H. S. IMAM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference arises under the IT Act, 1961 ( hereinafter referred to as `the Act'). The Tribunal makes this reference at the instance of the assessee in connection with the asst. yr. 1974-75 and referred the following question of law for consideration of this Court :

(2.) FOR the asst. yr. 1974-75 the assessee had filed his return of income declaring income of Rs. 17,635 which was accepted under s. 143(1) of the IT Act, 1961. FOR the subsequent year 1975-76, when the ITO was scrutinising the balance sheet filed by the assessee, it was noticed that there was a balance of Rs. 26,805, outstanding due from Birla Bazar at the end of the accounting year relevant for the asst. yr. 1975-76. The ITO investigated into the matter and found that the aforesaid sum of Rs. 20,000 represented two items of loans given by the assessee to the Birla Bazar. The loans were given on 10th Sept., 1973 (Rs.5,000) and 22nd Oct., 1973 (Rs. 15,000). It was found that the loan transactions related to the previous year relevant for the asst. yr. 1974-

(3.) SHRI Habeeb Ansari, the ld. counsel appearing for the assessee, questions the validity of the reassessment proceedings on a short ground. He invites attention to s. 69A of the Act, which provides that any unexplained money, etc. shall be deemed to be the income of the assessee as relating to the financial year in which the assessee is found to be the owner of the money. It is submitted that, finding that the assessee is the owner of the two amounts of Rs. 5,000 and Rs. 15,000 lent to Birla Bazar and noticing that there is no explanation about the nature and source of acquisition of that money, the ITO brought to assessment the sum of Rs. 20,000 specifically under s. 69A by deeming the unexplained money to be the income of the assessee for the financial year 1973-74 corresponding to the asst. yr. 1974-75. The id. counsel submits that it is not permissible for the ITO to clutch at the jurisdiction under s. 147 to bring to charge `deemed income'. According to the ld. counsel the provisions of s. 147 can be availed only for the purpose of assessing the `real income' of the assessee. Inasmuch the reassessment proceedings are initiated in the present case to bring to charge `deemed income' under s. 69A, it is alleged, the proceedings are not valid. The ld. counsel also pointed out that the assessment having been completed under s. 143(1), it was open to the ITO to take recourse to the provisions contained in s. 143(2) of the Act by issuing an appropriate notice to the assessee and an assessment under s. 143(3) of the Act could have been made for the asst. yr. 1974-75. Without availing the remedy available to the ITO, the counsel contends, the power to reopen the assessment under s. 147 should not have been exercised.