SENGUPTA, J. - (1.) AT the instance of the CIT West Bengal, the following question of law has been referred to this Court under S. 256(2) of the IT Act, 1961 for the asst. yrs. 1955-56 and 1956-57. "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding, in an appeal against the order to the AAC setting aside the assessment order of the ITO, that the addition made by the ITO was not justified and in that view directing deletion of the addition made in the already set aside assessment and whether the Tribunal acted beyond its jurisdiction in giving such a direction ?"
(2.) THE facts leading to this reference are that the assessee is an individual carrying on business in the name of Binapani Engg. Words. He is also a partner in two firms, viz., Howrah Iron & Scrap Co. and Bhagwandas Ramasankar. The original assessment for the years 1955-56 and 1956-57 under appeal were completed at Rs. 21,635 and Rs. 30,311 respectively. In the course of the assessment proceedings for the asst. yr. 1957-58 the ITO found that there was substantial increase in the capital account of the assessee in the book of Howrah Iron & Scrap Co. The capital account to the assessee at the end of the accounting year relevant to the asst. yr. 1954-55 showed a balance of Rs. 21,938 (in round figures) and it was increased to Rs. 1,41,477 at the end of the accounting year relevant t the asst. yr. 1957-58. According, he submitted a report to the CIT containing proposal for reopening the assessments for the years under consideration.
(3.) SUBSEQUENTLY he issued necessary notice for reassessment to the assessee. The assessee filed returns under protest. During the reassessment proceedings, the ITO enquired of the assessee to explain the increase interest he capital account in the books of Howrah Iron & Scrap Co. from Rs. 21,938 to Rs. 1,41,477. The ITO in this order dt. 28th March, 1968 made under ss. 144/147 of the Act observed that the capital introduction was made out of the assessee's own undisclosed income and accordingly treated a sum of Rs. 1,19,539 (Rs. 1,47,477 minus Rs. 21,938) as the assessee's income from other sources. For the asst. yr. 1956-57, in his order dt. 26th March, 1968 after observing that the position remained the same exactly as stated in detail in his assessment order for the year 1955-56, the ITO once again treated Rs. 1,19,539 as the assessee's income from other sources'.;