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1958 (11) TMI 3

rrived at in his enquiry under section 25A(1) of the Indian Income-tax Act ? - Whether there was any material or evidence upon which the taxing authorities could legally hold that the amount of ₹ 2,30,346 (Rupees two lakhs thirty thousand three hundred and forty-six) represented undisclosed profits of the accounting year in question ? - Held that:- What that tax is would depend on the assessment of income in proceedings taken under section 23, and an order under section 25A would have no effect on that assessment. It is in this context that we must read the observations in the order under section 25A relied on for the appellant. In fact, that order does not expressly decide that the family had the jewels mentioned in exhibit A, and that they were converted into cash as claimed by the appellant. Nor could such a finding be implied therein, when regard is had to the scope of the proceedings under section 25A and to the fact that the order under section 23(3) holding that the sum of ₹ 2,30,346 did not represent the value of the family jewels sold was passed on the same date as the order under section 25A and by the very same officer. - There is ample authority .....

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ere not pure. The Income-tax Officer rejected this explanation, because he held that the weight which was actually deducted for impurities in the accounts of the purchaser was almost negligible, and that what was sold was thus pure gold and not gold in old family jewels. He also remarked that the sales were in round figures of 500 tolas, and that if the assessee had been taking old ornaments broken or unbroken for sale it is inconceivable that on three occasions out of six he took gold weighing 500 tolas in round figure. He also referred to the fact that there was no list of the family jewels, and that there was nothing in the family accounts to show what jewels were held by the family. He accordingly held that the story of sale of family jewels was not true, and that the sum of Rs. 2,30,346 represented concealed profits of the business, and he included the said amount in the taxable income. He also followed it up by an order imposing tax on the appellant under the Excess Profits Tax Act. The appellant took both these orders in appeal to the Appellate Assistant Commissioner who again went into the matter fully, and observed that the appellant had been changing his version as to the .....

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t of the jewels set out in exhibit A, the gold which was available for partition was 3,133 tolas. It is recorded that this quantity should be sold in the market and the sale proceeds credited in the capital accounts of the business. And then we have the last of the proceedings dated April 21, 1945, which record that gold weighing 3,133 tolas was sold and the price credited in the accounts. Now, if these minutes are genuine and give a correct picture as to what really took place, they would go a long way to support the version given by the appellant as to how he came by the sums making up a total Rs. 2,30,346. Quite naturally, therefore, the appellant applied to the Tribunal to receive the proceedings book in evidence, and the ground given in support of the application was that it had been filed before the Income-tax Officer but had not been considered by him. Then the question was raised as to whether the proceedings book was, in fact, produced before the Income-tax Officer. The argument of the appellant was that the decision taken at the meeting dated April 21, 1945, which forms the concluding portion of the book had been translated into English at the instance of the Income-tax O .....

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g to the nature and division of the assets of the joint family in question which he arrived at in his enquiry under section 25A(1) of the Indian Income-tax Act ? (2) Whether there was any material or evidence upon which the taxing authorities could legally hold that the amount of Rs. 2,30,346 (Rupees two lakhs thirty thousand three hundred and forty-six) represented undisclosed profits of the accounting year in question ? The reference was heard by Chakravartti, C. J., and Lahiri, J., who by their judgment dated June, 19, 1953, answered the first question in the negative and the second in the affirmative. The appellant then filed an application under section 66A(2) for leave to appeal to this court, and that having been dismissed, has preferred the present appeals on leave granted by this court under article 136. Mr. Viswanatha Sastri, learned counsel for the appellant, raised the following contentions : (1) In view of the order of the Income-tax Officer under section 25A, it was not open to the Department to contend that the sum of Rs. 2,30,346 does not represent the value of family jewels. (2) The finding of the Income-tax authorities that the said amount represents concealed pro .....

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is context that we must read the observations in the order under section 25A relied on for the appellant. In fact, that order does not expressly decide that the family had the jewels mentioned in exhibit A, and that they were converted into cash as claimed by the appellant. Nor could such a finding be implied therein, when regard is had to the scope of the proceedings under section 25A and to the fact that the order under section 23(3) holding that the sum of Rs. 2,30,346 did not represent the value of the family jewels sold was passed on the same date as the order under section 25A and by the very same officer. (2) The next question is-and that is what was really pressed before us-whether the sum of Rs. 2,30,346 represents the price of family jewels sold or whether it is concealed business profits. That clearly is a question of fact which is open to attack in a reference under section 66 only if it could be shown that there is no evidence to support it or that it is perverse. Now, the contention of Mr. Viswanatha Sastri for the appellant is that the finding that it is concealed profits was reached by the Income-tax Officer and by the Appellate Assistant Commissioner by ignoring th .....

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d on by the appellant and were therefore not considered by the Officer. It is also significant that the order of the Income-tax Officer refers to sale of ornaments broken or unbroken. The story that the gold which was separated from the jewels after removing the pearls and stones was melted and sold in quantities of 250 or 500 tolas, which was the argument pressed before us, was not put forward before him. It is argued that in the appeal against the order of the Income-tax Officer the ground was definitely taken that the proceedings book had been produced before him, and that it was also prominently mentioned in a petition supported by affidavit filed by the appellant. But the order of the Appellate Assistant Commissioner does not deal with this matter either, and it is inconceivable that he would have failed to consider it if it had been pressed before him. It is also to be noted that the appellant who had obtained a return of the proceedings book from the Income-tax Officer did not file it before the Appellate Assistant Commissioner, nor did he move for its admission in evidence. Apart from taking the grounds to which we were referred, the appellant appears to have presented his .....

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