COMMISSIONER OF INCOME TAX Vs. CHAMANLAL NARULA

JUDGEMENT

(1.) THESE two references are under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The statements of fact were made on the following common question of law :

(2.) THE assessment in respect of the assessee was completed under Section 143(3) of the Act for the assessment year 1962-63 on March 28, 1967, and for the year 1963-64 on March 20, 1968. Coming to know that the assessee had not paid tax on some items of his income, notices were issued for those two years for reopening of assessment under Section 147(a) of the Act. It was found by the Income-tax Officer as well as the Appellate Assistant Commissioner that, in respect of the year 1962-63, the assessee invested Rs. 40,500 and in the year 1963-64 he invested Rs. 50,000 in the business of a partnership firm, namely, M/s. Narula Cold Storage and Ice Factory. Since the sources of the investments could not be explained, they were treated to be undisclosed income in the hands of the assessee and were taxed. THE assessee preferred appeals before the Income-tax Appellate Tribunal. On appeal, the Tribunal without going into the facts, held that notice under Section 147(a) of the Act is bad on account of the fact that there is no non-disclosure of material facts which is the pre-condition for exercise of power under Section 147(a) of the Act. Aggrieved by the decision, the Department filed applications under Section 256(1) of the Act and a statement of the case has been made for both the years on the question extracted earlier.