Law: Income Tax Act, 1922

Section: 2(11)

(Appeals by special leave from the judgment and order of the Allahabad High Court, dated January 2, 1864 in I.T. Reference No.244 of 959). Income-Tax------Income from undisclosed sources - Previous year-Financial year-1ndlan Income-Tax Act, 1922, S. 2(11) Income-tax Act, 1961, S. 68. It is now well settled that the only possible way in which income from an undisclosed source can be assessed or reassessed is to make the assessment on the basis that the previous year for such an income would be the ordinary financial year. Even under the provisions embodied in section 68 of the Income-tax Act, 1961, it is only when any amount is found credited in the books of the assessee for any previous year that the section will apply, and the amount so credited may be charged to tax as the income of that previous year, if the assessee offers no explanation or the explanation offered by him is not satisfactory. On the other hand, if the undisclosed income was found to be from some unknown source or the amount represented some concealed income which is not credited in his books, the position would probably not be different from what was laid down when the 1922-Act was in force. [Held also, on the facts, that the assessee failed to show that he had disclosed fully and truly all facts necessary for making the assessment for the assessment year 1944-45 and that the revised assessments under section 34 of the Income-tax Act, 1922, dated October 16, 1952, and March 18, 1954, were valid.] Bishan Dutt v. Commissioner of Income-tax (1960) 39 I T R 534 ; Commissioner of Income-tax v. P. Darolia & Sons (1955) 271 T R 515 ; Jethmal Lakhani v. Commissioner of Income-tax (1963) 49 I T R 633 and Mukherjee (P. R.) v. Commissioner of Income-tax (1956) 30 I T R 535 ref. JUDGMENT GROVER, J.------In these appeals by special leave the facts may be stated : The assessee at the material time was a Hindu undivided family. The relevant assessment year is 1944-45 corresponding to the accounting year ending on Diwali Samvat 2000 (October 28, 1943). On February 20, 1945, the Income-tax Officer made an assessment on a total income of Rs. 26,800 odd which comprised income from the share in the business…