Law: Income Tax Act, 1922

Section: 34,34(1)(a)

[Indian Income Tax Act, 1922 (XI of 1922)]..........Section 34(1)(a)- Reassessment-Cash credits-Original assessment accepting source of cash credits Subsequent enquiries disclosing lender to be not a person of means-Reopening of assessment- Whether justified- Held yes- Finding of Tribunal that lender could have advanced motives- Whether can be set aside-Held no. The accounts of the assessee for the assessment year 1948-49, the previous year being the year ending on December 31, 1947 showed certain credits to the tune of Rs 300,000 in the name of one T, a resident in the former state of Pudukottah. In the course of the assessment, particulars about T were called for and furnished and the assessment, completed on March 21, 1953, Subsequent enquiries by the officer about the status of T revealed that he was a man of little means and could not have advanced such a large amount and, accordingly, being of the view that the cash credits in the name of really represented the business profits of the assessee, intiated proceedings under Section 34(1)(a) of the Income Tax Act. Rejecting the objection of the assessee regarding the jurisdiction of the officer to invoke the provision of section 34(1)(a), the officer included the amount of Rs. 3,00,0000 as the undisclosed income of the assessee. In the course of the enquiry, the officer further found that I had purchased bank drafts in his name for Rs. 1,90,000 and Rs. 2,05,000 on banks in Colomb. cashed them there and remitted them in the form of drafts in his name on Madurai banks. According to T, he had earned an income of Rs. 100,000 in races and broker business in Ceylon and out of this profit which was remitted to Madurai, he had deposited Rs 3,00,000 with the assessee and the balance of Rs. 2,00,000 with another company, G Ltd. The officer ultimately treated a sum of Rs. 2,05,000 deposited by T with G Ltd also as belonging to the assessee in addition to the assessment of Rs. 3,00,000 fund as cash credits in the accounts of the assessee. On appeal, the Appellate Assistant Commissioner upheld the jurisdiction of the 0mC€I` to invoke Section 34 (I)(a) as well as the assessment of Rs. 3,00,000. He however, deleted the…

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