Summary
The assessee, a Hindu Undivided Family, was carrying on business in gold and jewellery in Lahore till June 1947.
In view of the impending partition of India Roshan Lal decided to move out of Lahore and accordingly transferred sums of Rs. 12,094/-, Rs. 13,000/- and Rs. 6,000/- from Lahore Banks to New Delhi Banks. He left Lahore and pro- ceeded to Mussoorie in June, 1947. On his way, he stopped at Amritsar for a few days and opened an account with the Imperial Bank of India with a view to obtaining a locker in the Safe Deposit Vault but a locker was not available and hence he deposited a trunk which he had brought from Lahore containing gold ornaments, jewellery and cash with the Imperial Bank of India. The assessee came to Delhi in October, 19.,7. and rented a house. In February, 1948. he succeeded in securing business premises and started busi- ness on 30.3.1948. The first entry in the books of account on 30.3.1948 showed gold ornaments of Rs. 1,19,320/-, Gold Rawa Rs. 1,69,020/- Stones worth Rs. 4,000/- Bank balance with the Imperial Bank of India, Delhi Rs. 35,053/- Bank Balance with Hindustan Commercial Bank. Delhi Rs. 221/- and Cash of Rs. 2.800/. The assessee thus brought in an aggre- gate capital of Rs. 3,33,414/- in the business on 30.3.1948. in 1957. it came to the notice of the Income Tax Officer that the assessee had made considerable income in his gold and jewellery business but had failed to pay any tax on such income and hence issued a notice to the assessee under s. 34(1)(a) of the Indian Income Tax Act, 1922, for bringing the income of the assessee for the assessment year 1948-49 to tax. The assessee flied his return. In the course of the assessment proceedings the I.T.O. called upon the assessee to explain the nature and source of the capital of Rs. 3,33,414/-.The assessee contended that he brought the gold Rawa, ornaments and cash representing the capital when he migrated from Lahore and they were kept in a sealed trunk with the bank at Amritsar and thereafter brought over to Delhi and deposited in the Safe Deposit Vault of Hindustan Commercial Bank at Delhi. When the business of the asses- see was commenced,he surrendered the locker and brought the entire gold, jewellery and cash into the business.The assessee observed that till he started his business in March 1948, neither the ,assessee nor Roshan Lal had any other business or means of income from which the amount of Rs. 3,33,414/- could have been earned. The assessee examined some witnesses. The ITO also examined the broth- ers of Roshan Lal who stated that the father of Roshan Lal was a man of ordinary means who was almost reduced to penury by about 1940 and that he had given a sum of Rs. 2000/- to his son Roshan Lal for starting gold and jewellery business in 1935 and he had also subsequently lent some tooroes to Roshan Lal on nominal interest. The Income Tax Officer rejected the explanation offered by the assessee and came to the conclusion that it was not possible to believe that the assessee had been able to accumulate capital to the extent of Rs. 3.33,414/- out of income from the business carried on. The Income Tax Officer gave credit for a sum of Rs.20,000/- and treated the balance of Rs.154 3,30,414/- as income of the assessee from undis- closed source. On appeal,the Appellate Assistant Commis- sioner allowed a further sum of Rs. 80,000./-on the follow- ing grounds: (1) That the assessee transferred a sum of Rs.12,004/-,Rs./3,000/- and Rs. 6,000/- from Banks as Lahore to the Bank at New Delhi. This shows that the assessee was not a man of very small means while he was at La- hore.(2) He was having accounts in 4 different Banks and a man of very modest means would not have normally so many Bank accounts.(3) While at Lahore. Roshan Lal had taken Life Insurance Policies worth Rs. 22.000/-.A number of letters and receipts regarding business transactions in Lahore Indicated that the Lahore business was not as small as the Income Tax Officer had taken it to be. The assessee stopped at Amritsar and opened an account and took Safe Deposit Vault where he deposited a sealed box. It is reasonable to presume that there must have been something quite valuable in the box.A further appeal filed by the assessee to the Tribunal failed. The tribunal, when the appeal came to be heard, put a question to Roshan Lal as to how he had brought gold and jewellery from Lahore and enquired about the weight of the box. The Tribunal after hearing the arguments of the parties rejected the appeal. The main arguments which weighed with the Tribunal were: (1) that the weight of the box was too less: (2) that the assessee did not disclose his assets under the scheme of the Government of India published in the Press Note in January 1952, requiring all evacuees to declare the amounts of money brought by them from Paki- stan.(3) that the assessee did not file any income tax returns in Lahore. The High Court con- firmed the finding of the Tribunal in the reference.Allowing the appeal,HELD: (1) The law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him.