TMI Blog1959 (11) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... son-in-law and the daughter of the assessee, was income of the assessee from undisclosed sources? It is necessary to advert to the facts with a view to understand and decide the points under reference and I am taking recourse to the statements of facts made by the Income-tax Tribunal. The applicant, Nabadwip Chandra Roy, had a business in cloth and yarn. In the year of account he was also a Director of the Assam Provincial Textile Co- operative Society and was paid a sum of ₹ 6,103 as bonus in consideration of services rendered by him in that capacity. The amount was not disclosed in the return submitted by him for the assessment year 1950-51 but the Income-tax Officer held that the amount was taxable and added it to the total income of the assessee. The assessee admitted the receipt of the above amount as bonus in the capacity of a director of the Assam Provincial Textile Co-operative Society. Before the Appellate Assistant Commissioner the point taken by the assessee was that this was his capital receipt and was not assessable to income-tax. That contention was repelled. In the appeal filed before the Income-tax Tribunal, however, the applicant pressed his claim for exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Officer, however, rejected the explanation of the applicant as to the source of the cash credit and added the amount to the total income of the assessee as his income from some undisclosed ource. The Appellate Assistant Commissioner as well as the Tribunal concurred in the view that it represented assessee's income from some hidden source and the money actually did not belong to Nisi Kanta Saha as was alleged. On this view the assessment was held. As to the first point much had been argued by both sides and Mr. Ghose's contention for the petitioner was that this income of ₹ 6,103, received as bonus, represented an income of a casual and nonrecurring nature coming within section 4(3)(vii) of the Income-tax Act, as had been the contention before the Tribunal. In support of this ontention he placed before us the following authorities: Mahammad Faruq, In re [1938] 6 I.T.R. 1 (All.), Commissioner of Income-tax v. M. Ahmad Badsha Saheb [1943] 11 I.T.R. 590 (Mad.), and Commissioner of Income-tax v. V.P. Rao [1959] 18 I.T.R. 825 (Mad.). Mr. B.N. Choudhuri, appearing on behalf of the department, contended that the instant case was not covered by any of these decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1943] 11 I.T.R. 590, 597 (Mad.): There can be no rule laid down with regard to what is of a casual and non-recurring nature. Each case must be decided on its particular facts. Therefore, the facts in each case have to be considered. The case reported in Commissioner of Income-tax v. V.P. Rao [1950] 18 I.T.R. 825 (Mad.) lends title supported to the assessee's contention that the receipt was of a casual nature. This point is more aptly answered by the decision of the Calcutta High Court, reported in Commissioner of Income-tax v. V.P. Rao##. In this case the promoters of a company engaged the services of a firm of chartered accountants to assist them in its flotation and the engagement was attended to by the assessee as a partner of the firm. After the company had been formed and the engagement of the firm terminated, and the firm had been fully remunerated for the services rendered by them, the promoters, as a token of appreciation for the assistance rendered to the promoters by the assessee made an unsolicited gift to the assessee of certain shares in the company. The question was whether in the circumstances the shares were given as a personal gift or they were given as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a case where the assessee after retirement was spending his time in studying Vedanta philosophy and expounding the same to such persons as were keen on understanding it. A number of disciples soon gathered about him and one of them was J.H. Levy of London. On 13th December 1941, Mr. Levy transferred the entire balance standing in his name in the Lloyd's Bank, Bombay, to the credit of the assessee, amounting to ₹ 2,41,103 and odd, after getting an account opened in the name of the assessee in the same bank. He used to continue payment and finally in August, 1951, the payment amounted to ₹ 4,50,000, which was transferred to assessee's bank from time to time. The assessee contended that this income should be exempted from income-tax; but, the High Court of Travancore-Cochin decided the point in favour of the department and on an appeal being preferred by the assessee, the Supreme Court affirmed the decision of that High Court. Their Lordships while discussing this point observed as follows [1959] 35 I.T.R. 48, 52 (S.C.): ......it is well established that it is not the motive of the person doing an act which decides whether the act done by him is the carryin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ughter of the assessee. The main question raised was to the deposit of ₹ 10,000, which the assessee's son-in-law, Nisi Kanta Saha, claimed to be his, and who deposed accordingly before the Income-tax Officer, Shillong. Both parties relied on one of the decisions of the Patna High Court, reported in S.N. Ganguly v. Commissioner of Income-tax [1953] 24 I.T.R. 16 (Pat.). What was held in that case was that when the assessee fails to prove positively the source and nature of a certain amount which he received in the accounting year, the revenue authorities are entitled to draw an inference that the receipts are of