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1971 (1) TMI 6

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..... against the assessee as a non-resident for the assessment years, amongst others, 1947-48, 1948-49 and 1949-50. The assessee had in the relevant years of account a current account with the Bank of India Ltd. in Bombay and sale proceeds in respect of large quantities of ghee supplied outside the taxable territories were credited in that account and were then transferred to Porbandar. The asessee had also a current account with the firm, Shamji Kalidas Company at Bombay and in this account Messrs. Shamji Kalidas Company had paid interest to the assessee. The assessee being a non-resident, tax at the maximum rate was deducted by Messrs. Shamji Kalidas Company in respect of the interest paid to the assessee under section 18(3A) of the Income-tax Act, 1922. The assessee disclosed those facts to the Income-tax Officer and contended that since the assessee had no business in the taxable territories nor any income taxable in the taxable territories (other than the income from Messrs. Shamji Kalidas Company in respect of which there were certificates showing deduction at the maximum rate), the assessment proceedings initiated by the Income-tax Officer be discharged. The Income-tax Of .....

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..... s a non-resident and has absolutely no business in British India. The assessee is doing ghee business at Porbandar and delivers goods at Porbandar to merchants who buy ghee from Indian Union. There is no office nor any agency of the non-resident in British India. The non-resident assessee has maintained a bank account in British India but this is only for recovering from the merchants dues in respect of goods delivered at Porbandar. Bank pass books are produced. It appears that the cheques that are received from the merchants are credited in this account and subsequently transferred to Porbandar. The assessee has, however, got a current account with Shamji Kalidas Co., and receives interest on the amounts deposited in this firm. Mr. Deshpande, however, produces certificates of the taxes deducted at the maximum rate under section 18(3A) on interest received by the non-resident. The tax is regularly paid up to 1948-49 assessment years. As there is no source of income taxable in British India, I drop the proceedings already started. " In the proceeding for assessment of income for the assessment year 1949-50 the assessee submitted a blank return stating : " With reference to y .....

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..... assessee were produced and the Income-tax Officer was informed that the cheques received were " subsequently transferred to Porbandar ", and the current account with Messrs. Shamji Kalidas Company and the amounts deposited therein were also disclosed. In the view of the Tribunal, by these disclosures, the " assessee did not furnish any particulars about how the delivery was given " and " the all important question about the price of the goods was not mentioned ", that on that account the statement must be regarded as incomplete ; that it was the duty of the assessee's representative to disclose " the profits embedded in the price, but the sequence of the several statements was such that the assessee wished to show thereby that there was no office or agency in British India and whatever was done was done at Porbandar that the question of receipt of sale proceeds in British India was thus bypassed " ; that the Income-tax Officer was informed about the interest paid to the assessee but no question was raised of any possible liability of the assessee to tax on other account ; that " all the statements taken together contained such a meagre presentation of the facts, that it was diff .....

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..... of receipt of sale proceeds in British India was thus bypassed ". The assessee's representative had expressly stated that the assessee had maintained a bank account in British India in which " for recovering from merchants dues in respect of goods delivered at Porbandar " were credited. The assessee also produced the bank pass books. The finding that " the question of receipt of sale proceeds was bypassed " cannot be accepted as correct. The statement that the cheques were " subsequently transferred to Porbandar " only means that the amounts realized by encashment of the cheques were sent to Porbandar, and not that the cheques were sent to Porbandar. We do not think that any more detailed disclosure was necessary to comply with the requirements that the assessee had fully and truly disclosed all the material facts necessary for the purpose of assessment. The Income-tax Officer may, if he is satisfied that on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment, income has escaped assessment, he may assess or reassess the income. But when the primary facts necessary for assessment are fully and trul .....

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