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TMI Blog1956 (5) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... tax and business profits tax purposes ? The High Court answered the first question in the affirmative but refused to answer the second question, being of the opinion that even though it had asked the Tribunal to refer that question under section 66(2) of the Act, it had no jurisdiction to do so inasmuch as the appellants had not asked the Tribunal to refer the second question and, therefore, no question arose of the Tribunal refusing to raise that question or to submit it for the decision of the High Court. The appellants are a partnership firm doing business in Mill Stores at Ahmedabad. Their head office is in Ahmedabad and their branch office is in Bombay. The Governor-General on 12th January, 1946, promulgated the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, and high denomination bank notes ceased to be legal tender on the expiry of 12th day of January, 1946. Pursuant to clause 6 of the Ordinance the appellants on 18th January, 1946, encashed high denomination notes of Rs. 1,000 each of the face value of Rs. 61,000. This was done in the calendar year 1946, being the account year corresponding with assessment year 1947-48. During the assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants appeared to have put in high denomination notes in the cash balance and taken the other notes away. It accepted the appellants' explanation only in regard to 31 notes and directed that the appellants' assessment for the year under reference be reduced by that amount and dismissed the rest of the appeal. The appellants applied to the Tribunal for stating a case and referring the first question of law to the High Court for its opinion under section 66(1) of the Act. The Tribunal rejected the said application holding that no question of law arose from its order. The appellants thereupon applied to the High Court under section 66(2) of the Act for an order directing the Tribunal to state a case and refer the questions set out in the application. The High Court directed the Tribunal to state a case and refer the two questions of law set out hereinbefore to it for its decision under section 66(2) of the Act. In stating the case and referring the said questions of law to the High Court, the Tribunal pointed out that the second question was not urged before the Tribunal at any stage and hence it was not dealt with by it in its original order. The reference was heard by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 18,395 on 2nd January, 1946. Rs. 15,000 were received by the appellants on 7th January, 1946, from the Sushico Textiles and Rs. 8,500 were received by them on 8th January, 1946, from Maniben, widow of Shah Maneklal Nihalchand. Various other sums were also received by the appellants from 2nd January, 1946, up to and inclusive of 11th January, 1946, which were either multiples of Rs. 1,000 or were over Rs. 1,000 and were thus capable of having been paid to the appellants in high denomination notes of Rs. 1,000. There was a cash balance of Rs. 69,891-2-6 with the appellants on 12th January, 1946, when the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, was promulgated and it was the case of the appellants that they had then in their custody and possession 61 high denomination notes of Rs. 1,000, which they encashed through the Eastern Bank on 18th January, 1946. The appellants further sought to support their contention by procuring before the Appellate Assistant Commissioner the affidavits of Kuthpady Shyama Shetty, General Manager of Messrs. Shree Anand Textiles, in regard to payment to the appellants of a sum of Rs. 20,000 in Rs. 1,000 Currency notes on 28th Decem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation notes of Rs. 1,000 each. It was by reason of their visualisation of such an impossibility that they negatived the appellants' contention. It has to be noted, however, that beyond these calculations of figures, no further scrutiny was made by the Income-tax Officer or the Appellate Assistant Commissioner of the entries in the cash book of the appellants. The cash book of the appellants was accepted and the entries therein were not challenged. No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. The appellants took it that the affidavits of these parties were enough and neither the Appellate Assistant Commissioner, nor the Income-tax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross-examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the Revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits. This being t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which Commissioners, having had proved or admitted before them a series of facts, may deduce therefrom further conclusions which are themselves conclusions of pure fact. But in such cases the determination in point of law is that the facts proved or admitted provide evidence to support the Commissioners' conclusions. " The latest pronouncement of the House of Lords on this question is to be found in Edwards (Inspector of Taxes) v. Bairstow and Another. Viscount Simonds observed at page 586 : " For it is universally conceded that, though it is a pure finding of fact, it may be set aside on grounds which have been stated in various ways but are, I think, fairly summarised by saying that the court should take that course if it appears that the Commissioners have acted without any evidence or upon a view of the facts which could not reasonably be entertained ", and Lord Radcliffe expressed himself as under at page 592 : " If the case contains anything ex facie which is bad law and which bears upon the determination, it is obviously erroneous in point of law. But, without any such misconception appearing ex facie, it may be that the facts found are such that no person acting jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egative and held that there were no materials to justify the assessment of Rs. 30,000 from out of the sum of Rs. 61,000, for income-tax and excess profits tax and business profits tax purposes, representing the value of the high denomination notes which were encashed on 18th January, 1946. In view of the above it is not necessary for us to go into the question whether the High Court ought to have answered the second referred question also. The answer to the first referred question being in the negative, the very basis for excess profits tax and business profits tax disappears and the second referred question becomes purely academical. The result, therefore, is that the appeal is allowed and the first referred question is answered in the negative. The appellants will have their costs here as well as in the High Court. VENKATARAMA AYYAR, J.--I agree to the order just proposed ; but I prefer to rest my decision on the ground that the finding of the Tribunal that high denomination notes of the value of Rs. 30,000 represented the concealed profits of the appellant is not supported by any evidence, and is, in consequence, erroneous in point of law and liable to be set aside. The ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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