BHOGILAL VIRCHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question, which has been referred at the instance of the assessee under S. 256(1) of the IT Act, 1961, is as follows :

(2.) THE assessee, who is the proprietor of a Kirani Stores, was assessed to income -tax on a total income of Rs. 21,347 for the asst. year 1960 -61, for which the relevant previous year was Sanvad 2015, i.e., from 13th Nov., 1958, to 12th Oct., 1959. On noticing in the assessment proceeding for the asst. year 1962 -63, that there were cash credits of the amount of Rs. 9,000 in the books of the assessee in the name of one Smt. Gajibai Maganlal in the month of March, 1960, the ITO reopened the assessment of the assessee for the asst. year 1960 -61. In reply to the notice under S. 148 of the act the assessee filed a return declaring the same quantum of income, as he had done originally. His explanation with regard to the sum of Rs. 9,000 was that it belonged to the son of Gajibai. This explanation was rejected by the ITO and holding that the money really belonged to the assessee the sum of Rs. 9,000 was included as the assessee's income from undisclosed sources by an order dt. 30th March, 1966.

(3.) MR . Pandit, appearing on behalf of the assessee, has contended that S. 68 of the Act merely gave recognition to the legal position relating to the conclusion of cash credits in the taxable income of the assessee, if the assessee fails to give a proper explanation in respect of the cash credits. According to the learned counsel, the position with regard to unexplained cash credit under the Act is the same as under the provisions of the Indian IT Act, 1922, under which the unexplained cash credits were included as income from undisclosed sources for the previous year, which was the final year. Thus, according to the learned counsel, S. 68 having merely given recognition to the prevalent legal position could not be treated as a substantive provision of law and S. 68 was, therefore, merely a procedural provision of which the assessee was entitled to take benefit. In support of the contention that in the instant case the cash credits could be included as his income only in respect of the asst. year 1961 -62, the learned counsel has relied on a construction, which has been placed by this Court on the provisions of S. 69A of the Act in J.S. Parkar vs. V.B. Palekar (1974) 94 ITR 616 (Bom). Sec. 68 of the INCOME TAX ACT, 1961, reads as follows :