COMMISSIONER OF INCOME TAX Vs. SHINDORE H N

JUDGEMENT

(1.) THE question referred to at the instance of the revenue in this reference is as under :

(2.) FOR the assessment years 1943 -44 to 1946 -47, the relevant previous years are the financial years ending March 31, 1943,1944,1945 and 1946, respectively. The assessee, H. N. Shindore, was deriving income from lands, money -lending and country liquor business. He denied having kept or maintained any books of account in respect of his business. He denied having kept or maintained any books of account in respect of his business and sources of income except the excise registers in connection with the liquor business. Prior to the assessment years 1941 -42, the income of the assessee did not reach the taxable limit. In the year 1941, money -lending business was reach the taxable limit. In the year 1941, money -lending business was started and the country liquor business was expanded. Assessments for the assessment years 1943 -44 to 1946 -47 were completed on total incomes of Rs. 14,884, Rs. 14,922, Rs. 33,592 and Rs. 25,155, respectively. Between April 1, 1942, and March 31, 1946, there was substantial and vast expansion of the assessee's business, his investments in properties, lands, sites and National Savings Certificates, etc. It was, therefore, suspected that the assessee had suppressed a lot of income form taxation. His case the assessee had supressed a lot of income form taxation. His case accordingly was referred to in the year 1950 by the Central Government to the Income -tax Investigation commission under section 5(1) of the Taxation on Income (Investigation commission) Act, 1947 (hereinafter referred to as 'the Act'). The said Commission submitted its report on September 9, 1952. Pursuant to the said report of the Commission, consequential assessment orders were passed by the Income -tax Officer on January 31, 1953, for the above assessment years. After those orders were passed proceedings for recovery of tax due under the said assessment orders were commenced.

(3.) BY four notices dated March 28, 1956, for the above four assessment years the Income -tax Officer commenced proceedings against the assessee under section 34(1A) of the Indian Income -tax Act, 1922, after obtaining the permission of the Commissioner of Income -tax. By the said notices he was called upon to file his total wealth statement as on March 31, 1940, and March 31, 1947. Pursuant to the said direction the assessee field his wealth statements according to which his total wealth as on March 31, 1940, was Rs. 2,59,313 and that as on March 31, 1947, was Rs. 4,81,436. Thus, according to the assessee, during this period there was an increase in his total wealth by Rs. 2,22,123. It was, however, submitted by the assessee that a sum of Rs. 3,59,538 was available to him from agricultural income, jagir income and also from the assessed income and that the total investments were fully explainable and that no income chargeable to tax had escaped assessments for those years. Before the Income -tax Officer he also raised objection to the validity of the initiation of reassessment proceedings. The said contentions of the assessee were rejected by the Income -tax Officer and he came to the conclusion that the increase in the wealth of the assessee during the said period was Rs. 3,27,705 and brought it to tax for the assessment years 1943 -44 to 1946 -47. The said assessment orders were passed on July 31, 1959.