JAMNALAL NATHANI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this reference under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion:

(2.) THE material facts giving rise to this reference, briefly, are as follows : THE assessee was at the material time a partner in the firm carrying on business at Ujjain under the name and style of Vimalchand Premchand. During the assessment year 1971-72, the assessee constructed a house and in the return filed by him disclosed an investment of Rs. 71,864 in connection with the construction of the house. THE ITO completed the assessment on August 27, 1974. THEreafter, the ITO received some complaint about evasion of tax by some partners of the firm of which the assessee was a partner. THE ITO made inquiries and as a result of the inquiry the ITO came to the conclusion that the cost of construction of the house built by the assessee was Rs. 1,12,300. THE ITO, therefore, initiated proceedings under Section 147(b) of the Act. THE assessee showed cause; but the ITO included in the total income of the assessee a sum of Rs. 52,196 as income from undisclosed sources. On appeal before the AAC, it was contended by the assessee that the reassessment proceedings initiated by the ITO under Section 147(b) of the Act were invalid. This contention was rejected by the AAC and, on further appeal, by the Tribunal. Hence, at the instance of the assessee, the aforesaid question of law has been referred to this court for its opinion.

(3.) FOR all these reasons, our answer to the question referred to us is in the affirmative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.