[160 E] AA.Govindaralulu Mudaliar v. Commissioner of Income Tax (1958) 34 ITR 807 and Commissioner of Income Tax, U.P. v.Devi Prasad Vishwanath Prasad 72 ITR 194 followed.(2) The conclusion of the Tribunal on a finding of fact can be assailed only if it is shown that the Tribunal had acted without any matenal or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law would have come to that determination.[161 C-D].Mehta Parikh & Co. v. Commissioner of Income-Tax Bombay 30 ITR 181, followed.(3) The Tribunal was right in commenting that primary evidence with regard to the extent of the Lahore business of the assessee was not forthcoming but it must be remem- bered that the assessee was being called upon to prove the extent of his business m a territory from which the member of the Hindu undivided family had to .flee for their lives and from where it was totally impossible to produce any primary evidence.. The. finding of the AAC that the assessee was doing fairly well m the business m Lahore was not disturbed by the Tribunal.. The .AAC found that it was reasonable to presume to at there Was something. quite valuable m the box .and this finding was also not dissented by the Tnbunal. There was no material to show that the orna- 155ments, jewellery and cash brought by the assessee and kept in the sealed trunk were of the value of only Rs. 1 lac and not more. The circumstances that the assessee had not filed any Income Tax return could be of no avail to the Revenue because admittedly the assessee had brought substan- tial amount from Lahore. [161 D-G](4) The Tribunal was wrong in relying upon certain answers given by Roshan Lal, about the weight of the sealed box when he was questioned by the Tribunal at the hearing of the appeal. It must be pointed out straightway that the answer given by Roshan Lal could not be relied on by the Tribunal because there is a procedure prescribed in rules 29. 30 and 31 of the Income Tax Appellate Tribunal Rules for taking additional evidence before the Tribunal and if the members of the Tribunal wanted to examine Roshan Lal on any aspects of the case. they should have followed this procedure. The answers given by Roshan Lal disregarding the perscribed procedure could not form part of the record and the Tribunal was not entitled to rely upon the same. [162H, 163 A-C](5) The Tribunal erred in relying on the Press Note be- cause admittedly the assessee had brought a sum of Rs. 1 lac to India and even that was not declared to the Government of India. [163 E-F](6) There was no material on the basis of which the Tribunal could come to the conclusion that the ornaments. jewellery and cash were not worth than Rs. 1 lac. It was not proved that Roshan Lal or the assessee had any business or other means of income in India until 30.3.1948. The genuineness of the entry of March 1948 was also not chal- lenged. It is utterly improbably amounting almost to impossibility that the assessee could have earned such a large amount of Rs. 2.33.414/- as profit within a few months in the disturbed conditions which then prevailed in India.[164 B-E](7) The Tribunal acted without any material and in any event, the finding of fact reached by the Tribunal was unreasonable or such that no person acting judicially and properly instructed as to the relevant law would come to such finding. [164 F-G]See the full content of this document
Extract
Roshan-di-hatti VS. Commissioner Of Income Tax
PETITIONER: ROSHAN-DI-HATTI Vs.RESPONDENT: COMMISSIONER OF INCOME TAXDATE OF JUDGMENT08/03/1977BENCH: BHAGWATI, P.N.BENCH: BHAGWATI, P.N.SARKARIA, RANJIT SINGHFAZALALI, SYED MURTAZACITATION: 1977 AIR 1605 1977 SCR (3) 153 1977 SCC (2) 378ACT: Income Tax Act 1922--Sec. 34(1)(a)--Escaped income--Reassessment-Burden of proof about source of income--Finding of facts of the Tribunal can be interfered under what circumstances---Conclusion without any materi- als-No person acting judicially and properly instructed as to the relevant law would come to determination--Income tax Appellate Tribunal--Whether Tribunal can ask questions to assessee informally--Whether part of record--Income Tax Appellate Tribunal Rules 29, 30 and 31.JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No.. 284 of 1972.(From the Judgment and Order dated 3-5-1971 of the Delhi High Court in I.T. Case No. 6-D of 1964)A.K. Sen, V.S. Desai and Bishamber Lal, for the appellant.G.C. Sharma and S.P. Nayar, for the respondent.The Judgment of the Court was delivered byBHAGWATI, J.--This is an appeal by special leave direct- ed against the Judgment of the Delhi High Court answering in favour of the Revenue a question which was directed to be referred by the Tribunal under section 66(2) of the Indian Income Tax Act, 1922. The controversy between the parties arises out of an assessment made on the assessee as a Hindu Undivided Family for the assessment year 1948-49, the corre- sponding accounting year being the financial year 1947-48.The ...
See the full content of this document