S. K. KAPUR J. - The Income-tax Appellate Tribunal having declined the assessees application under section 66 (1) of the Indian Income-tax Act, 1922, this court by order dated 25th October, 1962, directed the Tribunal to refer the following questions under section 66 (2) of the said Act :
'(1) Is not the finding of fact by the Tribunal as to the applicability of clause (a) of sub-section (1) of section 34 vitiated by relying on the affidavit of Manohar Lal which affidavit was in admissible in evidence ?
(2) Whether, on the facts and circumstances of the case, clause (a) of sub-section (1) of section 34 would rightly apply ?
The dispute relates to the assessment year 1946-47, the corresponding accounting year being the year ended on 16th October, 1945. The assessee is a Hindu undivided family carrying on business in the name and style of Hukam Chand Ulfatrai. On 12th January, 1946, the Central Government promulgated the Bank Notes (Declaration of Holdings) Ordinance, 1946, and the High Denomination Bank Notes (Demagnetization) Ordinance, 1946. By these statues, currency notes of Rs. 1,000 ceased to be legal tender with effect from the midnight of 12th and 13th January, 1946. On 15th January, 1946, the assessee encashed 58 high denomination notes of Rs. 1,000 each and the Income-tax Officer dealing with the assessees assessment year for the year 1947-48 held that a sum of Rs. 73,000 represented by 58 notes of Rs. 1,000 each encashed on 15th January, 1946, and 15 notes of Rs. 1,000 each delivered to Messrs. Hukam Chand Jagadharmal on 12th January, 1946, was the assessees income from undisclosed sources during the previous year relevant to the assessment year 1947-48 and added that amount in the income of the assessee. In the second appeal preferred by the assessee, the Tribunal set aside the said addition on the ground that in any even the income from undisclosed sources must have been earned on or before 12th January, 1946, and, therefore, it could not have been treated as income of the assessment year 1947-48. While dealing with the appeal with respect to the assessment year 1947-48, the Tribunal observed :
'Lastly, a sum of Rs. 73,000 has been added as the assessees income from undisclosed sources. Of this sum, Rs. 58,000 is the proceeds of encashment of 58 high denomination notes of Rs. 1,000 each in January, 1946, after the promulgation of the High Denomination Bank Notes (Demagnetization) Ordinance, 1946. The other sum of Rs. 15,000 represents 15 notes of Rs. 1,000 each which the assessee paid to one constituent on January 12, 1946. It is unnecessary to go into the truth of the explanations tendered by the assessee in this behalf, because if this sum of Rs. 73,000 was his income, it was income received in January, 1946, or earlier and not later. There can be no previous year in respect of income from an undisclosed source other than the financial year next preceding the assessment year. On this ground the addition of Rs. 73,000 in the assessment for 1947-48 must be deleted.'
As a consequence of the order of the Income-tax Appellate Tribunal mentioned above, the Income-tax Officer reopened the assessment for the assessment year 1946-47 and issued a notice to the assessee under section 34 of the said Act. The assessee, besides challenging the taxability of the said amount, also challenged the validity of the notice under section 34. The Income-tax Officer held that the assessee must have received 15 high denomination notes in the course of his business but with respect to the remaining 58 notes he decided that Rs. 58,000 represented by the said notes was the income of the assessee in the relevant year from undisclosed sources. In the assessees appeal before the Appellate Assistant Commissioner, the same contentions were urged without success. The assessee filed a second appeal before the Income-tax Appellate Tribunal and contended that the notice was a barred by time as section 34(1)(b) and not section 34 (1) (a) was applicable. The assessee also challenged the finding of the Appellate Assistant Commissioner regarding the treatment of Rs. 58,000 as their income. The Tribunal disposed of the appeal by two orders, the first order being dated 3rd July, 1957, and the second dated 1st May, 1959. In the first order the Tribunal dealt with the merits of the taxability of Rs. 58,000 and by the second order, which was passed on an application under section 35 of the said Act, it disposed of the question of validity of notice under section 34. In the order dated 3rd July, 1957, the Tribunal, inter alia, relied on an affidavit by one Manohar Lal and observed :
'This Manohar Lal even produced his note-book and showed entries about the receipt of the dalali in relation to this transaction. These entries show that the dalali was credited on the 13th of January.'
By the second order dated 1st May, 1959, the Tribunal held that action under section 34 (1) (a) was legal and proper. The assessee made two reference applications under section 66 (1) of the said Act and question No. 3 as stated in one of the reference applications was :
'Has not the Tribunal misdirected themselves in law in relying upon the affidavit of Manohar Lal, which was given in another case and which was not brought on the record of the applicant who had not been afforded any opportunity to cross-examine the said deponent ?'
While disposing of an application under section 66 (2) of the said Act, this court discussed the question of admissibility of the affidavit of Manohar Lal and the impact of the decision of their Lordships of the Supreme Court in Dhirajlal Girdhar Lal v. Commissioner of Income-tax, on the conclusion of the Tribunal, inter alia, based on the said affidavit, but while drawing up the question of law observed :
'Question No. 3 is not, however, properly drawn up and it is recast as follows.'
