Kashmiri Lal Kasturi Lal and Co. vs Commissioner of Income Tax

Gokal Chand Mital, J.—The Income Tax Appellate Tribunal, Amritsar Bench, has referred the following question of law for the opinion of this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that action u/s 147(a) was rightly taken by the Income Tax Officer against the assessee ?"

In order to answer the question, some of the facts found by the Tribunal have to be kept in view. In the account books of the assessee, it was shown that Gurdit Singh Sowraj Singh had advanced Rs. 20,000 to the assessee by way of cash credit. At the time of the original assessment, the fact did not come to light whether Gurdit Singh Sowraj Singh had really given advance by way of cash credit or was a bogus firm lending its name. Later on, when assessment proceedings were initiated against Gurdit Singh Sowraj Singh in which Sowraj Singh stated that he indulged in hawala business with various parties including the assessee and that the firm merely lent us name to the assessee and no amount was advanced, proceedings for reassessment u/s 147(a) of the Income Tax Act, 1961, were initiated against the assessee. The Income Tax Officer added the amount of Rs. 20,000 as income of the assessee from undisclosed sources in reassessment proceedings and the order was upheld by the Appellate Assistant Commissioner and the Tribunal. The Tribunal followed the decision of this court in Hazi Amir Mohd. Mir Ahmed Vs. Commissioner of Income Tax, in upholding the addition. The Tribunal relied upon the following observations from the decision of this court ( at p. 635 ) :

"It would be a case where the Income Tax Officer has reason to believe, on the basis of subsequent information, that the assessee had failed to disclose material facts truly."

In Hazi Amir Mohd. Mir Ahmed Vs. Commissioner of Income Tax, the facts were quite similar to the present case as there also a lending firm was indulging in hawala business and was merely lending its name without lending money. Since the Tribunal followed the decision of this court in a parallel case, we answer the question in the affirmative, i.e., in favour of the Revenue and against the assessee, that the Tribunal was right in coming to the conclusion that action u/s 147(a) of the Act was rightly taken by the Income Tax Officer. The Revenue will have its costs from the assessee.