( 1 ) AGGRIEVED by the order passed on 15-6-1971 by the Commissioner of income-tax, Mysore, Bangalore, in LRP. 108 of 1970 under S. 264-of the income-Tax Act, 1961, the petitioner has filed this writ petition. The petitioner was carrying on business in extraction and sale of manganese, and iron ores. In the course of the proceedings relating to. the assessment of his income in respect of the 'assessment year 1962-63, the Income-tax- Officer found that there were certain discrepancies regarding the stock of manganese held by the petitioner during the relevant year and that a sum of Rs. 1,75,000 shown in the books of the petitioner as borrowings on hundies had not been established. He was also of the opinion that there was a credit of Rs. 9,000 in suspense account regarding which there was no proper explanation. In view of the foregoing, the Income-Tax Officer ordered that in all a sum of Rs. 3,40,970 as income from undisclosed sources should be added to the income declared by the petitioner in his profit and loss account. The appeal filed against the order of the Income-Tax Officr was unsuccessful. Thereafter the petitioner filed a petition under S. 264 of the Incomer-Tax act, 1961, before the Commissioner of Income-Tax. The Commissioner of income-Tax modified the order of assessment to a small extent, but he negatived the contention urged on behalf of the petitioner with regard to the following items : (1) Rs. 1,75,000 shown as borrowals on hundies ; (2) Rs. 9,000 shown in suspense account; and (3) Rs. 85,783 being the value of the stock of manganese one held by the petitioner during the relevant period which had not been shown in his account books. ( 2 ) AGGRIEVED by the order of the Commissioner the petitioner has filed this writ petition. It is not disputed that a sum of Rs. 1,75,000 which was shown as amount borrowed on hundies; Rs. 9,000 which is staged to be an amount an unexplained suspense account and Rs. 13,261 which forms part of the value of the undisclosed stock of manganese ore related to the period prior to 31-3-1961 and it is also not disputed that they are treated by all the authorities concerned as incomes attributable to undisclosed sources. 9,000 which is staged to be an amount an unexplained suspense account and Rs. 13,261 which forms part of the value of the undisclosed stock of manganese ore related to the period prior to 31-3-1961 and it is also not disputed that they are treated by all the authorities concerned as incomes attributable to undisclosed sources. ( 3 ) THE question urged by Sri K. Srinivasan, learned Counsel for the petitioner, is that on the admitted facts, the Commissioner was in error in treating Rs. 1,75,000; Rs. 9,000 and Rs. 13,261 referred to above as income assessable during the assessment year 1962-63, because they being incomes attributed to undisclosed sources during the financial year 1960-61 and there being no accounts regarding the alleged undisclosed sources, were assessable as income of the petitioner only in the assessment year 1961-62, if at all they were assessable. In support of the above; proposition, he relied on a decision of the Supreme Court in Balaam Ram v. Commr. of lncome-tax, U. P. , (1960) 71 ITR. 427, in which it was observed by the Supreme Court that it waa well settled that in the absence of any accounts in respect of the undisclosed source or when there was nothing to snpw that the assesse had exercised any option under S. 2 (11) (i) (a) of the 1922 Act, the only possible way in which income from an undisclosed source could be assessed ox reassessed was to make the assessment on the basis that the previous year for such an income would be the ordinary financial year and had to be assessed in the immediately following financial year. The case of the petitioner squarely falls within the scope of the enunciation made by the Supreme Court. ( 4 ) SRI S. R. Rajasekhara Murthy, learned Counsel for the revenue, however relied on S. 297 (2) (b) of the Income-Tax Act, 1961, and argued that the case in question was governed by the provisions of the Income-Tax act, 1961, which came into force on 1-4-1962 as the return of the income had been filed after 1-4-1962 and any pronouncment made on the basis of the provisions of the 1922 Act would npt be applicable. Clause, (b) of subsection (2) of Section 297 states :"s. 297 (1 ). . . . . . . . . . . . . Clause, (b) of subsection (2) of Section 297 states :"s. 297 (1 ). . . . . . . . . . . . . (2) Notwithstanding the repeal of the Income-tax Act, 1922 (11 of 1922) (hereinafter referred to as the repealed Act), (b) Where a return of income is filed after the commencement of this Act otherwise than in pursuance of a notice under S. 34 of the repealed Act by any person for the assessment year ending on the 31st of March, 1962, or any earlier year, the assessment of the person for that year shall be made in accordance with the procedure specified in this Act. "reading of the said provision makes it very clear that what is held to be applicable to returns of income filed after the commencement of the 1961 act is the procedural part of that Act and not those parts of the Act which relate to the liability of an assessee. In these cases we are concerned with the liability of an assesses. Hencei no support can be derived by Sri Rajashekhara murthy by the above provision. ( 5 ) THEREFORE, the order passed by the Commissioner In respect of a sum of Rs 1,75,000 said to have been borrowed on hundies; Rs 9,000 traced to an unexplained suspense account and Rs,13,261 attributable to the undisclosed stock during the period prior to 31-3-1961 treating them as taxable in the assessment year 1962-63 should be set aside and it is accordingly set aside The matter is now remitted to the Commissioner to pass a fresh order in the light of this decision and in accordance with law It is however made clear that it is open to the authorities to take such steps as may be available to them in law regarding the above sums against the petitioners. The writ petitoin is accordingly allowed No costs. --- *** --- .