JUDGMENT

(Delivered by Rajagopalan, J.).

It was a consolidated reference that was directed under the one question framed by this Court:

“Whether on the facts and in the circumstances of this case, the Appellate Tribunal was justified in law in treating a sum of Rs. 16,000 and a further sum of Rs. 10,000 as income from undisclosed sources during the accounting year in question ?”

The consolidated question really consists of three questions: (1) Did the sum of Rs. 16,000 constitute the income of the assessee. (2) Did the sum of Rs. 10,000 constitute the income of the assessee. (3) If either or both the sums constituted the income of the assessee, did they or either sum accrue to the assessee in the year of account selected by him for his business. We should point out even at this stage that these two items were all along treated as concealed income of the assessee from an undisclosed source or sources.

The first item of Rs. 16,000 was a part of the total sum of Rs. 33,721 which the assessee put into his business the instalments as capital in the course of the year. He commenced that business on 30th September 1948, which marked the commencement of S. Y. 2005. His year of accounting for the assessment year 1950-1951 was S. Y. 2005, from 30th September 1948 to 21st October 1949. That the assessee had a sum of Rs. 40,838-13-0 to his credit in the books of H. Hassan and Co., of which he was a partner and from which he retired on 17th October, 1944, was accepted. The assessee's explanation, that the sum of Rs. 33,721 with which he started his business in S. Y. 2005, came out of the funds he had drawn towards his share from that partnership firm was disbelieved. The Department was of the view that between 17th October 1944 and 30th September 1948, when the assessee was at his native place away from Madras, he must have spent a considerable portion of this amount, and that only a sum of about Rs. 17,000 must have been available to him before 30th September 1948. Deducting this sum, the Department arrived at a round figure of Rs. 16,000, which the Department treated as the assessee's undisclosed income from an undisclosed source, which should be assessed in the assessment year 1950-1951. The assumption of the Department, which was accepted by the Tribunal, that the assessee could not have had more than Rs. 17,000 before 30th September, 1948, was vitiated by a basic misconception of the facts. That the assessee brought to Madras a sum of Rs. 25,000 by a Bank draft was admitted by the Department. The Assistant Commissioner recorded:

“The Appellant has produced before me his bank pass book in which a draft has been credited in October 1948 for a sum of Rs. 25,000.”

That was an erroneous reading of the entries in the pass book. The pass book was produced for our inspection, which showed that the bank draft had been cashed and credited to the assessee's account even in August 1948, that is, before he commenced his business on 30th September 1948. It was out of Rs. 25,000 so deposited in the bank that the assessee withdrew sums between 30th September 1948 and 18th November 1948, which he credited in the books of account of his business. Since there was clear proof that even before 30th September 1948, the assessee brought to Madras a sum of Rs. 25,000 there was certainly no basis for the department to hold that he could have had only Rs. 17,000. No doubt an estimate had to be made of the expenses the assessee had incurred in his native place between 1944 and 1948, but if the basic fact that he had Rs. 28,000 before 30th September 1948 is taken into account, the estimate made by the department could at best be viewed only as a conjecture. The finding of the Assistant Commissioner, which was accepted by the Tribunal, that the assessee could not have had more than Rs. 17,000 from out of his savings before he commenced his business on 30th September 1948 was vitiated, because the evidence afforded by the pass book was misread.

As we said, that the assessee had a sum of over Rs. 40,000 at the end of 1944 was not challenged by the department. The learned Counsel for the department urged that, even if Rs. 25,000 came out of this sum, the assessee should be called upon to explain difference between Rs. 25,000 and Rs. 33,000. That was not the approach made by the department or by the Tribunal. It is not for us to investigate the question afresh. The finding that the assessee could not have had more than Rs. 17,000 and therefore Rs. 16,000 constituted the income from an undisclosed source cannot be accepted. That left only the assessee's explanation, that the entire sum of Rs. 33,000 came out of his savings as a partner, to hold the field, and there was no real basis to reject it.

With reference to this sum of Rs. 16,000 we hold that there was no material on record to justify the conclusion, that it constituted the income of the assessee from an undisclosed source. In that view of the case, the third of the sub-questions we have mentioned above, whether, if it constituted concealed income, it could be held to have accrued to the assessee in S. Y. 2005 does not arises for consideration.

The second sum of Rs. 10,000 rep resented a credit in the name of the assessee's wife. The assessee's explanation that it was his wife's money, was rejected. It was certainly within the jurisdiction of the Tribunal, as the final fact finding authority, to hold on the material placed before it that the assessed had not proved his claim that the money belonged to his wife. So it remained an un-explained cash credit. The credit itself was made on 20th December 1948, which was within S. Y. 2005.

The learned Counsel for the assessee referred to S. N. Ganguly v. Commissioner of Incometax(1), and L. Sheo Narain Lal, In re(2), and contended that, since the money stood not in the name of the assessee, but, in the name of his wife, even if his explanation was rejected, the burden lay upon the department to prove wherefrom the assessee obtained this sum, that is, it was for the department to prove that it constituted his income. Really it is not a question of burden of proof at all. On the material placed before the Tribunal it was entitled to decide whether the money belonged to the assessee's wife or whether the money belonged to the assessee. If the money belonged to the assessee, it was for him to explain the source from which he obtained it to deckle whether it constituted his income, and his income in the relevant year of account assessable in the assessment year 1950-1951. He did not furnish any such explanation. The Tribunal was entitled to hold that it was concealed income of the assessee from an undisclosed source.

