Commissioner of Income Tax vs Prayagdass Rajgarhia

Dr. M.K. Sharma, J.—In this reference, the Income Tax Appellate Tribunal, has referred the following question being a question of law to this court for its opinion, relevant to the assessment year 1971-72 :

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that interest on the deposits totalling Rs. 1,30,000 appearing in the names of the assessor''s minor children in the books of Messrs. Delhi Pulp Industries and Rajindra Paper Mills were not taxable in the assessor''s hands by holding that the deposits stood explained in view of the voluntary disclosure made on behalf of the minor children under the Voluntary Disclosure Scheme of the Finance (No. 2) Act, 1965 ?"

The brief facts are that there were accounts in the names of his minor children in the firms of Delhi Paper Industries and Rajindra Paper Mills where he was a partner. The total deposits in these accounts amounted to Rs. 1,30,000. On the view that these deposits were not properly explained but invested there for interest and the interest was not disclosed, the Income Tax Officer estimated an income of nine per cent. on these deposits as income accruing to the assessed and brought it to tax in the assessment year 1967-68 and in each of the subsequent assessment years the Income Tax Officer went on repeating the same produce. In the appeals filed against those assessments it was found that the assessed had disclosed these amounts in the voluntary disclosure made to the Commissioner of Income Tax and in view of the decision of this court in the case of Rattan Lal and Others Vs. Income Tax Officer etc., , the addition made was deleted and consequently the interest income was also excluded. The Tribunal, following the order passed in the earlier assessment years 1967-68 to 1970-71 deleted a similar addition made in the assessment year under reference. Consequently, the application u/s 256(1) of the Income Tax Act was filed by the Revenue, out of which the present reference has arisen.

Our attention has been drawn to a decision of the Supreme Court in the case of Jamnaprasad Kanhaiyalal Vs. Commissioner of Income Tax, M.P., Bhopal, . It is to be noted that the aforesaid decision of the Supreme Court has also over ruled the decision of this court in the case of Rattan Lal and Others Vs. Income Tax Officer etc., , basing on the ratio of which the Tribunal has come to the aforesaid findings. According to counsel for the Revenue, the answer to the question of law referred to us for our decision in the present reference is covered by the ratio of the aforesaid decision of the Supreme Court. Accordingly, following the ratio of the aforesaid decision of the Supreme Court, we answer the question referred to us in the negative and in favor of the Revenue. The reference is answered accordingly.