Law: Income Tax Act, 1961

Section: 147

Section 147 of the Income-tax Act, 1961 [Corresponding to section 34 of the Indian Income-tax Act, 1922] - Income escaping assessment - Position prior to 1-4-1989 - Assessment years 1945-46 and 1947-48 - Original assessments were completed after computing assessee's total income by estimating his total sales and assessing gross profits on certain percentage basis - Subsequently, certain cash credits in his accounts having escaped assessment, were brought to tax in reassessment as income from undisclosed income - Whether taxing authorities were not precluded from treating amounts of credit entries as income from undisclosed sources simply because entries appeared in books of certain business whose income had previously been computed on percentage basis - Held, yes -Whether, therefore, cash credits in question could be assessed to tax as income from undisclosed sources in addition to business income computed by estimate - Held, yes Section 256 of the Income-tax Act, 1961 [Corresponding to section 66 of the Indian Income-tax Act, 1922] - High Court - Reference to - Assessment years 1945-46 and 1947-48 - Whether question as to whether a particular inference drawn by Tribunal is one of law or of fact is not such question which can arise out of decision of Tribunal and question in that form cannot be referred to High Court under section 66 of 1922 Act - Held, yes FACTS The assessee was a trader carrying on two businesses, namely, manihari (general merchandise) and bidis. For each of the assessment years concerned, the assessee had submitted a return but as his accounts were not found complete and reliable, the ITO had assessed the gross profits of the businesses on the basis of certain percentages of the total sales which had also to be fixed by estimates. No question arose in these appeals as to the correctness of those assessments. Subsequently, while dealing with the assessment for the year 1948-49, the ITO noticed various credit entries in the assessee's books of account which had all escaped his attention at the time of the assessment for the years 1945-46 and 1947-48. The ITO thereupon, with the sanction of the Commissioner re-opened the assessments in respect…

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