KHIZAR MOHD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) (1) In compliance with an order passed by this Court under section 66 (2) of the Indian Income Tax Act, 1922 the Income Tax Appellate Tribunal has stated the case and has referred to, this Court the following two questions of law : -

(2.) THE reference relates to the assessment year S. 2003, the accounting year being S 2002. The assessee was assessed to payment of income tax on an income of Rs. 53,202 by the Income Tax Officer, Srinagar by his order dated 10th assuj 2003 and was ordered to pay income tax of Rs. 5,819 for the assessment year 3003. On appeal Income Tax Commissioner affirmed the order of the Income Tax Officer and dismissed the assessees appeal An application was made by the assessee before the Finance Minister, Jammu and Kashmir praying that certain questions of law arose out of the order of the Income Tax Commissioner and requested him to make a reference to this Court. Meanwhile by Act No. XLI of 1954 the jurisdiction of the Central Income Tax Department was extended ever the State of Jammu and Kashmir. The petition before the Finance Minister, in pursuance of the provisions of Act No. XLI of 1954, was transferred by the Finance Minister to the Income Tax Appellate Tribunal Delhi. The Appellate Tribunal refused ; to make reference to this Court holding that the findings recorded by the Income Tax Commissioner were findings of fact and no question of law arose cut of the order of the Income Taw Commissioner. The assessee filed an application before this Court praying that the Income Tax Appellate Tribunal be required to state the case and refer to this Court certain questions of law which had arisen out of the order of the Income Tax Commissioner. The above mentioned questions have been referred to this Court by the Income Tax Appellate Tribunal for opinion.

(3.) THE assessee had encashed 60 currency notes of higher denomination of Rs. 1000 each from the Imperial Bank of India, Srinanar Branch in the year 1946 A. D. The case of the assessee was that he had earned no income in S year 2000, 2001 and 2002 excepting that he had received rent to the extent of Rs. 4200 in S. 2002. The learned Income Tax Officer had held that the amount of Rs 60,000 in 60 currency notes of denomination of Rs 1000 each was in fact income of the assessee and was liable to tax In the explanation the assessee had stated that he was running brothal house prior to S. 1991 and that he accumulated money and that he had taken 60 currency notes of Rs. 1000 each to Karachi for the purchase of furniture and fittings for his newly built house. He did not purchase furniture there and brought back the money to Srinagar and encashed the notes from the Imperial Bank of India, Srinagar Branch. The Income Tax Commissioner has mentioned in his order that in Srinagar brothels were closed in the year 1991 as a result of an Act of the Legislature aiming at stopping immoral traffic in women. It is therefore clear that the assessee could not have done any brothel keeping business in the State after S. 1991. There is no proof of the fact that the assessee was carrying on prostitution business in any part of British India. The learned Income Tax Commissioner has remarked in his order as follows : -