The question thus recast is the question No. (1) mentioned already above. When the matter came up for hearing before this court, the Tribunal was directed to file an additional statement. The necessity for additional statement appears to have been felt because, in the statement of case submitted appears to have been felt because, in the statement of case submitted by the Tribunal, no mentioned was made either of the fact of Manohar Lals affidavit or of the circumstances in which it was considered by the Tribunal. A supplementary statement of case having been sent by the Tribunal the matter has come up before us now for final disposal.
In the supplementary statement of the case, the Tribunal has observed that neither any affidavit of Manohar Lal, nor his statement, nor any notebook of his, is on the record of the Tribunal in Income-tax Appeal No. 5138 of 1956-57 (the appeal with which we are concerned). It has also been pointed out that there is no application either by the revenue or by the assessee for permission to produce or refer to any affidavit or statement or note-book of Manohar Lal, on the record of the Tribunal. In the said supplementary statement the Tribunal observed :
'From the above three letters written by Shri. S. S. Kapur copies of which are now produced by the revenue before us, it appears that some affidavit of Manohar Lal must have been referred to during the course of the hearing of the said appeal before the Tribunal. It may be pointed suit in this connection that from the following passage from the copy of the decision of the Appellate Assistant Commissioner, B-Range, New Delhi, dated December 3, 1956, in Income-tax Appeal No. 51 filed by Messrs. Mamraj Chuni Lal, in respect of its assessment for the assessment year 1946-47, filed on April 27, 1955, it appears that there were two affidavits of Manohar Lal, besides Manohar Lal statement recorded by him, when he heard the said appeals....'
From the said statement it does not prima facie appear that reference to Manohar Lals affidavit was not justified. The difficulty of the assessee, however, arises from the nature of the question referred to this court.
So far as the first question is concerned admittedly the assessee did not year in question. Mr. Deva Singh, the learned counsel for the assessee, says that the accounting period corresponding to the assessment year 1946-47 being the period ended on 16th October, 1945, the assessee could not have disclosed this amount in the assessment year 1946-47 and consequently they disclosed it in the assessment year 1947-48. That appears to be of no assistance to the assessee because in the appeal for the assessment year 1947-48, the Tribunal had clearly held that the previous year with respect to this income, being an income from undisclosed sources, would be the financial year. Apart from that, there is no reference before us as to what was the previous year of the assessee relevant to the assessment year 1946-47. In the face of the finding that the income was from undisclosed sources, I think the Tribunal rightly proceeded on the footing that the accounting period for this item of income has, in the circumstances the financial year. In this situation, it has to be taken for granted that with respect to the assessment year 1946-47, the financial year was the accounting period with respect to the alleged income of Rs. 58,000. The reference to Manohar Lals affidavit then becomes immaterial because admittedly the assessee had not disclosed this income in the assessment year with which we are concerned. This would clearly constitute an omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for their assessment for the assessment year 1946-47, thus attracting section 34(1) (a) of the Act. Faced with this difficulty, Mr. Deva Singh asked us to reframe the question by deleting the words 'as to the applicability of clause (a) of sub-section (1) of section 34' If these words are deleted, question No. (1) would read as under :
'Is not the finding of fact by the Tribunal vitiated by relying on the affidavit of Manohar Lal which affidavit was in admissible in evidence ?'
The question is : Are we competent to reframe the question in the manner suggeste This court can answer the those question which are actually referred to it. No doubt, it is open to this court to resettle or reframe the question formulated in the reference before answering them so as to bring out the real issues between the parties, but that power does not extend to raising new and different questions. Mr. Deva Singh has relied on Amarchand Sobhachand v. Commissioner of Income-tax, New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax, Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax, Mohammed Idrees Barry & Co. v. Commissioner of Income-tax and Commissioner of Income-tax v. G. M. Chennabasappa, in support of his plea that the powers of this court are very wide in reaffirming a question and it must always be reaffirmed to bring out and decide the real controversy between the parties. These cases are only illustrative of the treatment accorded to the facts of each case. The principle is, however, not in dispute that in reaffirming a question this court cannot reaffirm and answer a question totally different from the one referred. If the powers of the court were so wide as to formulate and answer an entirely new question the jurisdiction would in that even become appellate rather opinion if the question is reaffirmed in accordance with the by the learned counsel for the assessee, it would really be answering entirely a different question than the one referred, and I do not think I am competent to do so. The question as framed, however, is restricted only to the applicability of clause (a) of sub-section (1) of section 34, and, as I have already stated on the facts found and/or admitted, the only answer to the question must be that reliance on the affidavit of Manohar Lal does not vitiate the finding of the Tribunal as to the applicability of section 34 (1) (a). The first question, therefore, must be answered in the negative and in favour of the revenue.
So far as the second question is concerned, the narration of facts given above clearly shows that section 34 (1) (a) was rightly held applicable by the Tribunal. The assessee not having disclosed the income in the assessment year 1946-47, it cannot be said that there was no omission or failure on the part of the assessee so as to attract section 34 (1) (b). The answer to the second question must be in the affirmative and in favour of the revenue.
The reference is disposed of accordingly but there will be no order as to costs.
R. S. NARULA J. - I agree.