TaxTMI 
TaxTMI 
1982 (5) TMI 7
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....st December, 1961 (relevant to the assessment year 1962-63) and representing the assessee's income from undisclosed sources, but falling within the financial year 1960-61 having not been brought to tax in the assessment year 1961-62 could not be brought to tax for the assessment year 1962-63 ?" There is a slight typographical mistake in question No. 1, as it appears, in the dates. It should be the books of the assessee for the year ending 31st December, 1961, and not " 31st January, 1961 ", and there is a similar mistake in question No. 2. The assessment year under consideration is 1962-63. The assessee is a private limited company, which carried on business in purchase and sale of iron goods. The accounting period under consideration according to which the books of account were maintained by the assessee is the year ended 31st December, 1961. On going through the books of accounts relating to the accounting period ended 31st December, 1961, the ITO noticed credits in eleven different accounts. He proceeded to enquire into the credits and eventually came to the conclusion that the assessee was not able to tender satisfactory explanation. The relevant accounts considered have ....
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.... -------- 4,42,299. -------- The assessee had urged before the AAC that credits which fell in the financial year 1960-61, that is, in the period 1st April, 1960, to 31st March, 1961, coul....
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....oncluded that the pronouncement was authority for the view that for the assessment year 1961-62, what could be considered for the purposes of assessment would, if the facts otherwise warranted, include credits which fell in the financial year 1960-61, though the credits might have fallen outside the accounting period, i. e., the calendar year 1960, relevant to the assessment year 1961-62, for which books were maintained by the assessee. The Tribunal noticed the provisions of s. 68 of the I.T. Act, 1961, and expressed the view that income-tax was an annual tax and the law to be applied for any assessment year was the law which was applicable on the first day of April, of a particular assessment year. In support of this proposition, reliance was placed by the Tribunal on certain observations of the Supreme Court in the case of CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589. Section 68, according to the Tribunal, appears in the I.T. Act, 1961, and the I.T. Act, 1961, was to have effect from 1st April, 1962. There is nothing to show that the provisions of s. 68 would have any further retrospective effect and as such, the law as prevalent as on 1st April, 1961, according to ....
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....which this case has been argued, deals with " cash credits " and provides as follows "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. " Section 69 deals with " unexplained investments " and provides that where in the financial year immediately preceding the assessment year, the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the ITO, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. Section 69A provides for " unexplained money " and it provides that where in any financial year the assessee is found to be the owner of certain amount, then how that would be dealt with. It is m....
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....ion will apply. On the other hand, if the undisclosed income was found to be from some unknown source or the amount represents some concealed income which is not credited in his books the position would probably not be different from what was laid down in the various cases decided when the Act was in force. " In the facts of the instant case, it is important to bear in mind that this sum was being taxed not necessarily as an income from undisclosed source, but as an amount entered in the books of account of the assessee for which no explanation or satisfactory explanation could be offered by the assessee. This view of the Supreme Court was more or less reiterated by the Division Bench of the Patna High Court in the case of Hardwarmal Onkarmal v. CIT [1976] 102 ITR 779, where at pp. 783 and 784 of the report, Untwalia C.J. observed as follows: "There was no provision in the Indian Income-tax Act, 1922, corresponding to section 68 of the Act. Section 68, however, was enacted, as it appears, mainly to give a statutory recognition to tile principles of law laid down by the various authorities making a departure in regard to two matters only, as pointed out by the learned authors,....
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....findings of the Tribunal can be appreciated in the background of the findings recorded by the departmental authorities. In this background the Tribunal committed no error of law in saying that when the assessee was unable to explain satisfactorily, the addition was justified in view of section 68 of the Act; the Income-tax Officer was justified in adding the sums to the assessee's income under section 68 of the Act. In my opinion, judging the order of the Tribunal in the background of the facts recorded by the Income-tax Officer and the Appellate Assistant Commissioner, it is difficult to accept the argument put forward on behalf of the assessee that the decision of the Tribunal is perverse or is based upon no evidence or material. On the other hand, I am inclined to think that the decision is reasonable, correct and perfectly warranted by the facts and circumstances of this case. The assessee could not persuade the Tribunal to record a finding in its favour that the money found deposited in its account books was actually the money brought by the partners and deposited." The distinction between the amount found in the account books and an amount not found in the account books, f....