Satish Chandra, C.J. - (1.) The assessee is a private limited company carrying on business in the manufacture and sale of iron and steel goods. In respect of the assessment year 1961-62, the assessee filed a return disclosing a loss of Rs. 1,25,450. The Income-tax Officer, however, assessed the company on an income of Rs. 2,96,417. After deducting the tax payable thereon, the distributable surplus for the purposes of Section 23A of the Indian Income-tax Act, 1922 ("the Act"), was worked out at Rs. 1,68,029. The company had not declared any dividend. The Income-tax Officer passed an appropriate order under Section 23A. The assessee went up in appeal and succeeded. The Appellate Assistant Commissioner held that the add-backs made by the Income-tax Officer were on the basis that those claimed deductions were not proved. There was no material to show that the unproved items really pertained to actual concealment of income on the part of the assessee. The assessment under Section 23A was consequently cancelled. The Revenue went up in appeal to the Tribunal but failed. At the instance of the Revenue, the Tribunal has referred the following question of law for our opinion : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in confirming the order of the Appellate Assistant Commissioner cancelling the order passed under Section 23A(1) of the Indian Income-tax Act, 1922, in the case of the assessee for the assessment year 1961-62 and in dismissing the Department's appeal ?"
(2.) Before the Tribunal, the Department had placed reliance upon a letter dated December, 24, 1965, whereby the assessee-company had made a voluntary disclosure of Rs. 8,60,000 as undisclosed income under Section 24 of the Finance (No. 2) Act, 1965. The Tribunal held that this letter of voluntary disclosure did not contain any admission of concealment of income to sustain the order under Section 23A.
(3.) On a perusal of the letter dated December 24, 1965, it is clear that that the statement in paragraph 7 thereof to the following effect, namely, "That the above sum of Rs. 16,56,600 is the income from our business undisclosed up to March 31, 1964, i.e., the assessment year 1964-65", does amount to an admission that this amount was not disclosed in the returns filed by the assessee-company for the assessment years up to the year 1964-65. On this aspect, we cannot uphold the view of the Tribunal.;