SURMUKH SINGH UPPAL Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE assessee is late Dr. Surmukh Singh, s/o late Sardar Narain Singh Uppal. The original assessment for the assessment year 1946-47, relevant to the accounting period ending on 31st March, 1946, was completed by the ITO, Special Circle, Amritsar, on 16th December, 1948, in the status of non-resident, on a total income of Rs. 31,444. Later on it came to the notice of the ITO that during the relevant accounting period, the assessee had made huge investments by way of fixed deposits in banks, purchase of agricultural land, purchase of house property, etc. , which was not disclosed at the time of earlier assessment. With the prior approval of the Commissioner, action under Section 34 of the Indian I. T. Act, 1922 (hereinafter referred to as "the Act"), was taken. During the course of reassessment proceedings, the ITO required the assessee to explain and prove the nature and source of some deposits and investments. After examining the evidence produced by the assessee, the ITO added a sum of Rs. 3,58,314 as income from undisclosed sources represented by the various bank deposits and investments, after including a sum of Rs. 15,000 invested in the purchase of agricultural land and Rs. 26,000 invested in the purchase of the property at Majitha Road. The ITO, in the reassessment proceedings, held the status of the assessee as "resident but not ordinarily resident" as against the status "nonresident" assigned in the original assessment proceedings and further included a sum of Rs. 40,000 which was brought by the assessee at the time of his arrival in India from Africa in January, 1946, under the provisions of Section 4 (1) (b) (iii) of the Act. The ITO also included Rs. 864 by way of interest received on the F. D. of Rs. 50,000 which was taken in the name of Sardar Narain Singh. Thus, the ITO completed the assessment on a total income of Rs. 4,17,464 by his order dated23rd March, 1960.

(2.) FEELING aggrieved from the order of the ITO, an appeal was preferred by the assessee. The AAC partly allowed the appeal and only a sum of Rs. 1,10,860 as against the total addition of Rs. 3,58,314 made by the ITO towards the total income of the assessee was sustained. Aggrieved from the findings of the AAC, both the assessee, as well as the Revenue filed appeals. The Tribunal partly allowed both the appeals, vide its order dated 31st August, 1974. The Department, as well as the assessee filed applications under Section 256 (1) of the I. T. Act, 1961, for referring certain questions of law for the opinion of the High Court. The application filed by the Revenue was allowed and two questions were referred to for our opinion in ITR No. 1 of 1976 (Dr. Surmukh Singh Uppal v. CIT--see p. 191 (supra) ). However, the application filed by the assessee was declined. Dissatisfied with the order of the Tribunal refusing to refer the questions, the assessee filed a petition under Section 256 (2) of the I. T. Act, 1961. After considering the matter, it was held in I. T. C. No. 15 of 1976 (Dr. Surmukh Singh v. CIT--see p. 185 (supra)), that certain questions of law did arise for decision of this court. Accordingly, the Bench directed the Tribunal to refer the following questions of law for the opinion of this court:

(3.) THE Bench further ordered that this reference to be heard along with I. T. R. No. 1 of 1976. This is how the matter has come up before us for expressing our opinion on the aforesaid question.