JUDGMENT

1. This is a reference under Section 66(3) of the Indian Income-tax Act. By an order of a Bench of this Court dated the 19th November, 1940, the Commissioner of Income-tax was required to state the case and to refer it to this Court and he has accordingly done so.

2. The case relates to two assessees, Seth Gurmukh Singh and Seth Dyal Singh, and the years of assessment in dispute are 1934-35, 1935-36 and 1936-37.

"The questions formulated by this Court read as follows :-

"(1) Was the finding of fact by the Assistant Commissioner on the question of income brought in to British India during the years in dispute in an assessment made under Section 23(3) in the case of Seth Gurmukh Singh vitiated by the fact that in arriving at his conclusion the Income-tax Officer based that conclusion partly on circumstantial evidence and partly on material derived from inquiries made behind the back of the assessee which were never disclosed to the assessee.

(2) Whether the Income-tax Officer in the case of Seth Dyal Singh in an assessment made under Section 23(3) was entitled to base his conclusion solely on inquiries made behind the back of the assessee and not revealed to him."

3. The history o