TMI Blog1960 (9) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... dual capacity and not as the representative of the assessee family. 3. The following cash deposits appeared in the account books of the firm, Bachhoo Lal Chotey Lal, during the accounting year relevant for the assessment year 1944-45: 1. In the account of Kailash Chand (son of Bachhoolal) ... ₹ 3,200 2. In the account of Mst. Ram Piari (grandmother of Bachhoolal) ... ₹ 3,500 3. In the account of Bachhoolal's mother ... ₹ 1,000 The Income-tax Officer called upon the assessee family under section 23(3) to explain the deposits and to show cause why these amounts should not be treated as revenue receipts of the family. Radhey Shiam, the father of Bachhoolal, made a statement on oath. The statement is as follows: Ram Piari is my mother. Kailash Nath is my grandson and Kailash Nath's mother is my daughter-in-law. That ₹ 3,500 credited in my mother's name was with her for a long time. ₹ 3,200 are credited in Kailash's mother's account. She was married about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above facts and circumstances the following questions arise: 1. Whether there was any evidence to prove that the cash deposits of ₹ 3,200, ₹ 3,500 and ₹ 1,000 totalling ₹ 7,700 entered in the account books of the firm Bachhoolal Chotey Lal in the name of Kailash Chand, Mst. Ram Piari and Bachhoolal's mother respectively were the revenue receipts of the assessee? 2. Whether there was any evidence to prove that this amount could be treated as revenue receipts for the relevant accounting year? 8. Draft statement of the case was sent to the parties concerned. The Commissioner of Income-tax has no suggestions to make. The assessee desires that some portion of the Income-tax Officer's assessment order for the assessment year 1939-40 be incorporated. The aforesaid assessment order has been made a part of the case and is marked as annexure B . The statement is finalised. R. L. Gulathi, for the assessee. Gopal Behari, for the Commissioner. JUDGMENT The judgment of the court was delivered by UPADHYA, J.--The questions referred for the opinion of this court are: 1. Whether there was any evidence to prove that the cash de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the decision. It appears that in proceedings in respect of the assessment year 1939-40 of the assessee family a statement of total wealth was filed. The assessment order, annexure B, is a part of the statement of the case. In it the Income-tax Officer says that a statement of wealth was filed. The assessee contended before the Appellate Assistant Commissioner that in that statement of total wealth a sum of ₹ 5,000 was said to be lying in cash with Smt. Ram Piari, and another sum of ₹ 3,000 was said to be lying with Bachhoolal's mother, and these amounts could be available for the deposits in dispute. The Appellate Assistant Commissioner called for the statement of total wealth from the Income-tax, Officer, and annexure C is the letter sent by the Income-tax Officer, Lucknow. It appears that the statement of total wealth was not available to the Appellate Assistant Commissioner, and he did not accept the accused's contention. On appeal before the Appellate Tribunal the authorised representative of the Central Board of Revenue attached to the Income-tax Appellate Tribunal, Allahabad, called for the statement of total wealth again and annexure C append ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases a question of law, whether the assessee's claim that the receipt--its true source being known--is not taxable income is justified or not. Where, however, his explanation is rejected, the Tribunal has to record a finding on such materials as may be available, whether the money represents revenue receipt taxable as income of the relevant account period. The burden, in the first instance, must be on the assessee to show the true nature of the receipt and why he claims that it is not taxable income. When the assessee furnishes an explanation, if that explanation is unsatisfactory, that may in itself be a circumstance which the Income-tax Officer may be entitled to take into consideration but it need not necessarily, in every case, lead to the conclusion that the receipt is a revenue receipt taxable as income received in a particular year. The question must always remain a question of fact which has to be decided on the materials available. In each case the revenue authorities are entitled to take into consideration the fact that the explanation given by the assessee is either unreasonable or is false and then to consider whether that circumstance alone or the other materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in earlier years also and were regarded suspicious by the assessing officers in those years. The regular inflow of money year after year indicated the existence of some secret business which yielded income. The assessee's explanation that he had received the amount as a gift from his aunt was not supported by any evidence at all, and, in fact, the assessee had stated that he could not produce any evidence in support of his explanation. The court, therefore, took the view that the conclusion was properly based on the material on the record in the circumstances of that case. In Lal Mohan Krishna Lal Paul v. Commissioner of Income-tax [1944] 12 I.T.R. 441 the assessee was a Hindu undivided family carrying on business and in the account books a sum of ₹ 50,000 was introduced as capital. The Income-tax Officer called for an explanation relating to this amount. It was explained that this sum of ₹ 50,000 was obtained by the sale of gold ornaments. In support of this explanation vouchers were filed as issued by some Poddars. The Poddars denied the transaction but when they were shown the vouchers they admitted that the vouchers appeared to be of their firm. An examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount represented income of the assessee. Some features of the accounts, such as the absence of a regular stock account, were taken into consideration. The court took the view that it could not be said that there were no grounds for the Income-tax Officer to suspect the genuineness of the credit entry in the circumstances of the case and that if the assessee gave an explanation which was unbelievable there was nothing in law to prevent the Income-tax Officer from inferring that the receipt evidenced by the credit entry is a revenue receipt. This case also was one in which the credit entries appeared in the assessee's account books. The Nagpur High Court in R.B.N.J. Naidu v. Commissioner of Income-tax [1956] 29 I.T.R. 194 felt that the view expressed in Madappa's case [1948] 16 I.T.R. 385 by the Madras High Court appeared to be much widely stated and chose to agree with the view taken by this court in Mahabir Prasad Munnalal's case [1947] 15 I.T.R. 393. The case before the Nagpur High Court was one where the assessee carried on the business of exhibiting pictures at various cinema houses in Nagpur. He had withdrawn from his accounts considerable sums of money for hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Income-tax Officer can infer that the true state of affairs were such as the assessee wanted to conceal because revealing them would create a liability to tax. In the instant case it cannot be said that the assessee family received the amount. The deposits in question appear in the account books of a firm of which the assessee family is not a partner. It is that firm which received the amounts in dispute. The Income-tax authorities have not treated these amounts as the income of the firm. The rule, therefore, enunciated by the Supreme Court which is also the basis of the decisions of the various High Courts mentioned above is not available to guide the decision of the court in this case. In Narayan Das Kedar Nath v. Commissioner of Income-tax [1952] 22 I.T.R. 18, 26 the Bombay High Court had to consider a case where certain deposits appearing in the name of the partners of a firm had been taxed as the undisclosed income of the firm. It had been found by the Tribunal that these amounts were actually brought in by means of bank drafts by the partners of that firm. The partners could not give a satisfactory explanation as to how they came by the large amounts introduced by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by learned counsel for the assessee as an authority for the contention that where a property or a deposit does not appear in the account books of the assessee at all, the mere fact that the persons in whose names the deposits appear are members of the assessee family would not justify an inference that the deposits belonged to the family even if the explanation offered by those persons in whose names the deposits appear are not accepted by the income-tax authorities. In Chaturbhuj Co. v. Commissioner of Income-tax [1959] 36 I.T.R. 386, 395 a Bench of this court drew a distinction between cases where the explanation given by the assessee is found to be false or unreasonable and cases where the explanation is rejected but is not found to be false or unreasonable or unsatisfactory. Bhargava, J., observed: In a case where the explanation is only rejected as not proved or for want of proof, no positive circumstance comes into existence which provides material for the Tribunal to draw an inference against the assessee and the inference has to be drawn on other materials available to the Income-tax Appellate Tribunal. In the instant case also the explanation given by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
