TMI Blog1966 (8) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... ily totalling ₹ 65,000. These credits were: (1) ₹ 50,000 in the name of Surajmal Surajram, (2) ₹ 10,000 in the name of Krishnadas, and (3) ₹ 5,000 in the name of Dharam Das. The assessee is a Hindu undivided family which carries on business in the trade name of M/s. Mithoo Lal Tek Chand at Orai, District Jalaun. The credit entries came to light in the course of the assessment proceedings for the assessment year 1946-47. The Income-tax Officer called for an explanation. It was explained that the sum of ₹ 65,000 had come from previous withdrawals made during 1936-1940, and which were removed from Orai and kept tucked away in Jaisalmer, Rajasthan, the original home of the assessee. The explanation was disbelieved. The sum of ₹ 65,000 was, therefore, added in the assessment for 1946-47, as income of the assessee from an undisclosed source. When the matter was taken up to the High Court, upon reference, the High Court considered that the entry being on the first day of the year of account, relevant for the assessment year 1946-47, it was not possible to conceive of its being the income of that assessment year (the case is reported as Mithoo Lal Tek Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a fact that Amar Chand had deliberately, for an ulterior purpose, got the munim to sign the acknowledgment due receipt and further that the said munim, Ram Dayal, was an authorised agent to receive notices from the income-tax department. It also agreed with the view of the Appellate Assistant Commissioner that no full and true disclosure had been made in the accounting year 1944-45, relevant for the assessment year 1945-46, of the fact that some money was lying at Jaisalmer representing earlier withdrawals during the assessment years 1936 to 1940, and which had been brought into the books of account on the 17th of October, 1944, which fell within the financial year ending on 31st March, 1945, relevant for the assessment year 1945-46. Hence, this reference at the instance of the assessee. The first question need not detain us as it is concluded by findings of fact given by the Tribunal that there was in fact service upon the manager and the adult members of the family, though the acknowledgment due receipt was signed by the munim, Ram Dayal, and in any event that Ram Dayal was an authorised agent to receive notices on behalf of the assessee. In this view of the matter question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to the notice of the Income-tax Officer and he comes to the reasonable belief that the cash credits were the income from an undisclosed source for that accounting year, it may have to be held that the requisite condition for invoking section 34 was fulfilled. This may lead to hardship in some cases but not where the assessee, as in the present case, apparently objected in the course of assessment proceedings for 1946-47 that, even if the impugned credits could be held to be income from an undisclosed source, they could not be presumed to be necessarily the income relating to the assessment year 1946-47 and not of earlier years. The assessee cannot turn round, when proceedings under section 34(1)(a) are taken for 1945-46, and say that there was no obligation cast upon it to disclose the existence of impugned credits as part of its income for the assessment year 1945-46 or any other year. That may be tantamount to blowing hot and cold in the same breath. On facts, it had already been held earlier that the receipts constituted concealed income, and the only question left for determination was the period for which it was concealed income. Be that as it may, it is not really necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been followed in several unreported decisions by single judges (see Writ Petition No. 2182/1962 decided on the 24th July, 1963, Civil Misc. Writ Petition No. 849/1962, decided on September 9, 1963, and Civil Misc. Writ Petition No. 1938/1964 decided on January 21, 1965). It has been laid down by the Supreme Court that a Division Bench ordinarily must follow the decision of an earlier Division Bench, but if it does not agree with the view that has been taken, then the only course is to make a reference to a larger Bench. On the facts and circumstances of this case, we see no compelling reason to adopt the latter course. Respectfully following the decision in Jagdish Prakash Kaushik's case, [1962] 46 I.T.R. 212 we would answer the second question also in the affirmative and against the assessee. The reference is answered accordingly. The assessee will pay the costs of the Commissioner, which we assess at ₹ 200. Counsel's fee is also assessed at ₹ 200. M.H. BEG, J. I have had the advantage of going through the answers given by my learned brother, Manchanda J., to the two questions referred to us. I respectfully agree with the answers proposed. I have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected. When the case went to the Appellate Tribunal again in second appeal, the Appellate Tribunal held that the case would not fall under section 34(1)(a) but would come within the ambit of section 34(1)(b) of the Act, and it converted the proceeding into one under section 34(1)(b) of the Act. When the matter came before this court, upon a reference, it was held by Desai C.J. and Manchanda J. that the case would fall under section 34(1)(a), although the view taken by my learned brother, Manchanda J., was that the action would also be covered by section 34(1)(b) of the Act which, in his opinion, could be quite appropriately applied to such a situation. There was a difference of opinion between Desai C.J. and my learned brother, Manchanda J., on the question whether the Tribunal could convert the proceedings under section 34(1)(a) of the Act into proceedings under section 34(1)(b) of the Act, but their Lordships agreed that section 34(1)(a) could apply to such a case. Inasmuch as section 34(1)(a) has been applied to the case before us in very similar circumstances, I think we are bound, by the earlier decision mentioned above, to take the view that the case before us would also be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35 and 1940, noted by the Tribunal, was repeated before us. The assessee, without disclosing where the income came from, was trying to play hide and seek. It had not disclosed the source of the cash receipts even after its explanation had been definitely rejected as untrue. It had not explained how such a huge amount could be retained for a long period by a set of persons engaged in business without employing it for the purpose of earning a profit as they could very well have done. The presumption is that the assessee acts with common prudence in carrying on business. Therefore, it could be presumed that it had not kept these sums of money unemployed so to speak, or idle, and locked up without earning any income at all. It could be certainly presumed that some income for the assessment year 1945-46 was concealed. The question whether the whole amount of ₹ 65,000 could relate to the income of the assessment year 1945-46 was undoubtedly a difficult question to decide, but, where an assessee deliberately fails to disclose the correct source of the receipts of money, it can reasonably be presumed to be the income of the preceding year unless the contrary is shown. No facts were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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