OAK,C.J. - (1.) JUDGEMENT This is an application under section 66(2) of the Indian Income Tax Act, 1922 (hereinafter referred to as the Act). M/s. Bharat Engineering and Construction Company is the assessee. The assessment year is 1944-45. Under Section 34 read with section 23(3) of the Act the Income Tax Officer made the assessment. In making the assessment certain receipts of the assessee were treated as income. The assessee protested that these items did not constitute income of the assessee. When the matter went before the Income Tax Appellate Tribunal, Bombay Bench at Allahabad, the Appellate Tribunal partly accepted the assessees claim. Two items of Rs. 2,50,000/- and 40,000/- were excluded from the assessees income. The Commissioner of Income Tax, U. P., filed before the Appellate Tribunal an application under Section 66(1) of the Act requesting for reference of two questions of law to this Court. The application was dismissed by the Appellate Tribunal. The Commissioner of Income Tax, U. P., has filed the present application in this Court under Section 66(2) of the Act.
(2.) WE may mention at the outset that the Appellate Tribunal accepted the assessees claim with respect to two separate items for Rs. 2,50,000/- and Rs. 40,000/-. Although the assessees claim with respect to the sum of Rs. 40,000/-was in some respects similar to its claim with respect to the sum of Rs. 2,50,000/-the Commissioner has, in the present application, made no grievance with respect to the sum of Rs. 40,000/-. The present application is confined to the sum of Rs. 2,50,000/-. The controversy with respect to the amount of Rs. 2,50,000/- arises thus. In the account books of the assessee there are five separate entries between 1-6-1943 and 15-3-1944 with respect to five separate sums making a total of Rs. 2,50,000. These entries are in the name of Benaras Investment Corporation. According to these entries, the assessee received in all a sum of Rs. 2,50,000/- from the Benaras Investment Corporation between June 1943 and March, 1944. The question arose whether this sum of Rs. 2,50,000/- indicated an undisclosed income of the assessee. The Appellate Tribunal accepted the assessees explanation that this was merely money raised by the assessee for caring out the business of the firm.
(3.) THE point in dispute was disposed of by the Appellate Tribunal in paragraph 13 of its judgment dated 13-3-1963. The Tribunal observed :- "At the same time, it is difficult to visualize the assessee having an undisclosed source of income from which it can bring large sums from time to time and effectively conceal the income as borrowings. We are, therefore, prepared to give the benefit of doubt to the assessee in respect of the sum of Rs. 2,50,000 that have come into the account books in the earlier stages of its business." Some of the facts, which have a bearing on this question, are these. The assessee is a firm constituted under a partnership deed dated 6-2-1943. Originally, there were two partners. Two other persons joined the partnership after a few days under a supplementary deed dated 15-2-1943. There is some indication that business in some form commenced in December, 1942. The five items in question relate to the period from June 1943 to March, 1944. ;