1984 (11) TMI 25

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....f the Income-tax Act, 1961, for the assessment year 1967-68 ?" The reference arises out of an order of reassessment made on the assessee, an individual, for the assessment year 1967-68. The accounting year ended on March 31, 1967. The assessee filed a return originally. That return was not accepted and the Income-tax Officer (ITO) added sum of Rs. 5,914 to the income returned as difference in gross profit. With this addition, the assessment was completed. There was no appeal against the order and, thus, it has become conclusive. Thereafter, the Income-tax Officer noticed on the basis of the voluntary disclosure made by the assessee under section 15(1) of the Voluntary Disclosure of Income and Wealth Act, 1975, that income had escaped ....

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....ct that the Appellate Assistant Commissioner finally reduced the addition did not detract from the reasons recorded by the Income-tax Officer. So stating the Tribunal dismissed the appeal. Section 149(1)(a)(ii) reads: " for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year. " This is similar to section 34 of the Indian Income-tax Act, 1922. The expression " likely to amount to " appears to mean that the Income-tax Officer must form an honest belief that the amount of escaped income for the period in question is likely....

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....That income, although commonly described as 'intangible', is as much a part of his real income as that disclosed by his account books. It has the same concrete existence. It could be available to the assessee as the book profits could be. In Lagadapati Subba Ramaiah v. CIT [1956] 30 ITR 593, the Andhra Pradesh High Court adverted to this aspect of secret profits and their actual availability for application by the assessee. That view was affirmed by the Madras High Court in S. Kuppuswami Mudaliar v. CIT [1964] 51 ITR 757. If the addition made by the Income-tax Officer in the original assessment had been taken into consideration as the real income of the assessee, there was absolutely no basis for the Income-tax Officer to form an opinion....