TMI Blog1958 (9) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... year " for the assessment year 1948-49, there were transactions in the following accounts as shown below : Name Gross credit Gross debits Cr. closing balance K. S. G. Mariappa 9800 9800 Anamath account 3400 3400 Mallamma, (wife of a Karta) 500 500 Malllikarjunappa (3 years old minor son of Marta). 27,525 27,525 41,255 30,925 10,300 Copies of the aforesaid ledger accounts are annexed hereunto as annexures A, B, C and D and form part of case. 3. Annexure E annexed hereunto and forming part of the case is a statement showing collectively all the transactions in the annexures A to D aforesaid, chronologically arranged. This annexure shows Rs. 10,300 as the maximum peak credit therein on November 12, 1947, the end of the " previous year " aforesaid. 4. It is a matter of record that additions have been made to the assessments of the assessee for the following years to present deficiency of gross profit and for the unexplained cash credits. Assessment year For gross profit For unexplained Withdrawal out of deficiency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, inter alia, contended, as ground No. 5 as follows : With regard to the credits amounting to Rs. 19,968 to the exaccount of the assessee's son and others retained by the Appellate Assistant Commissioner in view of the fact that for the assessment year 1946-47 intangible additions to the extent of Rs. 16,686 and additions on account of credits were made to the extent of Rs. 4,010 and for the assessment year 1947-48, intangible additions to the extent of Rs. 14,222 and additions on account of credits were made to the extent of Rs. 37,400 the Appellate Assistant Commissioner ought to have held that any additions of the same credits repeating in the year of account was not justified. " 9. The Tribunal found that none of the credits in the books in the ledger accounts, annexures A to D aforesaid, were properly explained. Nevertheless, in its opinion, additions could be sustained in the assessment on account of these cash credits only to the extent to which such credits could reasonably to represent the assessee's income of the " previous year " in question. For the purpose of ascertaining the extent to which additions could be so sustained it had necessarily to consider th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view to bestow a semblance of reality to the artificial transactions put through several accounts for purposes of verisimilitude, withdrawals are shown frequently in some accounts with introductions into others. 14. For the above reasons, all the spurious accounts require to be considered collectively together and the transactions therein arranged chronologically, if a proper picture is to be obtained of the extent to which the home chest has been relied upon for the purpose of providing the assessee with the necessary funds to enter all his business transactions in the manner he had done. The maximum or peak credit at any one point of time in such a consolidated account would represent the extent of the home chest utilised for business purposes ; it is only to that extent ordinarily that an assessee can be said to lay himself open to explain. Consideration of only the gross credits, in the individual accounts, adding all of them up, ignoring the withdrawals and reintroduction's, will result in a totally fantastic picture which could have no relation to reality. 15. After determination of the peak credit in the various impugned creditor's accounts treated collectively in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credited to the assessee from the aforesaid sources the Tribunal held that no separate addition for the previous year in question even in respect of the peak credit of only Rs. 10,300 was deserved. For these reasons it deleted the entire addition. 18. It is humbly submitted that question No. 2 directed by their Lordships seems to imply that there has been an obvious mistake in the calculation of Rs. 10,300 as the peak credit. There is no arithmetical mistake as shown in the annexure ' E ' aforesaid. In the reference application by the Commissioner of Income-tax before the Tribunal no such allegations were made. Even if, in fact, there was such an arithmetical inaccuracy in the computation, as the foregoing facts would show, there were amounts totalling Rs. 43,304 in the home chest to cover the entire credit of Rs. 19,968 as computed by the Appellate Assistant Commissioner and consequently the decision of the Tribunal, it is respectfully pointed out, would have been no different. 19. Both parties agree that all the facts have been correctly stated and that no material facts have been omitted therefrom. A. Kuppuswami for V. Vedantachari for the Commissioner. P. Rama Rao and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious year's assessments. (2) Whether on the facts and in the circumstances of the case the assessee has discharged the onus of establishing the genuineness of the credits aggregating to Rs. 19,968. " This court complying with the request of the petitioner, directed the Tribunal to state a case and submit to this court the following two questions : " (1) Whether the Income-tax Appellate Tribunal is justified in making out a new case for the assessee in respect of the peak credit ascertained by it on a rearrangement of the impugned credits. (2) Whether the sum of Rs. 10,300 ascertained by the Tribunal as a peak credit is based on an obvious mistake. " Accordingly, the Tribunal has stated the case. The first question to be considered is, whether there was any justification for the Tribunal to have the peak credits determined on a rearrangement of the unexplained cash credits. Here, we are not concerned with the correctness of the view of the Appellate Assistant Commissioner whether the cash credits as found in all the four ledgers should have been added to the return or whether it is the peak credits that should be taken into account, as no appeal was filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine cash credits fails and is rejected. The next point for determination is whether the opinion of the Tribunal that these sums might have been included in the intangible additions for the previous years is sustainable. The Tribunal, as already stated, thought that it was not unreasonable to conclude that a part of them at least should have gone into the undisclosed profits which were added to the assessments in the previous years. When once the explanation given by the assessee that certain cash credits standing in the names of third parties were genuine is rejected as being unconvincing, the Revenue is at liberty to treat them not only as income amounts but also as receipts derived in the year in which these entries were made and it is for the assessee to show that this was the income which he got in the previous years of account and which formed part of the intangible additions made in the previous years. (See Auddy Brothers v. Commissioner of Income-tax (1955) 28 I. T. R. 713). No such case was put forward by the assessee at any time, either before the Income-tax Officer or the Appellate Assistant Commissioner or even before the Tribunal. In such a situation, there was no j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant authority for this proposition. In Ganga Ram Balmokand v. Commissioner of Income-tax (1937) 5 I. T. R. 464), the Punjab High Court has ruled that the High Court is not confined to the decision of the question of law as formulated by the Commissioner or the court issuing the mandamus. On the other hand, that section (section 66) confers upon the High Court full powers to decide the question of law in the form it actually arises from the statement of the case made by the Commissioner. This decision follows the judgment of the Allahabad High Court in Shiva Prasad v. Commissioner of Income-tax(A. I. R. 1929 All. 819), which has laid down that the High Court is entitled to resettle issues as it were and to decide them. A Bench of this court in Raja Rameshwara Rao v. Commissioner of Income-tax(1), has observed that if the question was in an ambiguous form, the court was certainly entitled to reframe it or amend it in such a way as to bring out the real dispute between the parties, and that the power to reframe or amend the question was implied in sub-section (5) of section 66 of the Act. The pronouncement of the Supreme Court in Narain Swadeshi Weaving Mills v. Commissioner of Exce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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