TMI Blog1954 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... s : In uncertain times of war it was considered best to keep some cash ready for emergency and it was easy to keep cash in notes of high denomination. This money represents part of my saving from my income accumulated over a few years. The small notes accumulated with me from time to time were converted into notes of high denomination as and when convenient. No record of these conversions had been kept and it is not possible to state with certainly when they were effected. In regard to 73 high denomination notes, he solemnly declared as follows : I have no personal bank account. This amount is my personal saving kept in safe custody of the Ruler of Sakti State when evacuation took place at Jameshedpur. When the Ordinance was promulgated the bank notes tendered were handed over to me which I am tendering herewith for encashment. The evacuation of Jamshedpur referred to was sometime in 1942 soon after the entry of Japan into the Word War II. But of the 73 high denomination notes encashed 70 of them were of A-6 series that were put into circulation only after 1942. This was pointed out by the Income-tax Officer. The assessee replied in his letter dated 17th January, 1947 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation given as to the source, manner and time of acquisition of such high denomination notes is not acceptable, there is positive evidence as to the receipt of ₹ 78,000 by the assessee in January, 1946. There are several sources from which this receipt could have come but the actual source from which the particular item did in fact come is only in the assessee's special knowledge. He, as discussed above, refuses to disclose it by giving an incorrect story about it. The natural inference is that the definition of the true source would make it liable to tax, now, and on this ground it is treated as concealed profit. It is well settled that by giving an incorrect source of any receipt an assesssee cannot shift on the department the onus of finding out or proving the real source which he alone knows. The Income-tax Officer added this sum of ₹ 78,000. The assessee appealed to the Appellate Assistant Commissioner objecting to the addition of the sum in his assessment. The Appellate Assistant Commissioner writes as follows : It was quite possible for the assessee to take a fancy to deposit the amount with the Ruler rather than to let out on interest. With r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department filed an appeal against this order to the Appellate Tribunal and contended that the Appellate Assistant Commissioner erred in remanding the case for further examination in regard to the high denomination notes of ₹ 78,000 when at the assessment stage evidence furnished by the assessee was thoroughly gone into and found unacceptable. It was contended that the Appellate Assistant Commissioner should not have entered the evidence which was not produced at the assessment stage. The Tribunal on hearing the parties writes as follows : It appears to us that in the circumstance the Appellate Assistant Commissioner should not have set aside the assessment, but should have himself examined the Ruler or Sakti and decided the case on its own merits. It is necessary to examine the Ruler. We have decided to examine him on commission. We, therefore, direct the Income-tax Officer, Raigarh, Madhya Pradesh, to examine the Ruler on commission. We attach herewith a set of questions which may be put to the Ruler during the course of his examination. The Income-tax Officer should find out from the Ruler what date will suit him for examination. He should then inform the assessee, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sakti has written what he has actually written. If has already been pointed out by the Income-tax Officer that if the assessee had this money in 1942 or thereabouts, ' Tewary Bechar Co. would not have been borrowing money. ' If money was deposited with the Ruler, as alleged, it passes our comprehension why it was not taken back soon after the alleged scare of 1942. The assessee does not take the trouble to get back his money until after the Ordinance was promulgated. It is clear that the assessee had at the time of the promulgation of the Ordinance 73 notes of ₹ 1,000 each. He knew that there would be difficulty if he tendered these notes on his own without bringing in the Ruler of Sakti. In our opinion, the assessee has failed to prove the source of ₹ 73,000. The addition of ₹ 73,000 to the assessee's income was therefore, properly made. The assessee had also encashed 5 notes of ₹ 1,000 each. We accept the assessee's explanation in regard to the amount. The copy of the order of the Appellate Tribunal dated 2nd August, 1951, is herewith annexed marked ' F ' and forms part of the case. Inasmuch as the Appellate As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1942 in my personal keeping, I have pleasure in confirming that you had deposited the amount in question with me in 1942 when you were on your way to Jubbulpore. The Income-tax Officer did not accept the explanation of the assessee on the ground that the high denomination notes were not put into circulation in the year 1942 but were put into circulation for the first time in the year 1943. The assessee took an appeal to the Appellate Assistant Commissioner against the order of the Income-tax Officer. In the course of the appeal the assessee produced a second certificate from the Ruler of Sakti wherein it was mentioned that