Law:

Section:

Section 104 of the Income-tax Act, 1961 - Additional income-tax on undistributed profits of certain companies - Assessment year 1964-65 - ITO levied additional super tax on distributable surplus in hands of assessee on ground that dividend declared by assessee was not reasonable - Tribunal held that unexplained cash credits added to assessee income could not be said to be assessee's concealed income, that donation as also tax payable should be deducted form assessee's total income and that and many other additions made to total income of assessee-company had to be excluded to ascertain commercial profits and, therefore, concluded that dividend declared was not unreasonable - Whether since calculations on basis of which Tribunal had proceeded had not been challenged by revenue, no interference by High Court was required with conclusion of Tribunal - Held, yes FACTS The assessee-company had declared a dividend of Rs. 5,625 in the relevant assessment year. The ITO computed the total assessable income of the assessee in the relevant assessment year to be Rs. 1,93,835. He found that after deduction from the said total income the assessed tax and donation under section 88, there was a distributable surplus in the hands of the assessee of Rs. 76,783. The ITO also ascertained the commercial profit of the assessee at Rs. 19862 and held that under section 104, the assessee was required to declare 60% of the surplus as dividend which the assessee had failed to do. The ITO, therefore, imposed an additional super-tax at the rate of 37% on the distributable income, namely, Rs. 76,783, as reduced by the dividend declared. On appeal, the Tribunal found that the total income of the assessee had been reduced on appeal to Rs. 1,00,547. The Tribunal held that from the said income, Rs. 26,000 which represented cash credits in the account of the assessee. The Tribunal also held that though the assessee had failed to produce sufficient evidence to explain the said cash credits, it could not be said that the credits represented its concealed income or were receipts deliberately omitted from its account to be added back to its profit. The Tribunal also held that a donation of Rs. 1,001…

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