Law: Income Tax Act, 1922

Section: 13

Income-tax Act (XI of 1922), S. 13-Cash credit-Entry in name of assessee's wife-Unsatisfactory explanations and con­tradictory evidence to prove that amount belonged to wife-Findings thereon material for holding amount as secreted profits. Dhirafal Girdharilal v. Commissioner of Income-tax, Bombay (1954) 26 I T R 736 ; Mehta Parikh & Co. v. Commissioner of Income-tax, Bombay (1956) 30 I T R 181 and S. N. Ganguly v. Commissioner of Income-tax, Bihar and Orissa (1953) 24 I T R 16 ref. JUDGMENT INAMULLAH, J.-The following question has been referred to us under section 66 (1) of the Income-tax Act by the Income-tax Appellate Tribunal, Karachi Bench : "Whether in the circumstances of this case there is material to justify the findings that the amount of Rs. 25,000 appearing in the account of Mst. Chaman Ara Begum represented secreted profits of the assessee ?" The facts briefly put giving rise to the above question are these :- The applicant before the Tribunal Sultan Illahi, hereinafter called the assessee, is a dealer in articles of general merchandise on wholesale basis. The assessment year is 1956-57, and the corresponding accounting period ended on 31st March 1956. The assessee showed a net profit of Rs. 17,580 from his accounts in this period. The Income-tax Officer raised the profits to Rs. 48,528, this figure included a sum of Rs. 25,000 for income from undisclosed source. This amount of Rs. 25,000 was credited in cash on the 1st of August 1955, in the accounts of Mst. Chaman Ara Begum, second wife of the assessee. The Income-tax Officer called upon the assessee to prove the nature and source of this item. It was alleged that the entire amount was brought over by the said Mst. Chaman Ara Begum from India on her migration to this country in 1950. Mst. Chaman Ara Begum had filed an affidavit stating that she had brought in all Rs. 31,000 from India. She advanced a sum of Rs. 25,000 out of the said amount to her husband as a loan. The Income-tax Officer did not believe this story and added the amount as income from undisclosed source of the assessee. On appeal the Appellate Assistant Commissioner accepted the contention of the assessee that the said amount…

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