Undisclosed profits from existing business are not a separate source; the accounting year option governs tax timing.

Undisclosed profits from an existing business are not a separate source of income merely because they were secreted from the books. The relevant previous year must be determined by reference to the assessee's existing businesses and the valid accounting year option exercised under the Income-tax Act, 1922, rather than by treating the profits as arising in a distinct source or by substituting the financial year. On that basis, the sum of Rs. 19,000 was includible in the assessee's total income for the assessment year 1947-48, and the issue was resolved in favour of the Revenue.

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Issues: Whether the sum of Rs. 19,000, treated as secreted profits from the assessee's existing businesses, was liable to be included in the total income for the assessment year 1947-48.

Analysis: The amount was found to represent income from the assessee's mica business and cloth and grain business, and not from any distinct or independent source. For the purpose of determining the previous year, the relevant source of income remained the existing businesses for which the assessee had maintained accounts and exercised his option as to the accounting year. Secreted profits arising from those businesses could not be split off and treated as a separate source merely because they were not disclosed in the books. The statutory definition of previous year under Section 2(11)(a) of the Income-tax Act, 1922 governed the assessment, and the Tribunal was not justified in substituting the financial year 1945-46 for the accounting years adopted by the assessee.

Conclusion: The sum of Rs. 19,000 was rightly includible in the assessee's total income for the assessment year 1947-48, and the question was answered in favour of the Revenue.

Ratio Decidendi: Undisclosed profits derived from an existing business do not constitute a separate source of income, and the previous year must be determined by reference to that existing source and the assessee's valid accounting year option under the Act.

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