Roshan Du Hatti vs The Commissioner Of Income-Tax
1971 Latest Caselaw 145 Del

JUDGMENT

H.R. Khanna, C.J.

(1) The following two questions have to be dealt with by this Court under section 66 of the. Indian Income-tax Act, 1 ^22 (hereinafter referred to as "the Act") :- "I whether in the circumstances of the case the assessment was validly made on the assesse in the status of a Hindu undivided family? 2. Whether there was material for coming to the conclusion that Rs. 2,33,414.00 out of the capital of Rs. 3,33,414.00 credited in the books of account of the assesses on March 31, 1948 represented income from undisclosed sources?"

(2) The assessed is a Hindu undivided family of which Roshan Lal is the Karta. Before the partition of the country, Roshan Lal carried on business at Lahore. Consequent upon partition, Roshan Lal migrated into India and started a jewellery shop in Delhi under the name and style of Roshan Di Hatti on March 31, 1948. The same day, i.e. March 31, 1948 a credit entry of Rs. 3,33,414.00 was made in the books of the account of the assessed as capital of the business. Rs. 2,92,340.00 out of that represented the value of gold ornaments, gold bullion and precious stones, the details of which are as under:-     GOLtornaments............Rs. 1,19,320.00 Gold Rawa etc.............Rs. 1,69,020.00 Precious stones.............. Rs. 4,000.00.  

(3) The balance of Rs. 41,074.00 represented cash. The assessed was never assessed to the income-tax either at Lahore till 1946 or at Delhi. On receipt of a complaint that the assessed had made considerable income in gold and jewellery business, the Income-tax Officer initiated proceedings for the assessment year 1948-49 and subsequent years under section 34 (1) (a) of the Act on March 28, 1957 in the name of Roshan Di Hatti (proprietor Roshan Lal). In the course of those proceedings, the assessed was called upon to explain the source of the capital introduced into the business. The assessed then stated that the assets entered as capital in the business account had been brought by him at the time of migration from Lahore. The Income-tax Officer held that the assessed had only brought assets of the value of Rs. 20,000.00 on migration from Lahore to Delhi and on that footing treated the balance of the capital introduced into the business on March 31, 1948 as income from undisclosed sources. In appeal to the Appellate Assistant Commissioner, the assessment was challenged on various grounds. One of the grounds was that the assessment was illegal and without jurisdiction as it related to Hindu undivided family which had ceased to exist as such on March 31, 1958. Reference in this connection was made to a note made by the assessed in the return filed on August 3, 1959 for the assessment year 1959-60. The Appellate Assistant Commissioner held that the Hindu undivided family, of which Roshan Lal was the Karta, continued to be in existence even though it might have parted with its business in April, 1958. The Appellate Assistant Commissioner estimated the assets brought by the assessed from Lahore at Rs, 1,00,000.00. He accordingly modified the order of assessment and directed assessment on Rs. 2.33,414.00 as income from undisclosed sources. The Income-tax Appellate Tribunal affirmed the order of the Appellate Assistant Commissioner without deciding whether there was disruption of the joint status of the assessed family. The Tribunal observed that there had been no formal application for an order under section 25A of the Act during the previous year, but only a claim for partial partition had been made long after the previous year and in the circumstances the question of partition under section 25A could not be agitated before the Tribunal. In the view of the Tribunal, the question of partition could only be agitated under section 25A of the Act. At the instance of the assessed the Tribunal referred the following question to the High Court under section 66(1) as per Income-tax Reference No. 15-T) of 1964 :-    "WHETHER in all the facts and circumstances aforesaid. the assessment was validly made on the assessed Hindu undivided family."  

(4) The assessed applied to the High Court under section 66(2) of the Act as per application No. 6-D of 1964 for an order that the Tribunal be directed to slate a case on four other questions, which according to the assessed, arose out of the order of the Tribunal. When the matter came up for hearing before, the High Court, the assessed pressed the application in respect of the following question only:-    "WHETHER the facts on the record and circumstances of the case justify the conclusion that out of the capital of Rs. 3,33,414.00 consisting of gold ornaments, gold rawa, precious stones and cash, a sum of Rs. 2,33,414.00 represented the income of the assessed from some undisclosed sources and whether there was any material for coming to this conclusion?"  

