M.R. Madhusudanan Kartha vs Commissioner of Income Tax

K.S. Radhakrishnan, J.—The following question of law has been referred u/s 256(1) of the Income Tax Act for our consideration:

Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the assessment of Rs. 75,000 as the undisclosed income of the assessee?

Assessee is an individual deriving income from business as a dealer in textiles at Perumbavoor. In the books of account of the assessee, assessing officer found credits in the names of various persons. In the assessment a total sum of Rs. 1,53,000 was added on account of credit as income from other source. The Commissioner (Appeals) confirmed the addition which included Rs. 75,000 appearing as credit in the name of Rajani Bhooshan. Assessee claimed it as genuine credit as the assessee had received the amount from his brother-in-law who was working in National Sample Survey. Assessing Officer did not accept the contention and treated the amount as assessee''s unexplained income and the same was confirmed by the first appellate authority. We notice before the Tribunal, it was contended that there was separate assessment made on the creditor Rajani Bhooshan for the assessment year 1990-91 and that in the order u/s 143(3), read with Section 147(a) a sum of Rs. 75,000 was brought to tax as his income other source. It was stated that in view of the fact that the department had initiated proceedings u/s 148 of the Income Tax Act on Raj ani Bhooshan for the reason that there was escaped income in his hands, the same amount could not have been treated as the undisclosed income of the assessee. On that basis Tribunal has referred the question to this Court u/s 256(1) of the Act.

We find no question of law to be considered by this Court in this case. As rightly pointed out by the assessing authority as well as by the appellate authority, unless and until it is established that Rajani Bhooshan had advanced the amount to the assessee mere fact that an amount of Rs. 75,000 was also brought to tax as income of Rajani Bhooshan would not advance the case of the assessee. No question of law arises for consideration in this case. We therefore, find no reason to answer the reference. Income Tax Reference would stand dismissed.