Law: Income Tax Act, 1922

Section: 3,4,10,37

[Income Tax Act, 1922 (XI of 1922)].......Sections 3, 4, and 10 Income from undisclosed source-Amount with drawn from Habib Bank after banking hours and deposited in Chartered Bank to liquidate outstanding loan the same day-Amount debited and posted in the ledger of Habib Bank on the date following-Factum of withdrawal supported by certificate issued by Habib Bank-Amount deposited in Chartered Bank, whether can be treated as income from undisclosed source-Held no. B. Income Tax Act, 1922 (XI of 1922)-Section 37-Power to take evidence on oath-Notice to witness-Failure of witness to appear an date of hearing-Adverse inference against witness without enforcing his attendance and refusal to allow opportunity of rebuttal to assessee-Whether illegal and against principles of natural justice-Held yes. Cases referred to:- Nathu Ram Prenchan v. Commissioner of Income Tax (1963) 8 Taxation 191, Munnalal Murlidhar v. Commissioner of Income Tax (1973) 27 Taxation 209 and Maharaja Patiala v. Commissioner of Income Tax (1943) I.T.R. 202. JUDGMENT [The order was passed by A. KARIM FAROOQ, Judicial Member]. This appeal relating to the assessment year 1968-69 is at the instance of a Registered Firm which derives income from the sale of cloth and yarn and in the year under appeal the only objection has been taken and urged before us is an addition of Rs. 80,000/-to have been deposited in the Chartered Bank, ,,..on 25-8-1967. During the course of assessment proceeding the appellant produced evidence to the effect that this amount of Rs. 80,000/- was withdrawn from M/s. Habib Bank, ,,,.on 25-8-1967 after the close of the banking hours and was deposited in the Chartered Bank to liquidate the amount of outstanding loan against the appellant on that date. The entry in the Chartered Bank was shown on 25th August, 1967 but the debit entry in the Habib Bank Ltd. ,,,was of 26-8-1967. 2. The Assessing Officer concludes that the amount deposited on 25-8-67 was not the amount which was withdrawn from the Habib Bank Ltd. but it was an income from undisclosed sources and, therefore, he added this amount to the declared income of the appellant. 3. As adverted to above the appellant had taken…

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