Law: Income Tax Act, 1961

Section: 68

Income-tax----Reference---Question of law---Unaccounted receipts---Onus in respect of on-money to show investment of funds---Question of law---Indian Income Tax Act, 1961, Ss. 68 & 256(2). The respondent-firm undertook supervision work of two cooperative societies and also booking of flats. Pursuant .to search conducted of the premises of an architect and the two cooperative societies, a paper was seized showing purchase of flat at Rs.455 per sq. ft. though the document in fact indicated the price of Rs.265 per sq. ft. On the basis of this information the Assessing Officer arrived at an investment of Rs.1,58,59,400 as having been made by the firm from unaccounted receipts. Pursuant to a notice from the Assessing Officer the respondent declared undisclosed income of Rs.30 lakhs. The Appellate Tribunal, considering the fact that the respondent was earning only supervision charges and taking into consideration the expenses, etc., arrived at a rate of 1.31 per cent. of undisclosed receipts as net profit; that the undisclosed income was not less than the net profit calculated at 1.31 per cent and that there was no material placed on record to indicate huge investment by the respondent and held that the Department had failed to prove that the claim of the respondent regarding extra expenditure was incorrect. The Tribunal and the 'High Court rejected the Department's application for a reference, inter alia, for the question: "Whether the Tribunal, having held that the assessee had received unaccounted receipts, was justified in holding that the Assessing Officer had to discharge the onus in respect of on-money by showing that the assessee had invested Rs.1,58,59,400 out of such receipts, whereas the claim of the assessee for extra expenditure was found to be incorrect? "On appeal to the Supreme Court: Held, reversing the decision of the High Court on that question, that the question of law arose out of the order of the Appellate Tribunal and the Tribunal had to state a case to the High Court on that question. Being aggrieved by the order passed by the Income-tax Appellate Tribunal, Ahmedabad Bench "C", Ahmedabad (hereinafter referred to as "the Tribunal"), in R.A.…

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