Commissioner Of Income Tax vs Dewan Chand Roshan Lal
1981 Latest Caselaw 280 Del

ORDER

S. Ranganathan, J.

1. The present Income Tax Reference arises out of the assessment M/s. of Dewan Chand Roshan Lal for the asst. yr. 1967-68. The accounts of the firm for the relevant previous year disclosed cash credits in the names of two minors Rajesh Kumar and Mukesh Kumar who were the sons of two out of the five partners of the assessed firm. The ITO examined the statements given before him by the fathers of the two minor depositors. Though it was claimed that these minors had disclosed the two sums of Rs. 5,000 in question as their income under the voluntary disclosure scheme of the Finance (No. 2) Act, 1965, the ITO pointed out the boys could not have earned Rs. 5,000 each at such a vary tender age. He observed that, if at all, the amounts of disclosures must have belonged to the fathers who headed the family and not to the minor sons. In his view the making of the disclosures by the minor children which were accepted by the department did not mean that the department had lost its right to enquire into the benami nature of the amounts disclosed in the assessment of the party in whose books the credits appeared. The protection was given by the scheme to the declarants. The scheme nowhere prohibited an inquiry of the source or the means of the declarant so far as any other proceedings were concerned. Having come to the conclusion that the source of the credits were not satisfactorily explained, the officer added the sum of Rs. 10,000 as the assessed's income from un-disclosed sources. The Income Tax Officer also disallowed interest on the sum of Rs. 10,000. The above additions were confirmed by the AAC.

2. The assessed preferred a further appeal to the Tribunal. The Tribunal, following the decision of this Court in Rattan Lal and Ors. v. ITO held that, in view of the fact that the sum of Rs. 10,000 had been taxed under the Voluntary Disclosure Scheme, the Revenue authorities were not empowered to tax the same again in the hands of the assessed firm. The AAC's order deleting the addition of Rs. 10,000 and the disallowance of interest of Rs. 795 was, therefore, upheld by the Tribunal.

3. On an application made by the CIT the following question has been referred to us for our decision.

"Whether on the facts and in the circumstances of the case, the Tribunal was legally right in holding that the deposits covered by the declarations made under the Voluntary Disclosure Scheme i.e. u/s. 24 of the Finance (No. 2) Act of 1965, were not includible in the assessed's assessment and thereby deleting the additions of Rs. 10,000 and further deleting the disallowance of interest of Rs. 795 thereon ?"

4. The above question has to be answered in the negative and favor of the applicant in view of the decision of the Supreme Court in the case of Jamnaprasad Kanhaiyalal v. CIT and we do so. The result of our answer will be to restore the matter to the file of the Appellate Tribunal for being disposed of after considering the explanations given on behalf of the two minor depositors of their merits.

5. Shri Gopal K. Sood, ld. counsel appearing for the respondent submitted that we should decide the issue on the facts also. He submitted that the question of law referred to us was very wide and he referred to the provisions of Order 41 Rule 24 of the Code of Civil Procedure. We do not however think that the ld. counsel's contentions can be accepted. The provisions of the Code of Civil Procedure do not apply to reference proceeding under the IT Act. So far the frame of the question is concerned, it has to be understood not only in the light of the facts and circumstances of the case but in the light of the order passed by the Tribunal out of which the reference is made. The only point decided by the Tribunal in this case was that in view of the voluntary disclosures relied upon by the assessed it was not open to the department to include the sum of Rs. 10,000 in the assessment of the present assessed. It is a short legal ground and the view of the Tribunal is no longer sustainable in view of the decision of the Supreme Court. The Tribunal did not go into the facts or the merits of the explanation tendered on behalf of the minor depositors. Learned counsel for the respondent says that the ITO has given self-contradictory findings, but this is also a matter to be examined by the Tribunal. It is not open to us in this reference to examine the facts and review the findings of the ITO and the AAC on questions of facts which have not been touched upon by the Tribunal. We, therefore, decline to enter into the merits of the explanations as asked for by the ld. counsel for the respondent.

6. The reference is disposed of as indicated above but in the circumstances we make no order as to costs.