SHANKAR LAHIRI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal has referred the following question of law to this Court under S. 256 (1) of the IT Act, 1961 ('the Act') :

(2.) THE assessee by his letter dt. 30th March, 1978 objected to the aforesaid additions proposed in the draft assessment order. On 31st March, 1978, the ITO forwarded the draft order along with the assessee's objections to the IAC, Range-III, Calcutta. During the course of hearing under S. 144B of the Act before the IAC, the assessee had requested the IAC to issue summons under S. 131 to the aforesaid parties to whom payments of the illegal gratification were alleged to have been made. The IAC, however, did not consider it worthwhile to summon them. According to the IAC , the diary seized in the course of the search being in the own hand writing of the assessee himself containing detailed records of mostly unaccounted money, should be taken as a genuine document. It was not for the Department to prove that the diary was not genuine. According to the IAC , the assessee did not adduce any evidence to show that the diary and the entries recorded therein were in any way bogus or fictitious. Under these circumstances, the IAC approved the aforesaid addition of Rs. 1,22,032. He also approved the addition of Rs. 17,000 being the fixed deposit in the name of the deceased-assessee's wife. The order covering the approval of the IAC was sent to the ITO on 18th Sept., 1978 and a copy thereof was endorsed to assessee . After the receipt of the aforesaid approval of the IAC, the ITO on 26th Sept., 1978 wrote a letter to the assessee seeking clarification in respect of certain entries made by him in the diary from January, 1975 to Dec., 1975. After some adjournments, on 30th Jan., 1979 some explanation was given regarding the expenses recorded in the said diary. At the same time, the assessee's son prayed for further time on the ground of serious illness of the assessee . This was not acceded to by the ITO, who on 23rd Feb., 1979 drew up another draft assessment order contemplating a further proposed addition of Rs. 1,68,590 found to be noted in the said personal diary of the deceased-assessee under the head 'Personal and domestic expenses', unaccounted for in regular books of account maintained by the assessee. A copy of the said draft order was once again forwarded to the assessee inviting his objections, if any, to the additions proposed in the draft assessment order. In the mean while, the assessee died. The ITO brought his legal heirs on the records. He, therefore, invited objections, if any, from the said legal heirs of the deceased- assessee to the additions proposed in the second draft order. The legal heirs, vide their letter dt. 10th July, 1979, objected to the additions proposed in the draft order. On 12th March, 1979, the ITO forwarded the second draft assessment order along with the objections, referred to herein- before, to the IAC , Range-III, Calcutta. The IAC , after due hearing in accordance with law, made certain adjustments and reduced the additions proposed for the first time in the second draft order from Rs. 1,68,590 to Rs. 1,48,490. On receipt of the second approval of the IAC , the ITO passed the assessment order under S. 143 (3) of the Act on 30th March, 1979 on a total income of Rs.

(3.) THE CIT (A) held: