V.S. Desai, J.
1. This is a reference in compliance with the requisition of this court under section 66(2) of the Indian Income-tax Act at the instance of the assessee.
2. The assessee, Shri Harilal Harjivan, is a partner in a firm known as 'F. Cornaglia & Co.' carrying on the business of restaurant keepers. On the 11th March, 1950, the assessee purchased the said restaurant business from two persons, who were carrying it on in partnership, for a sum of Rs. 50,000. In the books of the assessee's partnership firm, which was a partnership of the assessee, his father and his two brothers, entries pertaining to this purchase of the restaurant business were made on 9th March, 1950. The partnership deed relating to the partnership of the assessee, his father and his two brothers, was executed on the 4th April, 1950, and the said deed stated that the partnership would be deemed to have commenced from 11th March, 1950. In the assessment year 1951-52, the relevant accounting year for which was the financial year 1950-51, the partnership submitted its return and also an application under section 26A for the registration of the firm, which was constituted under the deed of the 4th April, 1950. The Income-tax Officer was of the opinion that the partnership firm was not genuine, and the business belonged exclusively to the assessee, and not to the firm. He, therefore, rejected the application for the registration of the firm and assessed the income as the income of the individual assessee. In the said assessment proceedings, the assessee was asked to explain the source of the sum of Rs. 50,000, and the explanation which he gave, namely, the amount was made up by the contributions made by himself, his father and his two brothers, was not accepted by the Income-tax Officer. He, therefore, held that the amount of Rs. 50,000 was income from an undisclosed source in the hands of the assessee and accordingly brought the said amount to tax. The Appellate Assistant Commissioner agreed with the view which the Income-tax Officer had taken and dismissed the appeals which had been filed by the assessee against the assessment order and also against the refusal to register the partnership firm. Two appeals were then preferred to the Tribunal, one relating to the refusal of registration, and the other relating to the assessment. The appeal from the order refusing registration of the firm was allowed by the Tribunal, holding that there was a genuine firm. In the other appeal, however, against the decision of the Income-tax Officer, that the amount of Rs. 50,000 was income from an undisclosed source in the hands of the assessee liable to tax, the Tribunal took the view that the said amount was rightly brought to tax in the hands of the assessee. In this appeal, it was sought to be argued by the assessee that the amount of Rs. 50,000, even if held to be the income of the assessee from an undisclosed source, did not belong to the assessment year 1951-52 and, therefore, could not be assessed to tax during that year. This contention was rejected by the Tribunal, firstly, on the ground that since it was not raised before the Income-tax Officer or before the Appellate Assistant Commissioner, it would not be allowed to be raised before the Tribunal for the first time and, secondly, on the ground that the contention was without any substance or merits. In holding that the contention had no substance in it, the Tribunal observed as follows :
'The assessee before us is not the firm, but the individual Harilal Harjivan. What is taxed in the hands of this assessee is the amount representing the purchase price of the business which he purchased on a date earlier than the date on which his partnership with his brothers and father started. He purchased it on March 11, 1950, whereas the partnership in question came into existence by a deed dated 4th April, 1950.'
3. The assessee's application under section 66(1) to the Tribunal for referring certain questions of law arising on its order to the High Court having been rejected, the assessee applied to this court under section 66(2) and, on that application, this court directed the Tribunal to draw up a statement of the case and refer to this court the following question :
'Whether the financial year 1950-51 was the correct previous year in respect of the sum of Rs. 50,000 (rupees fifty thousand) ?'
4. In our opinion, the answer to the question must be in the negative. Even though the assessee's explanation that this sum represented the total of the contributions made by himself, his father and his two brothers was rejected and the amount was held as belonging exclusively to the assessee, it is difficult to see how it can be brought to tax during the assessment year 1951-52. It is not disputed that this sum was paid for the purchase of the restaurant business on 11th March, 1950. It was, therefore, in existence before the commencement of the assessment year 1951-52, which commenced on the 1st April, 1951. It may be that the sum belonged to the assessee. But it could not be said to have arisen as income receipt during the assessment year 1951-52, because it had already arisen earlier and was in his hands even before the commencement of the said assessment year. So far as the said sum therefore, is concerned, the financial year 1950-51, which was the previous year for the assessment year 1951-52, was not the correct previous year.
5. Mr. Joshi, learned counsel for the revenue, has argued that the Tribunal had refused to allow this contention to be raised before it, because it has not been raised before the Income-tax Officer or the Appellate Assistant Commissioner. Whether to allow a new contention to be raised for the first time in the appeal before the Tribunal, or not to allow it, was within the discretion of the Tribunal, and the Tribunal could not be said to have erred in not permitting the assessee to raise that contention. As the contention was refused to be raised before it by the Tribunal, it could not be said to have arisen out of its order. On that ground, therefore, Mr. Joshi says that the Tribunal's decision must be held to be right and the question referred to must be answered against the assessee. We are afraid we cannot accept the submission of Mr. Joshi. The contention which has been raised before the Tribunal, even if the Tribunal has refused to entertain it, is a contention which arises on the order of the Tribunal. Moreover, since on an application made by the assessee to this court under section 66(2), the question before us has been directed to be referred to this court by the Tribunal, we must answer the question which is before us. In our opinion, therefore, the circumstance that the Tribunal had not permitted the question to be raised before it would not be sufficient to take the view that the question either need not be answered or must be answered against the assessee. In our opinion, therefore, the answer to the question referred to us is in the negative. The assessee will get his costs from the Commissioner.
6. Question answered in the negative.