Law:

Section:

Section 68 of the Income-tax Act, 1961 - Cash credits - In reassessment proceedings under section 147 for assessment year 1960-61, relating to accounting year from 13-11-1958 to 13-10-1959, ITO included cash credits found during proceedings for assessment year 1962-63 in assessee's books in march 1960 as income from undisclosed sources - Tribunal confirmed ITO's order holding that financial year was relevant previous year in respect of such income from undisclosed source - Whether tribunal justified - Held, yes Facts During the assessment proceedings for the assessment year 1962-63, the ITO found cash credits of Rs. 9,000 in the assessee's books in the name of G in March 1960. He consequently reopened the assessment for the assessment year 1960-61 relevant to the accounting year from 13-11-1958 to 13-10-1959, and added the said amount as his income from undisclosed sources. On appeal, the AAC deleted the addition holding that the impugned amount could not be taxed for the assessment year 1960-61 in view of the provisions of section 68. On appeal by the revenue, the Tribunal confirmed the addition relying on section 291 (2)( d)(ii) . On reference: Held Section 68 is very much a substantive provision of law which is in the nature of a charging provision inasmuch as it determines the character of unexplained cash credits and requires such amounts to be taxed as income of the assessee in the previous year in which the same are found credited in the assessee's books maintained for any previous year. However, if the undisclosed income was found to be from some unknown source or the amount represented some concealed income which was not credited in his books, the position would probably not be different from what was laid down when the 1922 Act was in force according to which income from undisclosed source could be assessed or reassessed on the basis that the previous year for such an income could be the financial year. Since section 68, being a substantive provision of law, would not be attracted in the case of reassessment proceedings governed by the 1922 Act, the Tribunal was right in holding that the impugned sum of Rs. 9,000 was assessable in the assessment year…

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