Commissioner of Income Tax vs Sujjan Singh Chadha

D.K. Jain, J.—At the instance of the Revenue, the Income Tax Appellate Tribunal (Delhi) has referred the following question, arising out of I. T. A. No. 2150 (Delhi) of 1974-75, pertaining to the assessment year 1967-68, for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the cash credits of Rs. 19,692 in the account of Smt. Amrit Kaur in the books of the assessed for this year stood satisfactorily explained by the assessed in view of the disclosure made by Amrit Kaur u/s 24(2) of the Finance (No. 2) Act of 1965 ?"

There is no appearance on behalf of the assessed. We have, accordingly, heard Ms. Prem Lata Bansal, learned standing counsel for the Revenue.

Briefly stated, the background facts are :

The assessed, an individual, carries on business in sugar mill machinery parts. The relevant previous year ended on June 30, 1966. During the course of assessment proceedings for the relevant assessment year, the Assessing Officer noticed a cash credit of Rs. 19,692 in the account of Smt. Amrit Kaur, the wife of the assessed, in the books of account maintained by the assessed. On being called upon to explain the source of said cash credit, it was explained that the said credit had come out of an earlier disclosure made by Smt. Amrit Kaur in terms of Section 24(2) of the Finance (No. 2) Act of 1965. Not satisfied with the Explanation furnished by the assessed, the Assessing Officer included the said amount in the total income of the assessed.

Being aggrieved, the assessed preferred an appeal to the Appellate Assistant Commissioner, who, relying on the decision of this court in the case of Rattan Lal and Others Vs. Income Tax Officer etc., , deleted the said addition. The Department filed an appeal to the Tribunal but without any success.

On being moved u/s 256(1) of the Act, the present reference has been made.

The issue raised is no longer rest integra. In Jamnaprasad Kanhaiyalal Vs. Commissioner of Income Tax, M.P., Bhopal, , the Supreme Court, dealing with a similar question, has held that the legal fiction created by Section 24(3) of the Finance (No. 2) Act of 1965, was limited in its scope and could not be invoked in assessment proceedings relating to any person other than the person making the declaration under that Act so as to rule out the applicability of section 68 of the Act. The court has further observed that there is nothing in Section 24 of the said Act, which prevents the Income Tax Officer, if he was not satisfied with the Explanation of an assessed about the genuineness or source of an amount found credited in his books, in spite of its having already been made the subject-matter of a declaration by the creditor and taxed under the scheme, from investigating the true nature and source of the credits. It is pertinent to note that in view of the aforenoted decision, the decision of this court in Rattan Lal and Others Vs. Income Tax Officer etc., has since been overruled by the apex court in Income Tax Officer, New Delhi and Others Vs. Rattan Lal and Others,

As noted above the addition made by the Assessing Officer was deleted by the appellate authorities on the basis of the decision of this court in Rattan Lal and Others Vs. Income Tax Officer etc., ) . In the light of the aforenoted decision of the Supreme Court, the question referred has to be answered in the negative, i.e., in favor of the Revenue and against the assessed. We answer the question accordingly. There will be no order as to costs.