ANSARI JEWELLERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference under Section 256(1) of the Income-tax Act, 1961, is at the instance of the assessee to answer the following question of law :

(2.) THE relevant assessment year is 1969-70. THE assessee M/s. Ansari Jewellers, Jaipur, claimed to be assessed as a firm. THE Income-tax Officer, however, assessed it as an "association of persons" under Section 144 of the Income-tax Act, and determined the total income at Rs. 35,000 comprising Rs. 18,000 as the estimated business income and Rs. 17,000 as income from undisclosed sources. THE assessee preferred an appeal to the Appellate Assistant Commissioner and challenged the quantum of the income assessed and assessment in the status of "association of persons". THE Appellate Assistant Commissioner deleted the addition of Rs. 17,000 in full and reduced the business income from Rs. 18,000 to Rs. 15,000. It was also held by the Appellate Assistant Commissioner that the Income-tax Officer was not justified in treating the appellant as an "association of persons".

(3.) CONSEQUENTLY, the reference is answered in favour of the assessee and against the Revenue as under :