MULCHAND HIRALAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) ASSESSEE as also the Revenue made two independent applications to this Court under Section 256(2) of the Income Tax Act of "'1961 (hereinafter referred to as the 'Act') asking for a direction to the Appellate Tribunal to state a case and refer certain questions said to be of la w arising out of the appellate order of the Tribunal for opinion of the Court. The year of assessment is 1960 -61 corresponding to the accounting period ending on 9 -5 -1959. During' the year, Assessee had cash credits to the extent of Rs. 1, 96, 593/ - from one Messrs Kandoi Company of Calcutta. The Income Tax Officer did not accept the cash credits as genuine and added a sum of Rs. 1, 10. 000/ - which was the peak amount. The Income Tax Officer did not accept the claim that the cash credits represented genuine loans and treated the amount as income in the hands of the Assessee from undisclosed sources. He directed proceedings under Section 271(1)(c) of the Act to be initiated. The Appellate Assistant Commissioner upheld the addition of cash credits. So did the tribunals.

(2.) ASSESSMENT is for the year 1960 -61. The provisions of Section 68 of the Act would in terms apply to the assessment for the year. The Income Tax Officer by his letter dated 17th of September, 1964, wrote to the Assessee:

(3.) A copy of the order of the Commissioner of Income Tax, West Bengal, has been placed before us by learned Standing Counsel. Admittedly Assessee was not a party before the Commissioner and, therefore, would not be bound by the findings recorded in the revision proceeding under Section 33 -B of the Income Tax Act of 1922. What has been found by the Commissioner may be true. The Commissioner nowhere recorded a finding that the transactions with the Assessee were bogus. General observations were made regarding the nature of transactions carried on, by the Assessee (creditor of the Assessee before us). Not withstanding the observations in general made in the revisional order, it is quite possible that the transactions with the Assessee may be genuine. The Income Tax Officer as also the other forums in the appellate hierarchy have been swayed away by the observations or findings of the Commissioner in the aforesaid revisional order. Some evidence was before the Income Tax Officer. The Income Tax Officer had accepted the request of the Assessee to call the creditor. It is not a case where there was no response from the creditor. On two occasions he had replied asking for time. There is no basis for the assumption of the Income Tax Officer that the creditor was aware of the position that by 31st of March, 1965, assessment would become time -barred and, therefore, the creditor could escape the clutches of law by dilly delaying until that day. The delay completing the assessment was essentially on the part of the Income Tax Officer because instead of attending to the assessment in good time, he waited till the very and of the period allowed in law to complete the assessment. We are satisfied that the Income Tax Officer was anxious to close the proceeding as the bar of limitation was about to set in and, therefore, placing undue importance on the decision of the commissioner in the revision proceeding, he concluded the matter. Before the Appellate Tribunal these aspects were canvassed. The tribunal in paragraph 9 of the appellate order observed: