The judgment of the court was delivered by

GROVER J.---In these appeals by special leave the facts may be stated : The assessee at the material time was a Hindu undivided family. The relevant assessment year is 1944-45 corresponding to the accounting year ending on Diwali Samvat 2000 (October 28, 1943). On February 20, 1945, the Income-tax Officer made an assessment on a total income of Rs. 26,800 odd which comprised income from the share in the business of Kasi Iron Foundry and the income from the property. This order was revised under section 34 of the Indian Income-tax Act, 1922, hereinafter called the Act. In the revised assessment order the total income of the assessee was computed at Rs. 71,731. In this amount a sum of Rs. 40,000 was included as income from undisclosed sources. This assessment was challenged before the Appellate Tribunal, and was set aside on the ground that there had not been proper service of a notice under section 34. A fresh notice under section 34 was issued in October, 1951. On October 16, 1952, a revised assessment order was passed and the total income of the assessee was computed at Rs. 85,817 which included a sum of Rs. 49,696 as income from undisclosed sources. On March 31, 1953, the Income-tax Officer served on the assessee another notice under section 34 in respect of the same assessment year 1944-45. On March 18, 1954, a revised assessment was made in which was included a sum of Rs. 32,000 as the assessee's income from undisclosed sources, being the alleged investment of the assessee in the sarpat and bamboo business prior to February 18, 1944. The total income of the assessee was computed at Rs. 1,17,817. The income from undisclosed source which came to be included in this computation amounted to Rs. 81,696. The assessee filed appeals against the assessment order dated October 16, 1952, contending, inter alia, that there had been no escapement of any income and that in any case the first revised assessment dated October 16, 1952, was barred by time under section 34(1)(b) of the Act as the provisions of section 34(1)(a) did not apply. The second revised assessment was challenged on the ground, inter alia, that the Income-tax Officer had no jurisdiction to issue the notice under section 34 as the material facts necessary for making the assessment were fully and truly disclosed to the Income-tax Officer during the assessment proceedings for the year 1945-46. That appeal was also dismissed. Thereafter the asseesee filed two appeals before the Income-tax Appellate Tribunal. Before the Tribunal it was contended by the assessee that the first revised assessment dated October 16, 1952, was barred by limitation and that the period of limitation was four years under section 34(1)(b) and not eight years under section 34(1)(a). The second revised assessment was challenged on the ground that the Income-tax Officer had no jurisdiction to issue a notice and make assessment under section 34. It was argued that the investment, expenditure and the profits earned from the business of sarpat and bamboo had been duly shown. As regards the first revised assessment the Tribunal held that the income of the assessee from the firm, Rajnarain Durga Prasad, had escaped assessment by failure on the part of the assessee to disclose fully and truly all the facts necessary for making the assessment and that the provisions of section 34(1)(a) were attracted and, therefore, the period of limitation was eight years and not four years. With regard to the second revised assessment it was urged that all the materials necessary for making the assessment were before the Income-tax Officer and by issuing a notice under section 34 the Income-tax Officer had changed his opinion and a mere change of opinion did not authorise the Income-tax Officer to take recourse to section 34. The Tribunal disposed of the argument with regard to the second revised assessment in the following words :

" The Income-tax Officer who made the assessment for 1945-46 might have had all the accounts of the business in sarpat and bamboos before him and might have known the investments made by the assessee in that business. The question for consideration is whether the Income-tax Officer had reason to believe that by the failure on the part of the assessee to fully and truly disclose all the material facts necessary for the making of the assessment for the year 1944-45, income had escaped assessment. Surely, even if the Income-tax Officer had known that the investment made by the assessee in that business. were his revenue income, he could not have proceeded under section 34 because the income could not have been assessed in the assessment year 1945-46. It could be assessed in the assessment year 1944-45. The income appearing by way of deposits in the sarpat business could be assessed only as income from some undisclosed source and the previous year for income from undisclosed source for which the assessee had not elected any previous year would be the financial year. The investments were made in the financial year relevant for the assessment year 1944-45 and were not made in the financial year relevant for the assessment year 1945-46. The Income-tax Officer had, therefore, no choice but to resort to section 34 of the Act. "

The Tribunal, however, found, as is apparent from its order dated March 21, 1957, that the unexplained investment which was really the income of the assessee from undisclosed source was Rs. 27,875 instead of Rs. 32,000. The Tribunal called for a report on certain other matters with which we are not concerned and which were disposed of by a subsequent order dated August 31, 1958. On a petition filed under section 66(1) of the Act the Tribunal referred the following question to the High Court for decision :

" Whether, on the facts and in the circumstances of the case, the revised assessments under section 34 dated 16th October, 1952, and 18th March, 1954, are legal and valid ? "

As regards the first revised assessment the High Court was of the view that even if the provisions of section 34(1)(b) were to apply the assessment could not be said to be barred by time nor could it be said to be barred under section 34(1)(a) as the assessee had failed to show that the Income-tax Officer was aware that the assessee had received income from its share in the firm. The question was consequently answered in the affirmative so far as the assessment order dated October 16, 1952, was concerned. The assessment order of March 18, 1954, was challenged before the High Court on the ground that there was no default on the part of the assessee attracting applicability of section 34(1)(a). It was noticed by the High Court that although the Income-tax Officer had, during the proceedings for the assessment year 1945-46, made an enquiry about the investments in sarpat and bamboo business no action had been taken in those assessment proceedings against the assessee but it could not be presumed that he had accepted the explanation of the assessee. Having held that the investment represented income from undisclosed source he was bound to treat it as income which accrued in December, 1943, when it was invested, being the income during the financial year 1943-44 and, therefore, it had to be taxed in the assessment year 1944-45. The question referred was answered in the affirmative with regard to the assessment order of March 18, 1954, as well.

The argument of Mr. S. C. Manchanda in respect of the assessment made in October, 1952, is that there was no failure on the part of the assessee to disclose material facts. It is submitted that the share income of the assessee's son from the firm, Rajnarain Durga Prasad, could not be shown in the assessee's return as the accounting period of that firm closed on April 1, 1944, which was well after the close of the previous year of the assessee which ended on October 28, 1943. It is said that neither the income of the firm nor the share of the assessee's son had been determined till then and it was not possible for the assessee to show the said income in his return. Moreover, the Income-tax Officer had knowledge of the assessee's interest in the firm, Ramnarain Durga Prasad, on May 12, 1947, when the assessment for the year 1945-46 was made. Thus, the escapement, if any, has not resulted from any default or omission on the part of the assessee. The High Court had disposed of this contention by observing that there was no finding in the order of the Appellate Tribunal that the income from the said firm was not known at the time when the return was filed. It was admitted that the return filed by the assessee did not disclose that the assessee enjoyed income from his share in that firm. It was no longer open to the assessee to press this contention particularly when the burden lay upon him to show that the Income-tax Officer was aware that the assessee received income from his share in that firm. Mr. Manchanda has not been able to persuade us to take a different view in the matter. The real challenge on behalf of the assessee before us has been to the amount which was included as income from undisclosed source in the revised assessment order made in March, 1954, being the capital which had been invested in the business of sarpat and bamboos. This amount, as found by the Tribunal, came to Rs. 27,000 odd and had been invested in partnership with Ramnarain Durga Prasad for the business of the supply of sarpat and bamboo to the Government, the investment having been made between December 8, 1943, and February 17, 1944. According to Mr. Manchanda no income from the aforesaid business could be shown in the return for the year 1944-45 because the business itself had been commenced after the close of the relevant previous year which ended on October 28, 1943. For the assessment year 1945-46, however, a sum of Rs. 1,640 was assessed as the assessee's income in this joint venture. During the course of the assessment proceedings for the year 1945-46 the assessee is stated to have filed an affidavit before the Income-tax Officer giving details in respect of the sarpat and bamboo business. Mr. Manchanda has invited our attention to the definition of " previous year " as contained in section 2(11) of the Act at the relevant period and has pointed out that the sarpat and bamboo business did not fall within the year up to which accounts had been made, i.e., October 28, 1943. It was verily impossible, says Mr. Manchanda, to have shown in the return any amount relating to sarpat and bamboo business. The method to be adopted in such a situation has now been settled by a long course of decisions. In Commissioner of Income-tax v. P. Darolia & Sons the facts were that for the assessment year 1947-48 the accounting year of the assessee was the Diwali year corresponding to November 4, 1945, to October 24, 1946. The Income-tax Officer rejected the books of the assessee and ascertained his income from the business at an estimate for that year. He also added to this estimate certain cash credits in its account books entered on the 22nd and 27th of November, 1945, as secret profits from undisclosed sources which dates were after the end of the accounting year. It was found that the amount included as secret profits from undisclosed source was not from the business of the assessee but from a separate source and no account was maintained by the assessee in respect of the amount nor had it exercised any option as regards the previous year with respect to that source. It was held that in the aforesaid circumstances the previous year of the assessee in respect of its undisclosed source of income was the financial year ending on March 31, 1946. In Bishan Dutt v. Commissioner of Income-tax the previous year of the assessee for the assessment year 1945-46 in respect of his cloth business was July 4, 1943, to June 26, 1944. In the account books of that business for that period a sum of Rs. 9,800 appeared as credit in the suspense account on September 2, 1943. The Income-tax Officer, in the absence of a satisfactory explanation, held this amount to be income from undisclosed source. The view expressed by the High Court was that there being nothing to show that any accounts in respect of the undisclosed source of income existed or were maintained or that the assessee exercised any option under section 2(11)(i)(a) in respect of such accounts, the only course open to the department was to tax his income from undisclosed source on the basis of the financial year being the previous year. On that basis the amount could be taxed only for the assessment year 1944-45 and not for the assessment year 1945-46. On similar facts the Calcutta High Court expressed the same view in Jethmal Lakhani v. Commissioner of Income-tax. By now it appears to be well settled and no decision, even of a High Court, has been cited to the contrary that in such circumstances the only possible way in which such undisclosed income can be assessed or reassessed is to make the assessment during the ordinary financial year.

Mr. Manchanda has called our attention to section 68 of the Income-tax Act, 1961, according to which where any sum is found credited in the books an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. It is, however, obvious that even under the provisions embodied under the new Act it is only when any amount is found credited in the books of an assessee that the section will apply. On the other hand if the undisclosed income was found to be from some unknown source or the amount represents some concealed income which is not credited in his books the position would probably not be different from what was laid down in the various cases decided when the Act was in force.

The last argument of Mr. Manchanda is that, in order to attract the applicability of section 34(1)(a) of the Act, the omission or the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment must be found to be wilful and deliberate. In support of his submission he has relied on P. R. Mukherjee v. Commissioner of Income-tax in which it was observed that a person cannot be said to have omitted or failed to disclose something when, of such thing, he has no knowledge and that a similar implication is carried by the word " disclose " because one cannot be expected to disclose a thing unless it is a matter which be had known or knows of. It is altogether unnecessary to decide whether this view is sustainable or not. At any rate, in the present case, the assessee had failed to show that he did not know and was not aware of the true position in respect of the sum of Rs. 27,000 odd which was invested in the sarpat and bamboo business.

For all these reasons the appeals fail and are dismissed with costs.

Appeals dismissed