Law: Income Tax Act, 1922

Section: 23

Section 143 of the Income-tax Act, 1961 [Corresponding to section 23 of the Indian Income-tax Act, 1922] - Assessment - Additions to income - Assessment years 1947-48 and 1948-49 - Assessee was engaged as a manager in cloth business started by 'A' in Singapore - Subsequently, 'A' sold said business and goodwill thereof, with other sects of said business - ITO having found that sum of $87,500 was entered in folio of 'A' in guise of sale proceeds of goods, closing stock, etc, which were simply bogus credits to conceal real facts assessed same as assessee's share of profit in business - Whether since there was material to show that 87,500 dollars represented income of assessee, ITO rightly assessed same in assessee's hands - Held, yes FACTS The assessee was engaged as a manager for a period of three years in cloth business started by 'A' in Singapore above. Subsequently 'A' sold the said business and the goodwill thereof, with the other assets of the said business. The ITO concluded that the assessee was the sole manager remunerated by a large share of profits for his sole conduct of the business, that sum of 87,500 was entered in the folio of 'A' in the guise of sale proceeds of goods, closing stock, etc. which were simply bogus credits to conceal the real facts as they had not been mentioned in the sale deed, for the assessment year 1947-48, the ITO assessed the remittances from Singapore and assessed profits at Rs. 2,10,600 which covered the remittances. For the assessment year 1948-49, the ITO estimated the remittance and found that enough profits out of the current year and out of the unassessed but unremitted profits of earlier years existed. On appeal, the AAC reduced the profit as well as remittance. On further appeal, the Tribunal held that 87,500 dollars credited to 'A' account was not available for being used for the purpose of the business, because at any rate, Rs. 1,50,000 had been remitted to India; that the income from business and other sources in the relevant year was more than Rs. 1,80,000; On reference, the High Court set aside the order of the Tribunal. On appeal to the Supreme Court: HELD The real controversy between the assessee and the…

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