COMMISSIONER OF INCOME TAX Vs. JAGADISH PRASAD AGARWALLA

JUDGEMENT

(1.) Jagadish Prasad Agarwalla of Nadia, the assessee in the instant case, filed a return of his income for the assessment year 1964-65, the relevant previous year having ended on 1370 B. S. Ratha Jatra, i.e., being the period from the 14th July, 1962, to the 3rd July, 1963, according to the English calendar. During the, assessment, a cash credit of Rs. 15,000 was discovered in his books in the name of one Kedar Nath Agarwalla. Summons under Section 131 of the I.T. Act, 1961, issued to the said Kedar Nath Agarwalla at the address of the latter as furnished by the assessee, by registered post, came back unserved with the postal remark " not known " The assessee's explanation was that Kedar Nath was a citizen of Pakistan, that he was then in Pakistan and had no source of income in India.

(2.) The ITO held that the source and nature of the said cash credit had not been proved and, accordingly, he treated the same as the assessee's income from undisclosed source and included the same in the assessment of the assessee's income. The said addition of Rs. 15,000 was confirmed by the AAC and the Income-tax Appellate Tribunal.

(3.) The ITO also initiated proceedings for imposition of penalty under Section 271(1)(c) of the I.T. Act, 1961, and as it appeared to him that the minimum penalty imposable would be over Rs. 1,000 he referred the case to the IAC. It was discovered by the IAC in the proceedings before him that the credit in the name of Kedar Nath Agarwalla stood at Rs. 20,000 and not Rs. 15,000. He referred the matter back to the ITO who reopened the assessment under Section 147 of the Act, and added the enhanced amount as the assessee's income from undisclosed sources.