Ajit Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, the following questions of law have been referred to this court for the assessment year 1972-73 : "1. Whether, on the facts and circumstances of the case, the Tribunal was justified in reversing the decision of the Commissioner of Income-tax (Appeals) and restoring the addition of a sum of Rs. 3,00,000 as income of the assessee from undisclosed sources ? 2. Whether, on the facts and the circumstances of the case, the Tribunal had material or evidence to take a decision on facts as well as on law contrary to the decision of the Commissioner of Income-tax (Appeals)? 3. Whether the Tribunal was right in its decision on the question of the applicability about the principles of res judicata and the principles of estoppel in the context of the present case ? 4. Whether, in view of the fact that filing of a return for the assessment year 1971-72 with a declaration disclosing the source of the sum of Rs. 3,30,000 is not in dispute, it was open to the Tribunal to hold that the return of the assessee showing the sum of Rs. 3,30,000 as exempted in the exemption column of the return for the assessment year 1971-72, was in fact yet to be established ? 5. Whether, in view of the fact that disciplinary proceedings and criminal cases are still continuing and are pending against the assessee and in view of the further fact that the assessee at the material time was just a low paid clerk in the Government of West Bengal at a total yearly salary of Rs. 850 on a charge of defalcation the Tribunal was justified in law in treating the sum of Rs. 3,30,000 as income of the assessee from undisclosed sources ?"
(2.) The facts leading to this reference are stated hereafter : The Income-tax Officer, for the assessment year 1972-73, completed the assessment of the assessee under Section 143(3) read with Section 144B. He noted in the assessment order that the assessee filed a duplicate return of income on January 14, 1972, showing an income of Rs. 850 under the head "Salaries". It was stated before the Income-tax Officer that the original return was filed on February 20, 1973, for which receipt was produced. The Income-tax Officer further noted that the original assessment was made under Section 143(3) on March 31, 1975, on a total income of Rs. 3,27,850 which assessment was set aside, by the Commissioner of Income-tax in his revision order under Section 264 dated March 26, 1977, with a direction to the Income-tax Officer to make assessment according to law and after giving the assessee an opportunity of being heard. Accordingly, the Income-tax Officer took up the matter for fresh completion of assessment He examined the assessee under Section 131. After considering the different materials and facts gathered, the Income-tax Officer forwarded a draft assessment order to the assessee under Section 144B and, on receipt of the assessee's objection, the Income-tax Officer forwarded these documents to the Inspecting Assistant Commissioner of Income-tax as required under Section 144B. He pointed out that the original return filed by the assessee was destroyed by fire which took place in the Income-tax Office, Cooch Behar, on August 27, 1974, and as far as he gathered from his predecessor, the original return was filed in response to a notice under Section 139(2), as the assessee was found to have made investment in fixed deposits. The Income-tax Officer was of the view that the burden of proof squarely lies on the assessee under Section 69, which the assessee has not been able to discharge. He pointed out that, at the first instance, the assessee admitted that the fixed deposits were made by him in his name, vide the assessee's letter dated February 3, 1975. It was further noted that subsequently, in the course of the examination under Section 131, the assessee stated that he was not connected with these accounts in any manner. Later on, again, by his letter dated March 20, 1978, the assessee admitted the ownership of the money, but claimed that the receipt was of capital nature. The Income-tax Officer went on further to say that, in the next stage of examination under Section 131 on April 27, 1978, the assessee contended that the money was deposited with him by some smugglers from Bangladesh and that he was merely a custodian. It was submitted that he received the money from those smugglers as a custodian and later on, he became the owner of the money.
(3.) The Income-tax Officer, however, offered the assessee further opportunity to state his explanation in writing regarding the addition of fixed deposits of Rs. 3 lakhs and also in respect of other investments in the form of motor car and truck. The Income-tax Officer considered other investments in the form of motor car and truck and also in respect of another sum of Rs. 1,10,000 seized from the house of the assessee's mother-in-law. But, for the present reference application, we are concerned only with the first amount of Rs. 3 lakhs. The Income-tax Officer noted that, at a later stage, the assessee took for the first time the plea that Rs. 3 lakhs represented money received from East Pakistan before March 31, 1971, but nothing was noted about the source of the money, except that it was a capital receipt. It was also mentioned that the assessee, however, admitted that Rs. 3 lakhs belonged to him and that he was the legal owner of the same. He pointed out that no evidence was shown that the money was received before March 31, 1971.;