The next question is, whether the Tribunal was entitled to view it as an item of income which could be assessed in the aasessment year 1950-1951. It should be remembered that it was not treated as the concealed income of the business which the assessee carried on in S. Y. 2005. It was treated as undisclosed income from an undisclosed source. The credit entry was on 20th December 1948, which certainly fell within S. Y. 2005. The Samvath year was the year of account of the assessee's choice only for his business. With reference to 20th December 1948, the year of account for income which did not come from that business could only be the period from 1st April 1948 to 31st March 1949, the relevant assessment year for which would be 1949-1950. The income which accrued or is held to have accrued to an assessee in the year of account which ended on 31st March 1949 could not obviously be assessed in the assessment year 1950-1951. Where the assessee does not choose his year of account, the department itself has no choice. It has necessarily to treat only the official year April to March as the year of account—See Commissioner of Incometax v. P. Darolia and Sons(3) and Bishun Dutt v. Commissioner of Incometax(4).

Thus the position is that, though the Tribunal was entitled to view this sum of Rs. 10,000 as the income of the assessee, it was not entitled to hold that it was income which could be assessed in the assessment year 1950-1951. The learned Counsel for the department could not challenge the correctness of the contention of the learned Counsel for the assessee, that at the worst this sum of Rs. 10,000 would have been assessable in the assessment year 1949-1950 and that it was not assessable in the assessment year 1950-1951. The learned Counsel for the department, however, urged that this question, whether it was assessable in the year of assessment 1950-1951, did not arise on the order of the Tribunal, and that therefore we should not decide that issue.

It is true that the Tribunal was not called upon to decide in the appeal whether this income of Rs. 10,000 could not be assessed to the assessment year 1950-1951, because the year of accounting as far as this sum was concerned could only be April 1948 to March 1949. The question, however, was raised in the application the asses see preferred to the Tribunal under S. 66 (1). It was also raised in the application the assessee subsequently preferred to this Court under S. 66 (2). As we said, it was a consolidated question that this Court directed the Tribunal to refer under S. 66 (2) of the Act. The last portion of that consolidated question specifically raised the issue of the year of account to which this sum of Rs. 10,000 could be correlated. That the petition is, the question, whether this sum of Rs. 10,000 could be assessed as undisclosed income in the assessment year 1950-1951 does specifically and expressly arise on the question as it has been framed. It is a comprehensive and consolidated question. Nonetheless, the learned Counsel for the department contended that this Court should not answer the question, because it did not arise on the order of the Tribunal, in the sense that it was not raised nor decided by the Tribunal at the stage of the appeal.

No doubt the learned Counsel for the department was well founded in his contention, that the scope of a reference under S. 66 (2) is no different from that of a question referred by the Tribunal itself under S. 66 (1). See the observations of Bhagwati, J., in New Jehangir Vakil Mills Ltd. v. Commissioner of Incometax. If the Tribunal had referred a question under S. 66 (1) of the Act which did not arise on the order of the Appellate Tribunal whether this Court should decline to answer that question does not arise for consideration here. We have to deal with the problem, whether this Court should decline to answer a question directed by the Court itself to be referred to it under S. 66 (2). That question in that form was answered against, the department by the Calcutta High Court in Chainrup Sampatram v. Commissioner of Incometax. The decision was followed by the Calcutta High Court in Commissioner of Incometax v. Diana Engineering Co. and in Khusiram Murarilal v. Commissioner of Incometax. A similar view was taken by the learned Judges of the Patna High Court in Bisheswar Singh v. Commissoner of Ineometax. The learned Judges applied the principle laid down by the Calcutta High Court in Chainrup Sampatram v. Commissioner of Incometax. Ramaswami C.J observed in Bisheswar Singh v. Commissioner of Incometax(5), at pages 385-6:

“It is manifest that the question of law does not arise out of the order of the Tribunal within the meaning of S. 66 (1) or 66 (2) of the Act and the Bench of the High Court ought not to have called for a statement of the case on this question. But the assessee has succeeded in persuading the previous Bench to call for a statement. The question is whether at this stage we should say that the reference should never have been called for under S. 66 (2). That would mean, in substance, that we overruled the order passed by the previous Bench. As the matter stands, I think that the question must be dealt with and answered on its merits and the reference cannot now be thrown out on the ground that the question does not arise out of the Tribunal's order.”

We are in respectful agreement with the principle that underlies these observations.

The learned Counsel for the department invited us to differ from the view taken by the Calcutta and Patna High Courts and to hold that, despite the reference of the question under S. 66 (2) of the Act, this Court should decline to answer the question once it is found that that question did not arise on the order of the Appellate Tribunal. We are unable to accept this contention. As we have already said, we agree with the view taken by the Calcutta and Patna High Courts. The issue whether a given question does or does not arise on the order of the Appellate Tribunal could be decided either expressly or by necessary implication in an order directing the reference under S. 66 (2). That is the proper stage for deciding that issue. Once a reference has been ordered and made, it is not open to this Court at a later stage to decline to answer that reference on the ground that the reference should not have been directed at all. Obviously, as Ramaswami C.J pointed out it is not open to us to review the earlier order in this case, the earlier order directing the reference.

Despite the feature of the case, that the Tribunal was not called upon to decide and did not decide whether this sum of Rs. 10,000 could be assessed in the assessment year 1950-1951 our answer to that part of the reference is that, even though the Tribunal was entitled to hold that Rs. 10000 constituted the income of the assessee, it was not income that could be assessed in the assessment year 1950-1951.

On the basis of what we have recorded above our answer to the consolidated question is in the negative and in favour of the assessee. On neither item Rs. 16,000 and 10,000 was he liable to be taxed in the assessment year 1950—1951.

As the assessee has succeeded in this reference, he will be entitled to his costs. Counsel's fee Rs. 250.

V.C.S