HARLAL MANNULAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the I.T. Act, 1961, referring for our answer the following question of law :

(2.) THE reference relates to the assessment year 1973-74. THE relevant previous year of the assessee was from 19th October, 1971, to 5th November, 1972. THE ITO made an addition of Rs. 20,000 as income from undisclosed sources and this addition was maintained by the Income-tax Appellate Tribunal. THE addition was made on the ground that the assessee had resources at the commencement of the accounting year which he was unable to explain. THE assessee in a statement riled along with the return for the year 1972-73 stated that he was possessed of Rs. 26,000 on 18th October, 1971. It was also found that the assessee made a deposit of Rs. 2,900 on 10th November, 1971, in a bank. It was further found that the assessee invested Rs. 14,000 on 2nd December, 1971, in the purchase of a truck. THE finding, briefly stated, is that out of the amount of Rs. 26,000 the assessee was able to explain the source of Rs. 6,000 only, and he was unable to explain the source of Rs. 20,000 which he showed in his possession on 18th October, 1971. THE investments of Rs. 2,900 and Rs. 14,000 were made out of this amount of Rs. 20,000 and it is this amount of Rs. 20,000 which has been added as the income for the assessment year 1973-74.

(3.) FOR the reasons given above, our answer to the question is that the unexplained possession of money to the extent of Rs. 20,000 could not be subjected to tax in the hands of the assessee during the assessment year 1973-74. There will be no order as to costs of this reference.