P.K.MUKHARJI,J. - (1.) THE question for determination on this IT ref. is : "1. The Tribunal in its order dated 27th March, 1961, having held that the ITO has made addition of Rs. 4,60,000 to the income of the appellant without any basis and arbitrarily, was it justified in adding the sum of Rs. 1,00,000 to the income of the appellant as estimated income and is such addition arbitrary and fanciful and based on no materials ? 2. In the facts and circumstances of the case, was the Tribunal justified in coming to the conclusion that any part of the income of Hanuman and Co. should be added to the income of the appellant or was the same done arbitrarily and without any materials ?"
(2.) THE statement of the case in this reference makes the following facts relevant for the purpose of determining or deciding the question. The assessee is Nandlal Kasera of 243, Chittaranjan Avenue, and an individual, owning some properties and having a share in the firm of M/s Bengal Kopack Ginning. The asst. yr. is 1948- 49. The accounting year is 2003/4 Diwali ending on the 11th November, 1947. The original assessment for the year 1948-49 was completed on the 11th December, 1953, on a total income of Rs. 2,985 only. It was then subsequently discovered and the ITO came to know that the assessee had done extensive speculative business in jute and hessian, in his own name and also in the name of M/s Hanuman & Co. and had acquired considerable property from such business, which he had concealed. Notice was therefore issued under s. 34(1)(a) by the ITO for the reassessment of the total income of the assessee. The assessee in reply filed a return of income showing a loss of Rs. 181 only. The assessee admitted before the ITO that he had done some speculative business with one Madanlal Saraf which was supposed to result in a huge loss but the assessee had not shown that loss in the return filed on the flimsy grounds that he had no details relating to the transaction. Thereupon, the ITO issued notice under s. 22(4) of the Act calling upon the assessee to produce all the books of account and vouchers. On the date of hearing, the assessee appeared with his authorised representative and stated that he had not maintained any books of account whatever. Indeed, the assessee denied any connection with Hanuman & Co. and, in fact, in his deposition recorded by the ITO under s. 37 on the 8th January, 1958, the assessee made the following statement : "I hereby declare that I have not done any business in the name of M/s Hanuman and Co. I have not entered into any business transaction with the said Hanuman and Co."
(3.) THIS has now been proved to be wholly an outrageous falsehood. The ITO did not accept the plea that was made. The investigations made by him from the banks revealed that the assessee was himself the proprietor of Hanuman & Co.;