(5) The High Court answered the question, referred to it, in the affirmative. It was observed that the allegation of partition could not be accepted since the Hindu undivided family had filed a return of its income in its own name even for the assessment year 1959-60, and that in the absence of an order under section 25A (1) of the Act, assessment on Hindu undivided family was proper. The High Court also declined to call for a statement of the case on the other question under section 66(2) of the Act. The assessed then went up in appeal to the Supreme Court. Shah, J. (as he then was) speaking for the Court, observed that the question raised by the assessed in the application under 66(2) was clearly a question of law. According to the assessed. there was no material on the record on which the conclusion of the Tribunal could be founded. It was held that whether the conclusion of the Tribunal on a question of fact is based on any material is a question of law. It was further observed that the question submitted to the High Court was not in proper form. Question No. 2, reproduced above was held to arise out of the order of the Tribunal. As regards the other question, which had been referred to the High Court under section 66(1) of the Act, contention was advanced on behalf of the assessed in the Supreme Court that section 25A would apply only to those cases where a Hindu family had been hitherto assessed as undivided". As the assessed-family had never been assessed previously, sub-section (3) of section 25A, it was submitted, had no application. In holding that section 25A applied, the High Court had relied upon the case of Kalwa Devadattam v. Union of India, (1963) 49 Itr (SC) 166(1). There Lordships held that the decision in the case of Kalwa Devadattain had no application because the Court in that case was not called upon to interpret the expression "hitherto assessed as undivided". Their Lordships then observed that the statement of the case by the Tribunal was incomplete in that the Tribunal had not set out its conclusion on a material issue of fact. The question, referred to the Court, was also reframed. The refrained question has been reproduced as question No. 1 at the commencement of this judgment. The case was accordingly remanded by the Supreme Court and it was directed that the High Court should call upon the Tribunal to submit a statement of the case under section 66(2) of the Act on the second question. The High Court was also directed to hear and dispose of the reference after supplementary statement of the case on the question referred, and the statement of the case under section 66(2) of the Act on the other question, were received. The Tribunal thereafter submitted a supplementary statement of the case under section 66(4) on the first question a reframed by their Lordships and also submitted a statement of the case under section 66(2) on the second question

(6) When the matter came up before this Court, we found, as per order dated May 15, 1969, that the supplementary statement, which had been filed on behalf of the Tribunal, suffered from the same infirmity as had been pointed out by the Supreme Court inasmuch as the Tribunal had not set out its conclusion on the issue of fact as to whether there had in fact been a partition of the joint family and on that account the joint family had ceased to exist. The Tribunal was accordingly ordered to do the needful in accordance with the directions of the Supreme Court and file a supplementary statement.

(7) The Tribunal has thereafter filed a supplementary statement of the case. It has been found by the Tribunal that the Hindu undivided family had not disrupted, or ceased to exist at any rate up to the date of the assessment in May, 1960.

(8) So far as question No. 1 is concerned, it is evident from the supplementary statement of the case that the various assessments have been made on the basis of the assessed's declaration in the status of an Hindu undivided family for the years 1948-49 to 1959-60. In the return filed for 1959-60 on August 3. 1959, after the alleged partition on March 31. 1958. the following note was made on behalf of the assessed:    "N.B.As a result of partial partition the H.U.F. business ceased to exist on and with effect from 1-4-58 from which date it was converted into partnership business.''  

(9) The Tribunal referred to the above note and observed that it would unmistakably indicate that what had taken place on March 31, 1958 was no more than a partial partion. It was further observed that the assesses, had not established by any positive evidence that all the assets of the family had been partitioned and that the family had ceased to exist as such. Nothing has been shown to us as may detract from the correctness of the above finding.   

(10) Section 25A of the Act deals with .assessment after partition of a Hindu undivided family. The section was designed to meet the difficulty which arose when an undivided family received income in the year of account but was no longer in existence as such at the time of the assessment.   

(11) The section reads as under :- "25A.(1) Where, at the time of making an assessment under section 23, it is claimed by or on behalf of any member of a Hindu family hitherto assessed as undivided that a partition has taken place among the members of such family, the Income-tax Officer shall make such inquiry there-into as he may think fit, and, if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions he shall record an order to that effect: Provided that no such order shall be recorded untill notices of the inquiry have been served on all the members of the family. (2) Where such an order has been passed, of where any person has succeeded to a business, profession or vocation formerly carried on by a Hindu undivided family whose joint family property has been partitioned on or after the last day on which it carried on such business, profession or vocation, the Income-tax Officer. "(3) shall make an assessment of the total income received by or on behalf of the joint family as such, as if no partition had taken place, and each member or group of members shall, in addition to any income-tax for which he or it may be separately liable and notwithstanding anything contained in sub-section (1) of section 14, be liable for a share of the tax on the income so assessed according to the portion of the joint family property allotted to him or it; and the Income-tax Officer shall make assessments accordingly on the various members and groups of members in accordance with the provisions of section 23. Provided that all the members and groups of members whose joint family property has been partitioned shall be liable jointly and severally for the tax assessed on the total income received by or on behalf of the joint family us such. (4) Where such an order has not been passed in respect of a Hindu family hitherto assessed as undivided, such family shall be deemed, for the purposes of this Act, to continue to be a Hindu undivided family."