the assessee made the deposit of ₹ 73,000 in 1942 not in high denomination notes but in currency notes of much smaller amount. The Ruler admitted in this certificate that he himself converted the money into high denomination notes after the assessee had made the deposit. The Appellate Assistant Commissioner set aside the order of assessment and remanded the case to the Income-tax Officer for taking the evidence of the Ruler of Sakti and after ascertaining the actual fact to make fresh assessment. Against this order the Income-tax Department preferred an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of this power is that the Tribunal should give an opportunity to both the parties to the appeal to be heard in the matter. It is not correct to say that the scope of the appeal preferred by the Income-tax Department was limited only to the two grounds mentioned in the petition of appeal. The subject-matter of the appeal was the correctness of the assessment imposed by the Income-tax Officer and we think that the Tribunal had jurisdiction to issue a commission direct for the examination of the Ruler of Sakti and also to decide the correctness of the assessment made by the Incometax Officer, upon its merit. The first question referred to the High Court must therefore be answered in favour of the Income-tax Department and against the assessee. The next and more important question is whether the Tribunal had material for holding that the sum of ₹ 73,000, the value of the high denomination notes encashed on the 26th of January, 1946, was concealed income of the assessee liable to be taxed. In the approach to this question it should be remembered that the onus is upon the assessee to prove positively the source and nature of the money which was received during the acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne's smaller value notes into higher denomination notes. After your deposit of the amount which was mixed up with my money I must have converted a number of times in the ordinary course. When the high denomination demonetizing ordinance was passed, I did hand over to you 73 notes of ₹ 1,000 each for encashment in lieu of the amount that you had deposited with me. I hope this will clear up the doubts raised by you. Mr. Dutt put forward the argument that in the face of the declaration made by the assessee and in the face of the two certificates granted by the Ruler of Sakti the Tribunal had no justification for holding that the amount of ₹ 73,000 was not deposited by the assessee with the Ruler of Sakti in 1942. As regards the source of the money it was explained on behalf of the assessee that from the year 1926 to the year 1945 the assessee and his brother D. Tiwary had withdrawn sum of ₹ 2,72,722 from two companies, viz., Narbheram Co. and Tiwary Bechar Co. This explanation was furnished by the assessee to the Income-tax Officer in his letter dated the 17th of January, 1947. It was argued by Mr. Dutt that this explanation should have been accepted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee would accept the amount of ₹ 73,000 from the Ruler of Sakti in high denomination notes knowing full well that these high denomination notes were not legal tender in British India. The Demonetization Ordinance was promulgated on the 12th of January, 1946, and the assessee must be deemed to have known this important fact. It is therefore not clear why the assessee should gratuitously undertake the responsibility of changing the high denomination notes which actually belonged to the Ruler of Sakti. If the case of the assessee is right and if the Ruler of Sakti had himself changed the money deposited by the assessee into high denomination notes it appears to be highly improbable that the Rule of Sakti would not himself under take to cash the high denomination notes and hand over the proceeds to the assessee instead of asking the assessee to encash the high denomination notes himself. In this connection the statement of the Ruler of Sakti at page 26 of the paper book is important. In answer to questions Nos. 18 and 19 the Ruler has made the following statements : 18. Did you tender yourself or did Either my state-treasurer or the palace any one else tender on your behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer to the income of the assessee for the assessment year as being liable to be taxed. Where the case involves a question of fact the jurisdiction of the High Court to interfere with the finding of the Tribunal is of a very limited character. If the Tribunal decides the question of fact without any material at all or if the Tribunal decides the question of fact by applying a wrong legal principle the High Court has jurisdiction to interfere. But the High Court has no jurisdiction to interfere with the finding of he Tribunal merely because the High Court takes a different view upon the question of fact after examination of the same material. In the present case we are satisfied that the question has not passed from the region of fact into the region of law and the High Court has no authority to interfere with the finding of the Tribunal on the question referred. The principal has been well stated by Lord Sternadale in Currie v. Commissioners of Inland Revenue((1921) 12 Tax Cas. 245 at 259). The first question that has been debated before us is this : Is the question whether a man is carrying on a profession or not, a matter of law or a matter of fact ? I do no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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