LAWS(DLH)-1980-3-10

SHAKUNTLA DEVI Vs. COMMISSIONER OF INCOME TAX

Decided On March 04, 1980
SHAKUNTLA DEVI Appellant
V/S
COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

(1.) THE applicant, Radha Kishan, was doing business in iron goods. In his books of account for the financial year which ended on March 31, 1962, there were two cash credits of Rs 8,000 and Rs. 17,500 the cash credit of Rs. 8,000 appeared on April 1, 1961, and was in the name of one Jagat Rai. The other cash credit of Rs. 17,500 appeared on February 12,1962, and was in the name of M/s Tilumal Lachhman Dass of Calcutta. Interest of Rs. 599 had also been credited to these accounts.

(2.) THE assessment of the present applicant to income -tax for the asst. year 1962 -63 was taken up by the ITO in 1966. By this time, the Govt. of India had promulgated a voluntary disclosure scheme which was embodied in the Finance (No. 2) Act of 1965. This enactment was intended to give a fillip to assessees who had disclosed their true income in earlier assessment years to come forward with voluntary disclosures of the income on which they had not paid tax. In the disclosure, the declarant had to state that a certain amount representing his income had not been charged to tax either under the 1922 Act or the 1961 Act. The details of the income, the manner in which they were held on the date of the declaration as well as the details of the financial year or years in which they had been earned were also expected to be disclosed by the declarant. When such a declaration was filed before the CIT, the CIT could, in certain cases where he had information that the existence of this income had been detected in the course of assessment proceedings, refuse to accept the declaration as made and could estimate the concealed income. In other cases the declaration was to be accepted. In either event tax was charged on the income declared or the income determined by the CIT on the basis that the said sum constituted the total income of the declarant and was liable to tax accordingly at the rates prescribed in the finance Act of 1965.

(3.) WHEN the ITO took up the assessment of the assessee for the asst. year 1962 -63, he called upon the assessee to explain the nature and source of the two cash credits. The assessee stated that the two loan accounts in the names of M/s Tiloo Mal Lachman Dass and Jagpat Rai really represented amounts belonging to Surinder Kumar and Narendra Kumar which had been deposited with the assessee. It is also seen from the assessment order that there was another credit standing in the name of Smt. Krishna Gautam which was sought to be explained by reference to a declaration made by the assessee himself. It was contended that since the amounts in question had been taxed under the provisions of the Finance (No. 2) Act of 1965, in the hands of the two sons of the assessee, Surinder Kumar and Narendra Kumar, the question of taxing them again in the hands of the assessee for the asst. year 1962 -63 could not arise. 4. The ITO accepted the assessee's contention so far as the cash credit in the name of Smt. Krishna Gautam was concerned. So far as the other two items in the names of the two sons were concerned the ITO summoned and examined the two sons of the assessee. He found that at the relevant time they were minors and were studying in schools and that there was no satisfactory explanation or account as to how they had come to have in their possession such large sums of money. He was, therefore, not satisfied that the cash credits belonged to the two sons despite the fact that they had disclosed the sum as their income in the voluntary disclosures. The ITO, therefore, added the two sums of Rs. 8,000 and Rs. 17,500 as the assessee's income and also disallowed the interest of Rs. 599 credited to the said accounts. This had been confirmed by the AAC and the Tribunal and at the request of the assessee the following question of law has been referred for the decision of this Court under S. 256(1) of the INCOME TAX ACT, 1961: