C.S.P.SINGH, J. - (1.) AT the instance of the CWT, Kanpur, the Tribunal has referred the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the amount of Rs. 59,48,714 from the assessment under the WT Act ?"
(2.) THE assessment years involved in this reference are 1958 -59 and 1959 -60. The Income -tax Investigation Commission had detected a huge amount of concealment of income by the assessee for the asst. yrs. 1939 to 1946. A settlement was arrived at between the assessee and the Department, as a result of which the assessee agreed to be assessed on an amount of Rs. 59,48,714. The break up of this amount was as under : . Rs. 1. Inflation in price of jute 26,96,112 2. Excess shown in purchase of stores 8,77,714 3. Excess shown in purchase of coal 10,755 4. Miscellaneous 2,538 5. Repairs to road and buildings held as non -business expenses 75,000 6. Inflation in wages 7,63,380 7. Bogus purchase of jute 1,38,781 8. Depreciation on personal assets held as non -business expenditure 36,728 9. Bogus profits and loss 2,88,184 10. Under -valuation of stock 10,85,522 . 59,74,714 The assessee in terms of the settlement arrived at under S. 34(1B) of the IT Act, 1922, paid tax on these amounts. For the assessment years in question, the WTO sought to include this amount in the total wealth of the assessee. The assessee's contention was that this amount was not available to it during the relevant years either in the shape of assets or otherwise. The WTO, however, did not accept this contention, and treated this amount as forming an asset of the company. An appeal filed before the AAC failed. The matter was then taken up before the Tribunal. The Tribunal found that so far as under valuation of stock is concerned, which was to the tune of Rs. 10,85,522, it had already been adjusted by the assessee in its books. As regards the other items, it held that these were of a similar nature, as in the case of J.K. Cotton Spg. and Wvg. Mills Co. Ltd., which case had already been decided by the Tribunal, and the facts of the present case were similar. It also held that the concealed income, taxed in the assessee's hands as result of the settlement, was not available to the assessee in the form of assets on the relevant valuation dates. Counsel for the Department urged that as the assessee had not produced the report of the Investigation Commission before the AAC, which would have thrown light on the question as to whether the amount remained with the assessee -company or was taken away by its directors or employees the amount in question should be taxed in the hands of the assessee, as the assessee had not disclosed as to how the amount had been spent. Sri V.S.Upadhya, appearing on behalf of the respondent, drew our attention to the decision of this Court in the case of CWT vs. J. K. Cotton Spinning and Weaving Mills Co. Ltd. (1979) 118 ITR 633 (All), where it was held that as the entire secreted funds had been utilised by the directors of the assessee -company, nothing out of it remained with the company, the amounts did not represent the assets of the company on the valuation date, and were not includible in its total wealth. We think that the matter can be disposed of without relying on the various reasons given by this Court in J. K. Cotton's case (1979) 118 ITR 633 (All). The question as to whether the amount was available with the assessee on the valuation date is a question of fact. The Tribunal has given a categorical finding that the amount was not available with the assessee on the valuation date. It is worthwhile noticing that the secreted income for the period 1939 to 1946 has to be included in the total wealth of the assessee for the asst. yrs. 1958 -59 and 1959 -60. As considerable time has elapsed, there cannot be any presumption that the amount remained with the company, so that it could be included in its total wealth for the years 1958 -59 and 1959 -60. Secondly, a perusal of the various heads in respect of which the assessee has been found concealing its income, shows that the amount must have been utilised either by the directors or its employees, and there is no material on the record to show that the company was reimbursed. The result was not that the company paid out moneys from its coffers, but did not receive it back. As in regard to the settlement arrived at under S. 34(1B), and the assessment of the company on the concealed income, that fact alone would not establish that the company retained the assessed income, even though the money had already gone from its coffers. Before a particular item can be treated as an asset of an assessee, it should be available with the assessee on the relevant valuation date. In the circumstances, it cannot be said that the Tribunal was unjustified in deleting the amount of Rs. 59,48,714 from the total wealth of the assessee.
(3.) THE question referred is accordingly answered in the affirmative, in favour of the assessee and against the Department. The assessee is entitled to its costs, which is assessed at Rs. 200. Counsel's fee is assessed at the same figure.;