Satish Chandra, C.J. - (1.) MESSRS. Pioneer Trading Syndicate, the assessee, carried on business in sports goods and also in radio and allied things. For the assessment year 1967-68, the ITO found in the assessee's books the following credit entries : JUDGEMENT_5_ITR120_1979Html1.htm
(2.) THE assessee had purchased a motor car for Rs. 14,500. According to him, the source of this money was two other deposits credited in the assessee's books, namely, of Rs. 10,000 by Sri Jagat Ram and of Rs. 14,500 by Smt. Viranwali. Sri Jagat Ram is the father and Smt. Viranwali, the mother of the assessee. THE ITO found that the explanation in respect of these credit entries was not satisfactory. He added all these credits amounting to Rs. 43,100 as the assessee's income from undisclosed sources. The assessee went up in appeal. The AAC reduced the addition by Rs. 3,000 in respect of the credit entries in favour of Sri Jagat Ram. The addition of the balance was upheld. The assessee then went up to the Tribunal in appeal. On behalf of the assessee, it was reiterated before the Tribunal that all the three creditors had made disclosures before the CIT under the Finance (No. 2) Act, 1965, of the following amounts : JUDGEMENT_5_ITR120_1979Html2.htm These disclosures had been accepted. The declarants had paid tax on the amounts of income disclosed by them. Subsequently, these persons had deposited the money with the assessee. The assessee had paid interest on the deposits. The creditors were taxed on the interest income earned by them from the assessee. The Tribunal, relying upon a decision of this court in Badri Pd. andamp; Sons v. CIT [1975] 98 ITR 657 (All), held that the declarations under the Voluntary Disclosure Scheme did not give immunity to the assessee. The revenue was entitled to examine the explanation of the assessee independently. The same could be accepted if it was found that the creditors had the necessary capacity to advance the money to the assessee. Examining the evidence from this angle, the Tribunal upheld the addition of Rs. 5,000 only in relation to Jagat Ram. It also upheld the addition in respect of the two ladies. In the result, additions to the tune of Rs. 28,100 were upheld by the Tribunal.
(3.) THE Tribunal submitted a statement of the case for eliciting the opinion of this court on the following question of law I "Whether, on the facts and in the circumstances of the case, the Tribunal was right in its view that the aggregate sum of Rs. 28,100 appearing as deposit in the assessee's account books in the names of third persons was the income of the assessee having regard to the fact that this very amount had been declared and accepted by the department to be the income of the depositor under the Voluntary Disclosure Scheme contained in the Finance (No. 2) Act of 1965?" When the reference came before a Bench of this court, it felt that in view of the decision of the Delhi High Court in Rattan Lal v. ITO [1975] 98 ITR 681 and of the Gujarat High Court in Manilal Gafoorbhai Shah v. CIT [1974] 95 ITR 624, the decision of this court in Badri Pd.'s case [1975] 98 ITR 657 (All) required reconsideration. The reference was hence referred to a Full Bench. That is how this case had come before us.;