an income nature unless the assessee proves the source and nature of the particular receipt. The burden of proof in such a case is not upon the revenue authorities, but is upon the assessee to show that the item of receipt was not of an income nature. But, the position is different in regard to a sum which is shown in the assessee's book in the name of a third party. In such a case the onus of proof is not upon the assessee to show the source or nature of the cash credit, but the onus shifts to the department to show by at least some material that the amount sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh entered in the name of his wife, and, therefore, we do not think that this case is of much assistance, and the court had referred therein to the earlier Patna cases of Ramkinkar Banerjee v. Commissioner of Income-tax [1936] 4 I.T.R. 108 (Pat.) and S.N. Ganguly v. Commissioner of Income-tax [1953] 23 I.T.R. 16 (Pat.) as discussed above. We, therefore, decide the points under reference as indicated above and as either party has shared some amount of benefit, we do not propose to pass any order for costs. MEHROTRA J.--I had the privilege of reading the judgment of my Lord and I am in complete agreement with the order proposed. The following questions of law have been referred to us for opinion: (1) Whether, under the facts and circumstances of the case, the receipt of ₹ 6,103 from the Assam Provincial Textile Co-operative Society by the assessee was exempt from taxation under the Income-tax Act as casual income of the assesse? (2) Whether, under the facts and circumstances of the case, and in view of the addition of ₹ 5,147, the Tribunal was justified in treating the amount of ₹ 3,150 as further income from undisclosed sources? (3) Whether under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remuneration therefor which he got for the services rendered as director was nothing but a receipt arising from the exercise of the textile business, vocation or occupation carried on by him. Reliance was placed on the case of Mahammad Faruq, In re [1938] 6 I.T.R. 1 (All). That case has been fully dealt with by my Lord in his order and it is sufficient for me to point out that the case is distinguishable on the facts. It was held in that case that the assessee did not carry on the vocation of the promoter of the company. Once it is held that the receipt arose out of the business, vocation or occupation of the assessee, it will not be necessary to go into the question whether it is of casual or non-recurring nature. The case of the David Mitchell v. Commissioner of Income-tax [1956] 30 I.T.R. 701 (Cal.), in my opinion, lays down the correct law. There the income of the assessee was held to be one arising from the vocation which was carried on by him. In his capacity as the partner of a Chartered Accountants firm, the petitioner was utilised by the company in promoting its objects and consequently the payment to him for his services rendered for the development of the company was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gative and question No. 2 in the affirmative. Coming to the question No. 3 which deals with the cash credit of ₹ 11,000 entered in the name of the son-in-law of the assessee, Mr. Choudhuri contends that the department having rejected the explanation given by the assessee that the amount shown in the name of his son-in-law belonged to him, it was entitled to infer that it was an income of the assessee from other sources. It was a question of fact and if having regard to the entire material on the record the assessing authority came to the conclusion that it was an income from other sources of the assessee himself, the High Court will not examine the question of fact. It is not necessary to refer to the various authorities of the Supreme Court laying down the powers and scope of this court under section 66 of the Income-tax Act. It is sufficient to point out that the facts proved or admitted may provide evidence to support further conclusions to be deduced from them, which conclusions may themselves be conclusions of fact and such inference from facts proved or admitted could be matters of law. This court would be entitled to interfere if it appears that the fact finding aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the effect that he deposited the amount with the assessee and in the absence of any other material to disprove the fact that the money was deposited by Nisi Kanta Saha with the assessee, it cannot be said that the amount was the income of the assessee from some undisclosed source. If it is shown from the account books that a certain money has been received by the assessee during the assessment year, the burden lies on him to prove the source and the nature of the particular receipt. It is for the assessee to show that the receipt is not in the nature of an income, but in cases where the amount is shown to have been deposited by a third party, prima facie it cannot be regarded as a receipt by the assessee--much less a taxable income, and in that event it is for the department, if they want to tax it as an income of the assessee, to show by some materials that the amount standing in the name of the third party does not belong to that third party but belongs to the assessee. By merely holding that the assessee has not established the source of receipt of that amount by the third party, the department cannot contend that it has placed material which leads conclusively to the resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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