9911796707
Advanced Search 
TMI Blog1972 (1) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... r permission to start a ginning factory. In anticipation of getting the requisite permission, the mills had advanced Rs. 1.54 lakhs to cotton growers for the supply of cotton to the mills. It had also constructed , the ginning factory and purchased and installed the machinery at a cost of Rs. 1 lakh. But, the permission sought for was refused by the authorities and, therefore, the mills could not start the ginning factory. Faced with the refusal, the mills had to make some other arrangement. The alternative arrangement which was thought of by the mills has been explained in the letter dated March 9, 1957, written by Ramaswami Naidu to the Income-tax Officer thus : " The mill itself could not run the factory since permission was refused by the textile authorities. As partner in the managing agency of the mill, I too could not run the same. So I had to look to others to run this factory. Instead of leasing it out to outsiders, Sri U. G. Krishnaswami was asked to take the same on lease." However, no lease agreement was executed between U. G. Krishnaswami and the mills. But U. G. Krishnaswami is said to have run the ginning factory from 1952 till March 31, 1955, as a lessee. The adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aidu had an eight annas share in the managing agency firm, he had full control of the managing agency firm as also the mills, he having purchased another six annas share owned by one G. Krishnan and others. U. G. Krishnaswami, though he purported to carry on the business, was not in a position to explain as to how he found the capital for starting his alleged business and how he spent or invested the profits which he had earned from the business for the years for which he was carrying on business. He was not also able to produce cash vouchers given to the cotton growers nor to give details and addresses of the parties with whom he is said to have carried on business. The premises of the mills were raided by the Enforcement Branch of the textile department and certain books were seized by them. Those included certain books maintained by Krishnaswami in relation to his alleged business. A comparison of the entries in the cash book produced by Krishnaswami in connection with his assessment with the book seized by the Enforcement Branch showed the inflatory prices paid to him to the extent of Rs 7,972 for the purchase of kappas. U. G. Krishnaswami had filed a criminal complaint against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to their assessments for the years 1952-53, 1953-54 and 1954-55. The Appellate Assistant Commissioner also found that Ramaswami Naidu was in full control of the managing agency firm of the mills and that he had discharged the tax liability of Krishnaswami Naidu by making some adjustments in the mills accounts and transferring the ultimate liability of Krishnaswami Naidu to the mills to the accounts of one Kavetti Naidu. According to the Appellate Assistant Commissioner it is Ramaswami Naidu who actually carried on the business in the name of Krishnaswami Naidu, his aunt's son and reaped the profits therefrom and the financial position of U. G. Krishnaswami remained the same all through even though he is said to have earned profits in the business in question. But at the same time, there had been substantial accretion of wealth to Ramaswami Naidu during the relevant years. There were further appeals to the Appellate Tribunal and it was contended before the Tribunal by both the assessees that the circumstances pointed out by the Income-tax Officer and the Appellate Assistant Commissioner are not sufficient to connect Ramaswami Naidu with the business of Krishnaswami Nai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that U. G. Krishnaswami Naidu is only a name-lender and that in fact Ramaswami Naidu is the owner of the business in question cannot at all be sustained on the materials on record and that if at all the business could be treated as that of the mills. We are not in a position to say that the facts and circumstances as found by the Tribunal are not sufficient to reach the inference that Ramaswami Naidu should have had a proprietary interest in the business in question. In our view, the materials are sufficient to establish a close and intimate nexus between Ramaswami Naidu and the business in question. From the facts found it is seen that U. G. Krishnaswami had no experience in any business and that his name was, for the first time,brought in by Ramaswami Naidu in the circumstances stated by him in his letter dated March 9, 1957. The letters seized by the Enforcement department also clearly showed that he had a proprietary interest in the business and that U. G. Krishnaswami was only his representative. Apart from this, his conduct in signing the day book, cash receipts and contracts in connection with that business also showed that that business was his. This conclusion is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en though the High Court could, on the evidence, have come to a conclusion entirely different from that of the Tribunal, that such findings of fact can be reviewed by the High Court only on the ground that there is no evidence to support it or that it is perverse, and that when a conclusion has been reached by the Tribunal on an appreciation of a number of facts established by the evidence, whether that is sound or not must be determined, not by considering the weight to be attached to each single fact in isolation but by assessing the cumulative effect of all the facts in their setting as a whole. In that case it was contended that the legal inference to be drawn from proved facts should be treated as one of law. In rejecting the said contention the Supreme Court held that it is only where an ultimate finding on an issue is an inference to be drawn from the facts found on the application of any principles of law, there will be a mixed question of law and fact that the inference from the facts found in such a case is a question of law, but where the final determination of the issue entirely rests on the finding or ascertainment of the basic facts it would not involve the applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee requiring him to prove that he was not the owner of the business. The question of onus does not come into play at all in this case as the Tribunal had decided the case purely on the materials on record and not on the basis that the assessee has not discharged the onus of proving that the business was not his. The learned counsel for the revenue contends that, having regard to the nature of the question referred to this court in T.C. No. 66 of 1965, it is not possible for us to embark upon a reappraisal of the evidence and to arrive at a conclusion contrary to that of the Tribunal and that we have to confine ourselves to the facts as found by the Tribunal and answer the question of law in the setting and context of these facts, and refers to the decision in Commissioner of Income-tax v. Kamal Singh Rampuria . In that case their Lordships of the Supreme Court, after referring to their earlier judgment in India Cements Ltd. v. Commissioner of Income-tax and Commissioner of Income-tax v. Sri Meenakshi Mills Ltd. , expressed the view that in the hearing of a reference under section 66(1) of the Income-tax Act, 1922, it is not open to the assessee to challenge a finding of fact u ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
