M.N.CHANDURKAR, J. - (1.)THE question which has been referred to us under s. 256(2) of the I. T. Act, 1961 (hereinafter referred to as 'the Act'), is as follows : 'Whether there was any evidence in support of the Tribunal's finding that the high denomination notes did not belong to the three assessees, Karandikar, Phatak and Desai and in support of the finding that they belonged to outside parties ?'
(2.)THIS reference arises out of the assessment proceedings for the year 1946 -47, in relation to the assessment under the Act made on the three assessees, Karandikar, Phatak and Desai. Their income as originally assessed was Rs. 28,162, Rs. 19,141 and Rs. 22,432, respectively. All these three assessments were, however, reopened under s. 34 (1) (a) of the Indian I. T. Act, 1922, and in reassessment proceedings certain amounts were added as undisclosed income of the three assessees as follows : Rs.(1) H. R. Karandikar 2,92,000(2) D. B. Phatak 2,39,000(3) M. G. Desai 4,24,000
Desai was a director in a company named Shree Laxmi Textile Mills Limited, which is public limited company at Bhor. Bhor was an Indian State and did not form a part of British Indian at the relevant time. Desai held shares worth Rs. 5,000 in the Laxmi Textile Mills. Another company, the Bhor Mercantile Agency Limited, was a private limited company, also in the Bhor State. This company was the managing agent of the Laxmi Textile Mills Limited, and Desai held one -third of the shares of this company, of the value of Rs. 700. The two other assesses, Phatak and Karandikar, were also shareholders of this managing agency company to the extent of Rs. 700 each. The Laxmi Textile Mills was only a spinning mill. Desai had income from cloth business carried on at Bhor and dividends on certain shares of companies in Billimora and a share in a firm at Bombay.

(3.)THE assessee, Phatak, was a partner in a firm called Pioneer Dyeing House, Poona, which is engaged in the business of dyeing yarn and cloth, and selling it after dyeing and printing. He also held shares in the Laxmi Textile Mills Limited of the value of Rs. 5,000, and he was also a director of the Bhor Mercantile Agency Limited. He was also a director of the Raja Raghunathrao Mills Limited, a textile mill at Bhor, where only weaving operations were carried on.