Law:

Section:

Section 66(1) of the Indian Income-tax act, 1922 [corresponding to section 256(1) of the income-tax act, 1961]-Reference- Tribunal's finding of fact-In reassessment proceedings, ITO included in income of assessee Rs. 9,55,000 representing encashment of undisclosed high denomination notes-After considering evidence and material collected during prosecution against assessee, tribunal reached conclusion that impugned notes did not belong to assessee-Whether there was any evidence to support tribunal's finding that impugned notes did not belong to assessee but to third party-Held, on facts, yes Section 66(2) of the Indian Income-tax Act, 1922 [corresponding to section 256(2) of the income-tax act, 1961]-Reference-question of law-Question originally framed for reference under section 66(1) was whether tribunal was justified in holding that high denomination notes did not belong to assessee-Whether high court justified in directing tribunal under-Section 66(2) to refer question as to whether there was any evidence to support tribunal's finding that high denomination notes did not belong to assessees-Held, on facts, yes Facts For the assessment year 1946-47, the original assessments of the assessees, K, P and D, were reopened under section 34(1)(a) of the 1922 Act. The assessees were either the directors or the major shareholders of LTM Ltd. and BMA Ltd. The latter company was the managing agent of the former company. Under the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, promulgated on 12-1-1946, the assessees submitted bank notes worth Rs. 10,55,000 for exchange in three lots. The first declaration of Rs. 9,69,000 was signed by P and K on behalf of LTM Ltd.; the second declaration of Rs. 62,000 was by D on behalf of LTM Ltd.; and the third declaration of Rs. 24,000 was in the name of D himself. During the course of investigation, a duplicate cash book showing deposits of Rs. 15,91,000 [Rs. 10,55,000 (in respect of which high denomination notes were submitted) plus Rs. 5,36,000 (which admittedly, was never received] from 48 depositors was seized. The repayments of these deposits were shown to have been made to the extent of Rs. 2,08,000 through D,…

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