COMMISSIONER OF INCOME TAX Vs. NABADWIP CHANDRA DEY

JUDGEMENT

(1.) THE following question of law has been referred at the instance of the Commissioner by the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati, under Section 256(1) of the Income-tax Act, 1961, for our opinion :

(2.) THE facts relevant for the purpose of deciding the aforesaid question of law may be briefly stated thus: THE assessee is an individual. THE relevant assessment year is the assessment year 1961-62. THE assessment of the assessee for the aforesaid year was reopened by the Income-tax Officer under Section 147(a) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). In the course of the reassessment proceedings the Income-tax Officer, A-Ward, Tripura Circle, Agartala, found that the assessee had introduced cash credits amounting to Rs. 21,000 in his books of account in the name of his father-in-law, Shyamacharan Dey. As the assessee could not explain satisfactorily the nature and source of the said amount, the Income-tax Officer added the same to the income of the assessee as income from undisclosed sources. THE Income-tax Officer further found that there was unexplained investment in the construction of a house by the assessee at Dharmanagar. A sum of Rs. 7,600 was determined to be the unexplained investment during the relevant assessment year and the same was also added to the income of the assessee as unexplained investment. Thus, in the aggregate, a sum of Rs. 28,600 was added to the income of the assessee. On appeal, the Appellate Assistant Commissioner of Income-tax confirmed the addition made by the Income-tax Officer. THE assessee preferred an appeal before the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati (shortly "the Tribunal"). In the appeal, the assessee pleaded his inability to produce evidence regarding the investment or the deposit. However, it was contended by the assessee as an alternative submission that there were intangible additions of about Rs. 9,000 in the assessment year 1959-60, Rs. 10,000 in the assessment year 1960-61 and Rs. 7,000 in the assessment year 1961-62. It was further stated that there were intangible additions in the assessment year 1958-59 also. It was argued that some credit must be given for these intangible additions made in the past. THE Tribunal held that in the context and setting of the relevant facts, the assessee has to be given some credit for the intangible additions made in the past. It came to the conclusion that the assessee should be given credit for a sum of Rs. 15,000 on that account. Accordingly, a set-off was given for Rs. 15,000 against the additions made of Rs. 28,600 by the Income-tax Officer on account of undisclosed deposit and investment. By setting off this amount, the Tribunal reduced the addition made by the Income-tax Officer to Rs. 13,600. THE Commissioner of Income-tax applied for a reference and, at his instance, the Tribunal has referred the aforesaid question of law for our opinion.

(3.) THE nature of intangible additions and the question of their availability for application by the assessee first came up for consideration before the Andhra High Court in Lagadapati Subba Ramaiah v. CIT, 1956 30 ITR 593 .where it was observed (p. 599) :