the assessment year 1950-51. The orders of the Accountant Member the Judicial Member and the President of the case. The Income-tax Officer now obtained the sanction of the commissioner of Income-tax and took assessment proceedings under section 34 in respect of the assessment year 1949-50. He rejected the explanation of the assessee in respect of the amount of Rs. 25,000, which was to the same effect as the earlier explanation and added that amount in the total income of the assessee for the assessment year 1949-50 as income from "other sources". The Appellate Assistant Commissioner dismissed the appeal of At the instance of the assessee, the Tribunal has referred three questions to this court for its opinion;

(2.) MR . P. N. Pachauri learned counsel for the assessee, has not made any submission in respect of the first question, and we shall assume for the purposes of this case that the amount of Rs. 25,000 represents income which has escaped assessment for the assessment year 1949-50 within the meaning of section 34. Mr. Pachauri however contends that the second and this questions should be answered in favour of the assessee. In order to appreciate the rival contentions of the parties, it is desirable to set out the findings of the Tribunal contained in its appellate order.

(3.) WE may now consider the second and third questions framed by the Tribunal. In the appeal relating to the assessment year 1950-51 the Tribunal found that the amount of Rs. 25,000, was not income which could be considered for the assessment year 1950-51, and no finding or direction rendered therein could be considered as a finding or direction in consequence of which or to give effect to which, a reassessment for the assessment year 1949-50 could be made. The provisions of the second proviso to section 34(3) are not attracted, and, in our opinion, the Tribunal plainly erred in holding by reference to that proviso that the bar of limitation could not be invoked by the assessee against the reassessment under section 34. That a finding or direction rendered by the Tribunal in a proceeding for one assessment year cannot be employed by reference to that proviso for ignoring the bar of limitation in respect of assessment proceedings concerning another assessment year has now been clearly laid down by the Supreme Court in Income-tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwan Das. In our opinion, it is not correct that no provision of limitation applies to the reassessment made on February 6, 1959. That provision is contained in section 34(3) which provides a period of four years from the end of the assessment year for an order of reassessment under section 34(1) (b) with an additional one year from the date of service of the notice where the notice has been issued within four years of the assessment year. The second question is answered accordingly.