TMI Blog1977 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on business in gold and jewellery at Chowk Surjan Singh in Lahore. In view of the impending partition of India, Roshan Lal decided to move out of Lahore and, accordingly, he transferred a sum of Rs. 12,094 from the account of the assessee with the Lahore branch of the Punjab National Bank Ltd. to the New Delhi branch of that bank in June, 1947. He also transferred from the Lahore branch of the Punjab National Bank Ltd. to the branch of that bank at New Delhi two sums of Rs. 13,000 and Rs. 6,000, the former in his own name and the latter in the name of his wife and obtained fixed deposit receipts for these two amounts from the New Delhi branch of the bank in July, 1947. He left Lahore in June, 1947, and proceeded to Mussoorie but on his way he stopped at Amritsar for a few days. He opened an account with the Amritsar branch of the Imperial Bank of India by depositing a sum of Rs. 300 with a view to obtaining a locker in the safe deposit vault where he could deposit for safe custody a trunk which he had brought with him from Lahore containing gold ornaments, jewellery and cash. It seems that a locker was not available and hence he deposited the trunk in a sealed condition with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he migrated from Lahore and they were kept in a sealed trunk with the Amritsar branch of the Imperial Bank of India and when Roshan Lal came over to Delhi in October, 1947, he deposited the same in a locker in the safe deposit vault of Hindustan Commercial Bank at Delhi and when the business of the assessee was commenced, he surrendered the locker and brought the entire gold, jewellery and cash into the business. It was emphasised by the assessee as a supportive fact that after Roshan Lal migrated from Lahore in June, 1947, until the assessee started the business of Roshan-di-Hatti on 30th March, 1948, neither the assessee nor Roshan Lal had any other business or means of income from which the assets of Rs. 3,33,414 could have been earned. This explanation was given in the course of various statements made by the assessee from time to time before the Income-tax Officer. The assessee also examined Hira Lal, father-in-law of Roshan Lal, and filed affidavits of Mulk Ram, Billa Mal, Dalal, Wazir Chand, Devidas Mehra and Panna Lal before the Income-tax Officer for the purpose of showing that the assessee was having a large gold and jewellery business in Lahore before migration and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Punjab National Bank account at Lahore to the same bank in New Delhi in June, 1947. It is also seen that he also transferred two amounts of Rs. 13,000 in his own name and Rs. 6,000 in his wife's name from the Punjab National Bank, Lahore, to the same bank at Minto Road, New Delhi, and fixed deposit receipts were taken for this total sum of Rs. 19,000 from the Delhi bank in July, 1947. All these monies including the realised fixed deposits later on went into the assessee's account with the State Bank of India which reveals a credit balance of Rs. 35,053 as on March 30, 1948. This atleast shows that the assessee was not a man of very small means while he was at Lahore. He was having four accounts in different banks at Lahore. The particulars, however, are not available and it is also stated that most of these accounts were very small ; but even then a man of very modest means would not normally have so many bank accounts. Moreover, while at Lahore Shri Roshan Lal had taken life insurance policies for Rs. 22,000. A number of letters and receipts regarding business transactions in Lahore were also filed which indicate that the Lahore business was not as small as the Income-tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the books as on March 30, 1948, is mostly unverifiable and even assuming that the assessee was doing reasonably well in his business at Lahore, there are hardly any reasons to believe that he could have accumulated so much capital and could have brought all that capital safely into India ; but the circumstances of the case do, in my view, justify a much larger allowance for old capital than has been allowed by the Income-tax Officer. In my opinion, a reduction of the assessment by Rs. 80,000 will meet the requirement of the case." The Appellate Assistant Commissioner thus reduced the figure of undisclosed income of the assessee to Rs. 2,33,414. But this relief was not enough and the assessee preferred a further appeal to the Tribunal. When the appeal came to be heard by the Tribunal, Roshan Lal, who was present at the hearing, was asked by the members of the Tribunal as to how he had brought gold and jewellery from Lahore and he stated that it was brought in train in a box of the size of 2 1/2" X 1 1/2" X 1' and he was then asked what was the weight of the box, to which he replied stating that the weight of the contents