GANGADAS SARDA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Sec. 66, Sub -section (1), Income -tax Act by the Income -tax Appellate Tribunal. The question referred for our decision is as under : "Whether in the exercise of its discretion under Rule 12, the Tribunal was justified in not admitting the additional ground raised by the assessee at the stage of final hearing of the appeal -

(2.) RULE 12 of the Appellate Tribunal Rules reads as follows : "12. The Appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth, in the memorandum of appeal; but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule." The proviso to this rule is not necessary for the decision of the matter concerned.

(3.) THERE is no controversy about the question being an important one, substantially resting on a point of law, which, if answered favourably for the assessee, would go to the root of the assessment. A case on similar facts was decided by a Bench of this Court recently, see - - Commr. of Income -tax V/s. P. Darolia & Sons, 1955 Pat 478 (AIR V 42) (A), in which it was held, on the facts of that case, that in absence of any system of accounting adopted by the assessee and in absence of any option on his part, the only course open to the Income -tax authorities was to take the financial year as the previous year for the income from undisclosed sources and the amount could not be included in the assessees income for the assessment year. In arriving at this conclusion, their Lordships observed there is no presumption that the cash receipt is income of the same business for which the assessee has kept regular accounts; it may be income from the same business or from a different source and that the question in really a question of fact to be decided upon materials furnished in each particular case. It was found in that case that the amount included as secret profits from undisclosed sources, as in the present case, was not from the business of the assessee, but from a separate source and no account was maintained by the assessee in respect of the amount, nor had it exercised any option as regards the previous year with respect to that source. The Appellate Tribunal, admittedly, has not applied its mind whether the cash credits, which represented secret profits of the assessee, were from the same source of business or from a separate one. It appears that these sources have not been disclosed by the assessee who has, apparently not maintained any account, regarding the same. The Tribunal, therefore, should have considered the question in the light of the decision mentioned above and then arrived at its conclusion whether the cash receipts were of an income nature and, therefore, liable to be taxed. Reference has also been made in this connection on behalf of the assessee to two other unreported decisions, namely, Misc. Judl, Case No. 46 of 1953, D/ - 11 -11 -1954 (Pat) (B), and Misc. Judl. Case No. 18 of 1953, D/ - 8 -12 -1954 (PatJ (C). It is not necessary to discuss these two decisions as the principle involved is the same.