SUKHLAL BHANWARLAL (HUF) Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) On the direction of this Court passed on 2nd August, 1988 in Misc. Civil Case No. 174 of 1985 on application of the assessee presented under s. 256(2) of the IT Act, 1961 (for short the Act), the Tribunal has stated the case and referred the undernoted questions of law arising out of the order dt. 26th October, 1984 passed by the Tribunal in ITA No. 10/Ind/1983 for asst. yr. 1975-76 :

(2.) Facts lie in a narrow compass. For the asst. yr. 1975-76, (previous year ending Diwali, 1974) the assessee was originally assessed in the status of HUF under s. 143(3) of the Act on total income of Rs. 36,400 and agricultural income of Rs. 4,210. In wealth tax proceedings, the matter was examined by the appropriate authority and it was noticed that total wealth as on the valuation date had increased by Rs. 87,000. This formed the basis of the ITOs satisfaction that certain income had escaped assessment. He, therefore, documented the reasons and reopened the assessment for the asst. yr. 1975-76 under s. 147(a) of the Act. The assessee was noticed and then filed the revised return showing the agricultural income as Rs. 25,000, non-agricultural income Rs. 32,000 and gifts of Rs. 30,000. The ITO partly believed the assessee to the extent of Rs. 26,210 and held that the balance of Rs. 60,790 was unexplained accretion. He, thus, made the addition of Rs. 60,790 to the income of the assessee. He doubted the assertion as regards the receipts from the gift (Annexure-A). The assessee then filed the appeal before the AAC. In this appeal no ground was taken as to the validity of initiation of proceedings under s. 147(a) of the Act (Annexure B). The AAC concurred with the ITO and dismissed the appeal (Annexure C). The assessee then filed the appeal before the Tribunal. The order of the Tribunal does not contain any discussion about the proceedings under s. 147(a) of the Act. No Misc. Application under s. 254(2) of the Act was filed for any rectification. The appeal was dismissed. The assessee then filed the application under s. 256(1) of the Act in which no question regarding the initiation of proceedings under s. 147(a) was proposed. The application was rejected. The assessee then filed the application under s. 256(2) of the Act which was registered in this Court as Misc. Civil Case No. 174 of 1985. That was disposed of on 2nd August, 1988 directing the Tribunal to state the case and refer the aforesaid questions for consideration. In compliance, the Tribunal has referred the aforesaid questions.

(3.) We have heard Shri P.M. Choudhary, learned counsel for the applicant/assessee and Shri A. M. Mathur, learned Sr. counsel with Shri A. K. Shrivastava, for the non-applicant/revenue.