of the box was about eight seers. The Tribunal then, afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that Rs. 2,33,414, out of the capital of Rs. 3,33,414 credited in the books of account of the assessee on 31 st March, 1948, represented income from undisclosed source ? " Pursuant to this order the Tribunal stated a case for the opinion of the High Court and the High Court answered the question referred to it in favour of the revenue by holding that there was material on the basis of which the Tribunal could come to the conclusion that Rs. 2,33,414 represented the undisclosed income of the assessee. Hence, the present appeal by the assessee with special leave obtained from this court. Now, the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him. If he disputes the liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the revenue is entitled to treat it as taxable income. This was laid down as far back as 1958 when this court pointed out in A. Govindarajulu Mudaliar v. Commissioner of Income-tax [1958] 34 ITR 807, 810 (SC) that : There is ample authority for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny income-tax in Lahore but, as pointed out by the Appellate Assistant Commissioner in his order, a number of letters and receipts regarding business transactions in Lahore were filed by the assessee which showed that the business in Lahore was not small and there were documents and papers which referred to dealings involving Rs. 10,000 or more at a time and there were also several vouchers produced by the assessee relating to advertising charges paid at Lahore. The business carried on by the assessee at Lahore was, therefore, a reasonably large business though its extent could not be verified by any reliable material produced by the assessee. The assessee undoubtedly filed affidavits of Mulk Ram, Billa Mal, Dalal, Wazir Chand, Devidas Mehra and Panna Lal, but, as commented upon by the Tribunal, these affidavits were vague and could not be regarded as having much evidentiary value. Still they did go to show that the Lahore business of the assessee was a fairly large business. The Tribunal was no doubt right in commenting that primary evidence with regard to the extent of the Lahore business of the assessee was not forthcoming, but it must be remembered that the assessee was being c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought gold, ornaments and cash of the value of Rs. 3,33,414 could be rejected ? The only material relied upon by the Tribunal was that the assessee had never filed any income-tax return nor ever paid any tax on the income of its business in Lahore and the presumption must, therefore, be that the assessee did not earn any assessable income before migration from Lahore. Now, it is true that where an assessee has not paid income-tax, the presumption ordinarily must be that the assessee had no assessable income, but here the fact remains that the assessee transferred no less than an aggregate sum of Rs. 31,094 from Lahore to New Delhi and also brought de substantial amount either in the form of jewellery, etc., or cash " and deposited the same in a sealed trunk with the Imperial Bank of India, Amritsar branch, in June, 1947. This obviously the assessee could not have done unless it had a reasonably large business in Lahore and, therefore, the fact that the assessee did not pay income-tax in Lahore cannot have much evidentiary value. All that it would show is that, as pointed out by the Tribunal, " the assessee has not been very straightforward in his dealings with the income-tax d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remains that they were not disclosed by the assessee despite the Press Note of the Government of India and hence no adverse inference could be drawn from-the fact of non-disclosure of the assets by the assessee. It will, therefore, be seen that there was no material on the basis of which the Tribunal could come to the conclusion that though the assessee had a fairly large business in Lahore and had brought its entire ornaments, jewellery and cash from Lahore and deposited the same in a sealed trunk with the Amritsar branch of the Imperial Bank of India, these ornaments, jewellery and cash, were worth not more than Rs. 1,00,000. One may also ask the question that if the assessee did not bring assets worth more than Rs. 1,00,000 from Lahore, where and how did it get the remaining assets of the value of Rs. 2,33,414 ? Roshan Lal had come away from Lahore as a refugee and conditions in post-partition India were also highly unsettled and the clear and undoubted evidence was that neither Roshan Lal nor the assessee had any business or other means of income in India until 30th March, 1948. In this situation, it is impossible to believe that the assessee could have earned such a huge a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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