1962 (8) TMI 69 - HC - Income Tax

Summary

Issues Involved:
1. Whether the sum of Rs. 2,50,000 credited to the account of Rampratap Agarwal in the assessment year 1944-45 belonged to the assessee.
2. Whether the sum of Rs. 2,50,000 accrued or arose in the taxable territories in the assessment year 1944-45.
3. Whether the sum of Rs. 2,520 credited as interest in the assessment year 1945-46 belonged to the assessee and should be assessed as income from undisclosed sources.
4. Whether the sum of Rs. 2,520 accrued or arose in the taxable territories in the assessment year 1945-46.
5. Whether the sums of Rs. 1,00,000 and Rs. 40,000 credited in the assessment year 1949-50 belonged to the assessee.
6. Whether the sums of Rs. 1,00,000 and Rs. 40,000 accrued or arose in the taxable territories in the assessment year 1949-50.
7. Whether the sum of Rs. 6,558 credited as interest in the assessment year 1949-50 belonged to the assessee.
8. Whether the sum of Rs. 6,558 accrued or arose in the taxable territories in the assessment year 1949-50.

Detailed Analysis:

Issue 1: Ownership of Rs. 2,50,000 in Assessment Year 1944-45
The Income-tax Officer found a sum of Rs. 2,50,000 credited to the account of Rampratap Agarwal on October 10, 1942. The assessee claimed that Rampratap Agarwal was a benami for M/s. Surajmal Nagarmal and that the amount was accounted for in a settlement with the Central Government. The Income-tax Officer did not accept this explanation due to a lack of evidence and included the sum as the assessee's income from undisclosed sources. This view was upheld by the Appellate Assistant Commissioner and the Tribunal. However, the High Court found that the entire account was treated as the account of Surajmal Nagarmal by the Income-tax Investigation Commission, thus supporting the assessee's claim. Therefore, the court concluded that the amount did not belong to the assessee and did not constitute its undisclosed income.

Issue 2: Accrual of Rs. 2,50,000 in Taxable Territories in Assessment Year 1944-45
Given the conclusion on Issue 1, the question of whether the sum accrued or arose in the taxable territories did not need to be answered.

Issue 3: Ownership of Rs. 2,520 Credited as Interest in Assessment Year 1945-46
The Tribunal disallowed the interest of Rs. 2,520 credited to Rampratap Agarwal's account, treating it as the assessee's income from undisclosed sources. The High Court, however, found that the account was indeed a benami account of Surajmal Nagarmal, and thus, the interest did not belong to the assessee.

Issue 4: Accrual of Rs. 2,520 in Taxable Territories in Assessment Year 1945-46
Given the conclusion on Issue 3, the question of whether the sum accrued or arose in the taxable territories did not need to be answered.

Issue 5: Ownership of Rs. 1,00,000 and Rs. 40,000 in Assessment Year 1949-50
The Tribunal found that the sums of Rs. 1,00,000 and Rs. 40,000 credited in the account of Rampratap Agarwal on March 16, 1948, and July 19, 1948, respectively, belonged to the assessee. However, the High Court found that these sums were part of the concealed income of Surajmal Nagarmal, as indicated by the Investigation Commission and subsequent assessments. Thus, the court concluded that these amounts did not belong to the assessee.

Issue 6: Accrual of Rs. 1,00,000 and Rs. 40,000 in Taxable Territories in Assessment Year 1949-50
Given the conclusion on Issue 5, the question of whether the sums accrued or arose in the taxable territories did not need to be answered.

Issue 7: Ownership of Rs. 6,558 Credited as Interest in Assessment Year 1949-50
The Tribunal disallowed the interest of Rs. 6,558 credited to Rampratap Agarwal's account, treating it as the assessee's income from undisclosed sources. The High Court, however, found that the account was a benami account of Surajmal Nagarmal, and thus, the interest did not belong to the assessee.

Issue 8: Accrual of Rs. 6,558 in Taxable Territories in Assessment Year 1949-50
Given the conclusion on Issue 7, the question of whether the sum accrued or arose in the taxable territories did not need to be answered.

Conclusion:
The High Court concluded that the amounts credited to the account of Rampratap Agarwal did not belong to the assessee and did not constitute its undisclosed income. Consequently, the questions regarding the accrual or arising of these sums in the taxable territories were not addressed. The first question for each assessment year was answered in the negative, and the second question for each year was not answered. The assessee was awarded costs from the department.