1984 (7) TMI 36

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....e questions of law have been referred to this court by the Tribunal under s. 256(1) of the I.T. Act, 1961 : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in holding that the sum of Rs. 40,000 added to the assessee's income from undisclosed sources could not be treated as a part of commercial profits of the assessee and could not accordin....

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....ear is 1963-64. The assessment was completed on a sum of Rs. 75,200. After adjusting the tax paid, the ITO computed the distributable surplus at Rs. 37,600. As the assessee had failed to declare any dividend, the ITO served a notice upon the assessee to show cause why additional super-tax should not be levied. The assessee pleaded that no dividend could be declared during the relevant year of acco....

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....nalty proceeding that was taken against the assessee, the sum of Rs. 40,000 was not treated as the assessee's income because the ITO was unable to discharge the onus of proving this sum as the assessee's income. On a parity of reasoning, this sum could not be treated as the commercial income of the assessee for the purpose of s. 104(c) of the Act. The Tribunal came to the conclusion that the addit....

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....ent of this court in the case of Banga Luxmi Hosiery Mills Pvt. Ltd. v. CIT [1977] 106 ITR 644. But there the facts were quite different. There, an assessment was made by applying s. 145 of the Act, because the assessee did not maintain its accounts properly and on estimate the profits were calculated at a certain figure. In this case, a sum has been added back, because the assessee had not been a....