TaxTMI 
TaxTMI 
1979 (11) TMI 39
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....y to the assessment of the cash credits and that they were not liable for assessment as income from undisclosed sources, for the assessment year 1960-61 ? The facts stated are as follows. The assessment year involved is 1960-61 for which the assessee's accounting year was the calendar year ending 31st December, 1959. The assessee had not filed any voluntary return of the income under s. 22(1) of the Indian I.T. Act, 1922. The ITO had also not issued notice to the assessee under s. 22(2) of that Act. After the commencement of the I.T. Act, 1961, while perusing the accounts of the assessee for the calendar year 1960, the ITO came across the following cash credits in the capital account of the assessee : Rs. 1-1-1960 10,000 30-3-19....
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....ion found favour with the Tribunal on an application made by the department, the Tribunal referred the question which we have set out above. The settled law under the 1922 Act was that the only possible way in which income from an undisclosed source could be assessed or reassessed was to make the assessment on the basis that the previous year for such income was the ordinary financial year [Baladin Ram v. CIT (1969] 71 ITR 427 (SC)]. Section 68 of the 1961 Act makes a departure on this point in respect of amounts found credited in the books of the assessee.. The section provides thus : " 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....
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.... cash credits which were found to be income from undisclosed sources would be taken as the income of the previous year for which the accounts were maintained, i.e., the calendar year 1960, and they could be assessed only as income for the assessment year 1961-62. If s. 68 was inapplicable and if the law to be applied was that which prevailed prior to the commencement of the 1961 Act, the cash credits would be taken as the income of the financial year 1959-60, assessable as income for the assessment year 1960-61. The 1961 Act came into-force on 1st April, 1962. By s. 297(1) of that Act, the 1922 Act was repealed. The repeal was subject to the provisions contained in sub-s. (2) of s. 297. We are here concerned with cl. (d) of sub-s. (2), w....
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....is a substantive provision and, therefore, it has no application here, Sub-section (2)(d)(ii) of s. 297 was considered by the Supreme Court in Govinddas v. ITO [1976] 103 ITR 123. The Supreme Court held that the words " all the provisions of this Act shall apply accordingly " merely refer to the machinery provided in the new Act for the assessment of escaped income and they do not import any substantive provisions of the new Act which create rights or liabilities. It was further observed that the word " accordingly " in the context meant nothing more than for the purpose of assessment " and it clearly suggested that the provisions of the new Act which were made applicable were those relating to the machinery of assessment. In view of the de....