TMI Blog1950 (4) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of Excess Profits Tax Liability. 2. The facts of this case are that one Ganga Sahai had four sons, viz., Umrao Singh, Shimbhumal, Raghubir Saran and Ram Sarup. Shimbhumal had a son, Radhey Lal. Umrao Singh had three sons, namely Shib Charan Das, Tirloki Nath and Ram Richhpal. Parbhu Dayal is the son of Shib Charan Das. The family remained a joint Hindu family up to some date in the year 1920 and it used to carry on business of whole-sale cloth dealers, retail cloth dealers and of commission agents. The business was carried on in the names and styles of Firm Gangasahai Umraosingh, Firm Shimbhumal Raghubirsaran and Firm Gangasahai Ramsarup. In 1920 there was a partition in the family but the business continued to be carried on as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... family business was split up into two parts--Firm Gangasahai Umraosingh and Firm Shimbhumal Raghubirsaran. In the wholesale cloth business, which was being carried on by Firm Gangasahai Umraosingh, Umrao Singh was given one anna share though, under the law, he would have been entitled to two annas, Shib Charan Das got a three annas share instead of two annas and the other two sons of Umrao Singh got two annas share each and this business was placed in the charge of Umrao Singh's sons. The other two firms, Shimbhumal Raghubirsaran and Gangasahai Ramsarup, were combined into one firm under the business name of Firm Shimbhumal Raghubirsaran and in this firm Umrao Singh was not given any share. His three sons got the following shares : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business was effected with the main purpose of evading payment of the Excess Profits Tax. The members of the Appellate Tribunal mentioned three circumstances which, according to them, entitled them to come to the conclusion that this alteration was made with the main purpose of evading payment of the Excess Profits Tax. The circumstances are as follows : (1) That no satisfactory reason was furnished as to why Umrao Singh was not given any share in Firm Shimbhumal Raghubirsaran; (2) that no satisfactory reason was given as to why the parent partnership was split up into two units; and (3) that the assessee firm knew that they would have to pay the Excess Profits Tax if the amount of profits was in excess of ₹ 36,000/-. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods knowing them to be stolen, unless he can account for his possession, yet, where an accused person gives an explanation, which may reasonably be true and which is consistent with his innocence even though the accused may have failed to convince the Court about the truth of the explanation given, the burden is again shifted and the prosecution has to prove that the accused is guilty. This case was considered by me in the case of Rex v. Ram Bharosey 1949 A. C. J. 445 : 1949 A. W. C. 532 where I pointed out that the observations of their Lordships partly embodied the provisions of Section 114, illus. A, Evidence Act, and what their Lordships intended to emphasise was that it was for the prosecution to prove that the accused was guilt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m this fact the Appellate Tribunal could hold it established that the main purpose was to evade payment of the excess profits tax. Learned counsel for the department has relied on a decision of the Madras High Court in the Commissioner of Income and Excess Profits Tax, Madras v. Coimbatore Pioneer Mills, Ltd., Coimbatore [1950]18ITR213(Mad) where one of the learned Judges held that the assessee having failed to prove the motive or the reason for the change, the time at which the alteration was made becomes significant and it can properly be assumed that it was done with the main purpose of evading payment of the excess profits tax. Firstly, this would mean that after the Excess Profits Tax Act was amended and Section 10A was added to it, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose was to evade payment of the Excess Profits Tax, the Tribunal was not justified in coming to the conclusion, merely because the assessee had failed to give a satisfactory reason, that the motive was to evade payment of the Excess Profits Tax. Though direct evidence is not possible, yet in such cases it is the duty of the Excess Profits Tax Officer to investigate the facts carefully and examine the detailed working of the concern or concerns or look into such other facts and circumstances as would lead to a reasonable inference that the main purpose behind the reconstitution of the firm was to evade payment of the Excess Profits Tax. In the facts and circumstances of this case it being admitted, or at least not challenged, that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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