LAWS(APH)-1969-9-12

ADDEPALLY NAGESWARA RAO Vs. COMMISSIONER OF INCOME TAX

Decided On September 16, 1969
ADDEPALLY NAGESWARA RAO AND BROTHERS Appellant
V/S
COMMISSIONER OF INCOME-TAX Respondents

JUDGEMENT

(1.) THIS is a reference made to this court under Section 66(1) of the Indian Income-tax Act, 1922 (XI of 1922), hereinafter called the " Act ", and raises the following three questions :

(2.) THE facts out of which these questions arise may briefly be mentioned.

(3.) IT appears that, in the course of the proceedings for the assessment year 1962-63, the Income-tax Officer had some information which led him to believe that one of the partners, A. Mareswara Rao, was not in fact a partner. An inspector of income-tax seems to have visited the premises of the firm somewhere in December, 1962, and obtained a statement from Mareswara Rao. The statement indicated that Mareswara Rao was unable to explain the source of the capital which is claimed to have been contributed by him and in lieu of which he was given a six annas share in the firm. IT also states that the said partner had very vague ideas about the capital contributions and in regard to the shares of the other partners. Mareswara Rao was stated to be the managing partner of the firm which factor highlighted the suspicion which had arisen on account of this statement in the mind of the Income-tax Officer. Although, thereafter, in January, 1963, and May, 1963, Mareswara Rao made some attempts to explain and clarify the doubts, no final decision was taken on that matter and it was pending before the Income-tax Officer.