SUNDAR LAL JAIN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is an individual. He became a partner of the firm, Messrs, Saraswati Udyog, which was constituted in Diwali, 1968. His share in the firm was 27%. On November 7, 1968, he gave 11 engines and some other spare parts to the firm of the total value of Rs. 40,000. This was his capital contribution to the firm. He also gave a cash deposit of Rs. 6,000 to the firm on June 4, 1969. THE ITO, while computing the income for the assessment year 1970-71, required the assessee to explain the source of these investments. He disbelieved the explanation offered by the assessee and included these two items in the assessable income.

(2.) ON appeal, it was held that the inclusion was justifiable only under Section 60. ON merits, the explanation offered by the assessee was disbelieved and the inclusion was held justified. In the result, the appeal was dismissed. The assessee then went up to the Tribunal. The Tribunal held that Section 68 was applicable because the books of the firm are as much books of the assessee and the credit entry therein can be considered under Section 68. They held that Section 69 was not applicable. ON the merits, they agreed with the findings of the authorities below. In the result, the appeal was dismissed.

(3.) IN our opinion, Section 69 was applicable to the facts of the case. The Tribunal was in error in holding that Section 68 was applicable. The Tribunal did not answer the defect pointed out by the assessee in the course of arguments before it that if Section 69 were to apply then on the merits there will be some difficulty in including it in the income for the year 1970-71. The assessee's argument was that the income could be includible under Section 69 only for the assessment year 1969-70. The Tribunal has, however, not given any finding on this aspect. This finding is also not the subject-matter of the question referred to us. We, therefore, leave the question open.