(1.) In this reference under Section 256(2) of the Income-tax Act, 1961, the following questions of law have been referred to this court :
(2.) Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the explanation offered by the assessee in respect of Rs, 1,82,535 (rupees 5,126 cash, Rs. 56,606 foreign currency, Rs. 40,803 gold sovereigns and Rs. 80,000 expenses for investment in house property or any part thereof) and in treating the same as undisclosed income of the assessee and as such liable to be assessed in the assessment year 1968-69 ?" 2. The assessment year involved in 1968-69 relevant to the accounting year ended March 31, 1968. In the raids conducted by the Revenue in the house, locker of the assessee in a bank and the business premises some time in September, 1967, the Revenue found the following assets :-- <FRM>JUDGEMENT_270_ITR205_1994Html1.htm</FRM>
(3.) The assessee by way of an explanation for the source of the assets submitted that his wife had received gifts of Rs. 40,000 and Rs. 1,50,000, respectively, from her mother-in-law and her father. Out of these gifts, the aforesaid assets were acquired and investments made. It was further stated that the said gifts were lying in cash with the assessee's wife and that she had shown the same in her wealth-tax returns right from the assessment year 1963-64. But this explanation was not accepted by the Income-tax Officer in the proceedings under Section 132(5) as well as by the Central Board of Direct Taxes in its order under Section 132(12) of the Act. The treatment of the aforesaid items as the assessee's income from other sources in the order under Section 132(5) was affirmed by the Board in its order under Section 132(12). The Income-tax Officer, therefore, followed the said decision in completing the assessment and treated the amount of investment disclosed in the search as the assessee's income from other sources.