GANGADAS SARDA Vs. COMMR OF INCOME TAX B AND O

JUDGEMENT

(1.) This is a reference under Section 66, Sub-section (1), Income-tax Act by the Income-tax Appellate Tribunal. The question referred for our decision is as under :

(2.) Rule 12 of the Appellate Tribunal Rules reads as follows :

(3.) The facts giving rise to the reference are as follows : The assessee is a Hindu undivided family and the assessment year is 1945-46. The accounting year of the assessee maintained for the purposes of his business accounts is the Diwali year 2001 Sambat corresponding to from 28-10-3943 to 18-10-1944. It may be mentioned in this connection that the corresponding financial year for the year of assessment is from 1-4-1944, to 31-3-1945. From 21-1-1944, to 28-2-1944, upon examination of the account books of the assessee, a number of cash credits, aggregating to a sum of Rs. 1,00,000/-, were detected. The Income-tax Officer treated this amount as income from some secret source, which was not disclosed, and, therefore, added the sum to the income shown. The assessee then appealed to the Assistant Commissioner who gave relief to the assessee to the extent of Rs. 40,000/-, but disallowed the cash credits of Rs. 60,000/-. The assessee then filed an appeal before the Income-tax Appellate Tribunal against the inclusion of Rs. 60,000/-, while the Department appealed against the exclusion of Rs. 40,000/-. On 22-2-1952, the Appellate Tribunal remanded the case for further investigation into the matter, find the Income-tax Officer submitted his report on 28-3-1953. Both the appeals were finally heard by the Appellate Tribunal on 12-8-1953. At the time of final hearing before the Appellate Tribunal, the assessee urged an additional ground of law stating that the entire cash credits amounting to Rs. 1,00,000/- occurred prior to 31-3-1944, and, as the same was treated as secreted profits, there could be no previous year in respect of an undisclosed source other than the financial year next preceding the assessment year under Section 2 (11) (c), Income-tax Act. The assessee prayed before the Tribunal that on this legal ground, which went to the root of the assessment, the assessee was not liable to be taxed in the assessment year 1945-46. The Appellate Tribunal, however, disallowed the prayer of the assessee to add this ground as an additional one to his memorandum of appeal, remarking as follows : "At the time of hearing, an additional ground was sought to be urged, but as no valid excuse was pleaded for not having raised it earlier, we rejected it." It was argued on behalf of the assessee that this important point of law was not urged earlier as it was ignorant of the view expressed by the Tribunal on the point, but that, in any case, the point being an important one, which went to the root of the assessment and being entirely based on law, the Tribunal should have exercised its discretion judicially and entertained it. Thereafter, the question of law was stated by the Tribunal and sent to this Court for decision.