SUHAS CHANDRA SEN J. - (1.) THE Tribunal has referred the following question of law under section 256(1) of the Income -tax Act, 1961 ('the Act') : 'Whether, on the facts and in the circumstances of the case and in law, the Tribunal was correct in holding that, in the income disclosed under the Voluntary Disclosure Scheme, 1975, the speculation loss should be set off against the other income of the assessee notwithstanding the prohibition contained in section 73(1) of the Income -tax Act, 1961 ?'
(2.) THE assessment years involved are 1971 -72 and 1972 -73 for which the relevant years of account were years ending October 28, 1970, and October 17, 1971. The facts as narrated by the Tribunal in the statement of case are as under. The respondent -assessee is Sumati Kumar Sunil Kumar, a partnership firm, the concerned assessment years being 1971 -72 and 1972 -73. The material facts which are common to both the years are that there was a search and seizure in the case of the assessee on June 12, 1973. The original assessment for 1971 -72 was made on March 19, 1974, on a total income of Rs. 25,913 and the original assessment for 1972 -73 was made on February 25, 1975, on a total income of Rs. 28,000. The documents seized during the search and seizure operation were under scrutiny. On December 30, 1975, the assessee made a disclosure under section 14(1) of the Voluntary Disclosure of Income and Wealth Ordinance, 1975. In the said disclosure petition, the assessee disclosed concealed income of Rs. 6,16,000 for the assessment year 1971 -72 and Rs. 4,73,000 for the assessment year 1972 -73. Both the assessments for 1971 -72 and 1972 -73 were, thereupon, reopened under section 147 of the Act and proceedings were initiated by issue of notices under section 148 of the Act in order to bring under assessment the concealed income which was detected by the Department in the course of search and seizure. In the course of assessment proceedings, the Income -tax Officer found that, for the assessment year 1971 -72, the income of Rs. 6,16,000 disclosed by the assessee under section 11(1) of the Act was made up as below : Rs. Income from jute business carried on in various benami names 7,08,146 Loss in speculation business 92,146 6,16,000 For the assessment year 1972 -73, the income of Rs. 4,73,000 disclosed by the assessee was made up as below : Rs. Income from jute business carried on in various benami names 5,33,846 Loss in speculation business 60,846 4,73,000
(3.) THE Income -tax Officer determined the assessees income from jute business at Rs. 7,08,146 for the assessment year 1971 -72 and at Rs. 5,33,846 for the assessment year 1972 -73. He did not allow set off of the speculation loss in determining the assessees income from business.;