Ajtt K. Sengupta, J. - (1.) This is a reference under Section 256(2) of the Income-tax Act, 1961, for the assessment years 1961-62 to 1968-69.
(2.) In the course of the assessment proceeding for the assessment year 1967-68, which was completed under Section 143(3) of the Income-tax Act, 1961, the Income-tax Officer noticed payment of salary of Rs. 12,972 to Smt. Kamala Devi Saboo, wife of Sri T. C. Saboo, who was found to be in the top employment of the assessee-company. On being asked to explain the nature of duties performed by the lady and her qualifications which would enable her to perform the duties, the assessee by its letter dated February 11, 1969, to the Income-tax Officer submitted that Smt. Kamala Devi Saboo was working in the field of labour welfare and labour relations and her duties included welfare and social work among the workmen and their families. The Income-tax Officer, however, observed that the assessee did not come forward with any evidence regarding the duties alleged to have been performed by the lady who had been in the employment of the assessee for the last six or seven years. The Income-tax Officer also did not find any evidentiary value in the letter dated February 20, 1968, written by Sri Jagannath Rao, Member, Bally Jute Mills Working Committee. The assessee failed to produce any evidence regarding the actual services rendered by the lady and, moreover, the said letter was, according to the Income-tax Officer, written on a date when the enquiries against the assessee were already afoot. In these circumstances, he decided to treat the payment as of ex-gratia nature and disallowed the sum of Rs. 12,972 in the assessment for the assessment year 1967-68.
(3.) Assessment for the assessment year 1968-69 was similarly completed under Section 143(3) of the Income-tax Act, 1961, and salary paid to Smt. Kamala Devi Saboo at Rs. 6,480 was disallowed in the said assessment.;