SURRENDRA OVERSEAS LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This reference under the I.T. Act, 1961, relates to the assessments of M/s. Surrendra Overseas Ltd. in assessment years 1960-61 and 1961-62, the previous years ending on the 31st March of 1960 and 1961. The assessee had purchased a ship named APJ Ambar in the assessment year 1960-61 and another ship named APJ Usha in the assessment year 1961-62. In the assessments for the said assessment years, the assessee had claimed and had been allowed development rebate in respect of the said two ships amounting, respectively, to Rs. 5,10,830 and Rs. 5,90,653.

(2.) The assessee preferred appeals from the said assessments. The main contention in the appeals was that the ITO had wrongly added to the total income of the assessee various amounts shown as hundi loans as income from undisclosed sources. An additional ground, raised at the hearing of the appeal, was that the amount shown in the account of the assessee as estimated value of subsidies, in fact, had not been received by the assessee but was wrongly added back. The AAC found that relevant documents and records in respect of the said hundi loans had not at all been examined by the ITO and that statements obtained from the alleged creditors had also not been made available to the assessee. He found further that the assessee's claim in respect of the estimated subsidies credited in the latter's account had not been examined by the ITO. He directed the ITO, inter alia, to give reasonable opportunity to the assessee to produce all evidence in support of the genuineness of the loans and also to rebut the adverse inference drawn by the ITO. The ITO was also directed to look into the claim relating to the estimated subsidies. The AAC's order was as follows :

(3.) At the reassessments, pursuant to the aforesaid, the ITO came to note that though the assessee had claimed and had been allowed development rebate in respect of the said two ships, the said ships had been sold or otherwise transferred within a period of eight years from the date of their acquisition. Finding that the assessee had become disentitled to the benefit, he withdrew the rebate granted earlier.