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TMI Blog1963 (1) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... x Officer to prepare from the records in the possession of the department statements of income returned and income assessed in the hands of the appellant for the years 1931 to 1945. These statements were duly prepared. The Income-tax Officer also prepared statements of the capital accounts in the different books of the appellant and the amounts withdrawn by her therefrom, for the assessment years 1936-1937 to 1946-1947. No books of account were, however, available for the year 1944-1945 and for the first four months of 1945-1946, some of these books, it was stated, were destroyed as a result of an explosion which took place in the Bombay docks on April 14, 1944. By the time the appeal was heard the Appellate Assistant Commissioner who had called for the aforesaid statements was transferred. His successor-in-office who dealt with the appeal held that the Income-tax Officer was justified in adding Rs. 1,38,000 as income from undisclosed sources. The appeal was accordingly dismissed. Then, there was an appeal to the Income-tax Appellate Tribunal, Bombay. By its order dated May 6, 1959, the Appellate Tribunal held that there was " no positive and tangible proof to correlate the encashm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of law arose out of its order dated May 6, 1959. The appellant then moved the High Court under section 66(2) of the Act for an order directing the Tribunal to state a case on the questions of law which according to the appellant arose out of the Tribunal's order. This application was summarily dismissed by the High Court on March 27, 1961. The appellant then moved this court for special leave to appeal from the order of the High Court dated March 27, 1961. This court granted special leave and the present appeal has been preferred in pursuance of the leave so granted. We should like to make it clear at the very outset that the short question before us is the correctness or otherwise of the order of the High Court dated March 27, 1961. That again depends on whether any questions of law arise out of the order of the Tribunal dated May 6, 1959. If the order of the Tribunal raises no questions of law, then clearly the High Court was right in dismissing the application for a reference under section 66 of the Act. If, on the contrary, the order of the Tribunal dated May 6, 1959, gave rise to the questions of law which the appellant has raised, then the High Court was wrong in reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted, and (2) whether the high denomination notes encashed by her represented a part of her alleged accumulated savings from the year 1931. He answered those two questions against the appellant and then held that out of the sum of Rs. 2,38,000 of high denomination notes encashed by her, a sum of Rs. 1,00,000 could at most be treated as representing savings from all sources and, therefore, the balance of Rs. 1,38,000 was income from undisclosed sources. The Appellate Assistant Commissioner and the Tribunal also proceeded on the same lines. The Tribunal said : " Her husband died in 1931, and, under his will, she had admittedly to disburse legacies worth Rs. 2,50,000. These disbursements must have been spread over quite a long period. . . . . But it is in evidence that in the late thirties she had two accounts in her name, viz., (1) Bai Velbai Kanji account and (2) Bai Velbai Kanji (personal) account. In the former account the cash withdrawals from 1934 to 1945 came to hardly less than two lakhs and on her own showing, this could have been utilised largely towards the payment of legacies. In the personal account dividend income, interest on securities and debentures and fixed deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts in the three banks, the withdrawals amounting to about Rs. 4,00,220 early in 1942. The Tribunal then pointed out that the appellant invested Rs. 2,53,980 in September, 1942, in municipal bonds and Rs. 70,000 in shares in 1943. This was followed by a further investment in 1945 in the municipal debentures. This left a sum of a little over Rs. 76,000 with the appellant. The Tribunal referred to a further investment in municipal debentures of about Rs. 20,000. But the Tribunal did not consider the case of the appellant as regards her having the entire Rs. 76,000 and odd nor her explanation as to the source from which the municipal debentures were acquired. What, however, the Tribunal failed to consider was the withdrawals which the appellant had made in cash from the capital accounts in her different businesses from 1936-1937 to 1945-1946. The Income-tax Officer referred to these withdrawals and disposed of them on the short ground that the capital accounts were maintained more for the purpose of inter-departmental transfer of money than for her personal needs. Learned counsel for the appellant has referred us to these capital accounts and has pointed out that though transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court in Omar Salay Mahomed Sait v. Commissioner of Income-tax [1959] 37 I. T. R. 151 (S. C.)., and Homi Jehangir Gheesta v. Commissioner of Income-tax [1961] 41 I. T. R. 135 (S. C.).. We have read the order of the Tribunal as a whole and we are not unmindful of the observation made in the case of Homi Jehangir Gheesta [1961] 41 I. T. R. 135 (S. C.). that in considering probabilities properly arising from the facts alleged or proved, the Tribunal does not indulge in conjectures, surmises or suspicions. We may perhaps add that what we have said in this judgment is meant only to show that certain questions of law arise out of the Tribunal's order and the High Court was wrong in summarily rejecting the application for a reference. As to how the questions of law should be answered will be a matter for the High Court to decide when on the statement of the case filed by the Tribunal the reference is dealt with by it. For the reasons given above we allow this appeal and set aside the order of the High Court dated March 27, 1961, by which it summarily rejected the application for a reference under section 66 of the Act. We now direct the High Court to do what it should have done under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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