- (1.) The Income Tax Appellate Tribunal has referred the following two questions of law under Section 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this Court: 1. Having regard to the fact that the assessee herself took the plea in appeal for assessment year 1975-76 that the unexplained amounts within the meaning of Section 69A could be brought to tax in A.Y. 1976-77 only, was the Tribunal correct in its view that the unexplained amount could still not be considered in A.Y. 1976-77
(2.) Scheme of Voluntary Disclosure being what it was and there being no alternative but to accept the wealth as disclosed other conditions having been fulfilled, was the Tribunal correct in its view that the department has deliberately held that ornaments in question represented assessee's wealth on 31.3.1975 and having accepted the wealth tax for assessment year 1975-76 with valuation date on 31.3.1975, the I.T. Act, 1961 in A.Y. 1976-77 for taxing the unexplained possession of jewellery and each disclosed in October/November, 1975 under Section 15(1) of the Voluntary Disclosure of Income and Wealth Ordinance, 1975 2. The reference relates to the Assessment Year 1976-77.
(3.) Briefly stated, the facts giving rise to the present reference are as follow: The Income Tax Officer in his assessment order under Section 143(3)/148 noted that the return was filed in the status of individual' in compliance with the notice issued under Section 148. It was pointed out that the assessee made a declaration of wealth under the Voluntary-Disclosure of Income and Wealth Ordinance, 1975 (hereinafter referred to as "the Ordinance") in the shape of gold ornaments and jewellery. In respect of the source of investment, the Officer took action under Section 148 for the assessment year 1975-76 since the acquisition of the asset had not been fully explained. The Income Tax Officer also mentioned that the assessment was framed by his predecessor treating part of the asset to the extent of Rs. 40,000/- as unexplained under Section 69. The assessee took up the matter before the Appellate Assistant Commissioner who set aside the assessment order with the direction that the disclosure of ornaments made in October, 1975 technically fell and was liable to tax for the assessment year 1976-77 and not in the assessment year 1975-76. The Income Tax Officer, therefore, took action under Section 148 in respect of the assessment year 1976-77 and a notice under Section 148 was served on the husband of the assessee. A return in compliance with the said notice and as mentioned above, was filed. The Income Tax Officer fixed up the case for hearing asking the assessee to produce evidence in support of the claim regarding the source of the investment. He issued summons under Section 131 to the assessee for compliance as there was non-compliance in the past. The assessee insisted to be examined at her residence as she is a purdanashin lady. Accordingly, the Inspector of Income Tax was directed to record her statement in the presence of her husband Shri Ayodhya Prasad. The Income Tax Officer considered the statement and came to the conclusion that the source of the ornaments disclosed under the Ordinance was not fully disclosed, which fact was also apparent as the assessee filed the affidavit before the predecessor Income Tax Officer that she received 50 tolas of gold ornaments from her parents and 102 tolas from her in-laws. The Income Tax Officer pointed out that the statement contradicted the affidavit filed by the assessee. The assessee also claimed that her father in law gifted adequate gold ornaments at the time of her marriage. Various submissions were made before him, but the Income Tax Officer found no evidence regarding the status of donors in the year of the marriage of the assessee. He, therefore, concluded that these ornaments were not in her possession since her marriage and they must have been acquired in the course of the business of her husband. He, however, considered the local customs and estimated the value of ornaments at Rs. 50,000/-, which might have been in possession of the assessee at the time of her marriage. The balance of Rs. 40,000/- of gold ornaments and cash of Rs. 15,000/- were treated as being unexplained under Section 69A. The assessment was completed accordingly. The assessee took up the matter before the Appellate Assistant Commissioner who considered the various submissions raised before him as well as the findings of the Income Tax Officer. He found no force in the contention of the assessee. The various contentions made by the assessee were recorded by the Appellate Assistant Commissioner in his appellate order. He was of the view that the Income Tax Officer's observation that the source of ornaments disclosed by the assessee was unproved, was correct. On the reasons recorded by him, the Appellate Assistant Commissioner sustained additions of the above two items under Section 69A. The appeal of the assessee was dismissed. The assessee took up the matter before the Tribunal and reiterated the facts and the background of the case as mentioned in the order of assessment as well as in the order of the Appellate Assistant Commissioner. The Tribunal mentioned that the ornaments and income of Rs. 25,000/- were disclosed by the assessee and the above cash included a Fixed Deposit Receipt of Rs. 12,000/- and the remaining cash of Rs. 13,000/-. It was also mentioned that the Income Tax Officer also made assessment on a wealth of Rs. 1,05,000/- as on the valuation dated of 31.3.1975 for the assessment year 1975-76. Reproducing the assessment order dated 14.7.1977, the Tribunal observed that it failed to understand how the Wealth Tax Officer/Income Tax Officer could take a view after having held that the assessee was the owner of the ornaments worth Rs. 90,000/- and the cash of Rs. 15,000/- as on 31.3.1975 that they had been acquired out of the unexplained source in the assessment year 1976-77 for which the accounting year itself started on 1.4.1975 and ended on 31.3.1976. It also mentioned that the Wealth Tax Officer clearly held that the lady was in possession of ornaments and the above asset in the assessment year 1975-76 for which the valuation date was 31.3.1975 and, therefore, he could not again hold that the same ornaments and cash had been acquired by the assessee in the assessment year 1976-77. On that issue, the Tribunal found that the assessment for the assessment year 1976-77 cannot survive. The Tribunal did not deal with the reasons which led the Income Tax Officer to initiate proceedings for the assessment year 1976-77. The assessment was, therefore, annulled in its entirety.;