SURMUKH SINGH Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE assessee, late Dr. Stirmukh Singh; was originally assessed to tax for the assessment year 1946-47, relevant to the accounting period ending March 31, 1946, on a total income of Rs. 31,444. Later on, proceedings under Section 34 of the Indian I. T. Act, 1922 (herein-after referred to as the "old Act,"), were taken by the ITO and a notice under the said section was served on the assessee on March 14,. 1955, and the assessment was completed ex parte under Section 23 (4) of the old Act, on a total income of Rs. 3,84,21 3 in the status of "resident but not ordinarily resident". The assessee filed an application under Section 27 of the old. Act which was accepted on May 18, 1957, and the proceedings were commenced de novo from the return stage. , In the course of the reassessment proceedings, the ITO required the assessee to explain and prove the nature and source of various deposits. The assessee explained that deposits in banks, Jubilee bonds and in the firm, M/s, Hindustan Rayon and Woollen Textile Mills in the name of the assessee in the relevant accounting year when the assessee was out of, India, were made by the father, S. Narain Singh, who had gifted these amounts to the assessee. It was also explained that the assessee did not make investment in the name of his son, Bhupal Singh, and had not made any deposit in the accounts of M/s. B. H. Singh and Company with the Punjab National Bank, Amritsar. In support of his case, the assessee placed various documents before the ITO and also made an application requesting the ITO to summon Sardar Narain Singh Uppal and the account books of the various firms for the period from April 1, 1945, to March 31, 1946, under Section 37 of the old Act at the expense of the assessee, but this application was rejected by the ITO. The ITO accepted the explanation of the assessee qua some of the items and qua others, the explanation was held to be not plausible. Thus, the ITO completed the assessment on a total income of Rs. 4,17,464 by his order dated March 28, 1980.

(2.) THE assessee pleaded in the first appeal that the provisions of Section 34 (1) (a) of the old Act were not applicable to the present case and that the assessment could not be reopened after the lapse of more than 4 years. The AAC negatived the contention of the assessee and held that the ITO had rightly invoked the provisions of Section 34 (1) (a) of the old Act, since the assessee failed to disclose a sum of Rs. 70,000 which was deposited in the name of M/s. B. H. Singh and Company. As regards the addition of Rs. 3,58,314, representing various deposits in the banks and other investments it the name of the assessee, the AAC deleted the entire addition except for the following items : Rs. (i) Deposits in the name of the assessee with M/s. Hindustan Rayon 47,000and Woollen Textile Mills Ltd. on 1-9-1945. (ii) Out of deposits of Rs. 70,000 in the Punjab National Bank Ltd. , 63,860hall Bazar, Amritsar, in November and December, 1945, in the name of M/s. B. H. Singh and Company Total. 1,10,860.

(3.) THUS, out of the total addition of Rs. 3,58,314 made by the ITO towards the total income of the assessee as income from undisclosed sources, only a sum of Rs. 1,10,860 was sustained by the AAC.