(12) Dealing with the above provision, their Lordships of the judicial Committee in the case of Sir Sunder Singh Majithia v. The Commissioner of Income-tax, C.P. & U.P., (1942) 10 Itr 457 observed: "THE section has nothing to say about any Hindu undivided family which continues in existence, never having been disrupted. Such a case is outside sub-section (3) because it is not within the section at all. No sub-section is required to enable an undivided family which has never been broken up to be deemed to continue. But it need not have the same assets or the same income in each year and it can part with an item of its property to its individual members if it takes the proper steps."

(13) The proposition, in our opinion, is well-established that section 25A of the Act has no application where there has been only a partial partition of the joint family property. (See in this connection K. Y. Pilliah and Son v. Commissioner of Income-lax, Mysore, (1962) 45 Itr 13 6, (3) and Madam Gurumurthi Setty v. Commissioner of Income-tax, Madras, (1944) 12 Itr 176). We would, therefore, answer question No. 1 in the affirmative in favor of the Revenue and hold that the assessment in question was validly made on the assessed in the status of a Hindu undivided family,

(14) So far as question No. 2 is concerned, we find that the Tribunal has maintained the finding of the Appellate Assistant Commissioner that Roshan Lal brought assets of the value of Rs. 1,00,000.00 from Lahore when he migrated to India during the partition days. From the statement of the case it would appear , that Roshan Lal in his statement recorded on June 7. 1957 stated that he had started his business career as a Saraf in 1933-34. but did not remember the amount of initial investment in the business. He also did not remember what he earned from 1934 to 1947. According to Roshan Lal, the present business was started by him in Dariba Kalan. Delhi, on March 30. 1948 and in between October, 1947 and March 30, 1948 he was not engaged in any business or vocation. In another statement made on January 25, 1958 Roshan Lal stated that he had opened an account with the Imperial Bank of India, Arnritsar, in 1947 with a deposit of Rs. 300.00 in order to get a locker to place his jewellery and cash in sealed condition with the Bank. As no locker was available, he placed a trunk in sealed condition with the Bank. He came to Delhi in October, 1947 and occupied two rooms on a monthly rent of Rs. 38.00. His father-in-law also came and stayed with him and paid half of the rent. Roshan Lal took a locker in Hindustan Commercial Bank at Delhi in 1947 for about three months. After surrendering the locker, the entire jewellery and cash were brought to the shop Roshan Lal added that he had two brothers-Kishan Chand and Prem Nath, but they were not on good terms with him. According to Roshan Lal, one residential house, two plots of land and one shop were the joint property inherited from his forefathers. On January 1, 1960 Roshan Lal filed a declaration to the effect that his father had been doing money lending business in Pakistan and he died in 1942. Roshan Lal expressed his ignorance about the affairs of money lending done by his father. The father and mother were stated to be more attached to Roshan Lal than to his brothers, in another declaration Roshan Lal stated that he had never been assessed to income-tax in Pakistan or in India till then and that he did not maintain any bank account in Pakistan except a current account in Sita Ram Bank and National Bank of Lahore. Roshan Lal added that there was no insurance of his household goods or stock-in-trade in Lahore.

(15) Prem Nath. brother of Roshan Lal, was examined by the Income-tax Officer on December 15, 1960. Prem Nath stated that their father in his peak days had between twenty to thirty thousand of rupees but the money was spent by 1940 because of his long illness. According to Prem Nath, their father gave Rs. 2,000.00 to the assessed for starting .a shop in 1935, besides some amount by way of loan bearing nominal interest. During his lifetime the father used to pester the assessed for paying him rent of the shop but the assessed put him off by saying that there was not sufficient income to pay the rent. In 1940, at the instance of the relatives, the assessed started paying rent of Rs. 15.00 to Rs. 20.00 per month. According further to Prem Nath, Roshan Lal and his family, who were living separately, did not have a standard of living higher than that of Prem Nath who was getting a salary of Rs. 150- in 1947. Prem Nath added that at no stage he or his brothers had surrendered their claim as heirs of their father, but since there was nothing to be distributed no necessity of any document arose. Kishan Chand, another brother of the assessed was also examined and he stated that their father had not given any money during his lifetime nor did Kishan Chand receive any money after his death, though he received a claim for Rs. 4,500.00. According to Kishan Chand, he did not relinquish his share in favor of his brothers after the father's death.

(16) Roshan Lal was thereafter examined on February 15, 1960 and he stated that his father had helped him when he started business in 1935 and thereafter he had not received anything from the father. Roshan Lal had also no idea as to the mollies his father gave him and for what period. When it was put to Roshan Lal that there were contradictory assertions about the financial status of his father, Roshan Lal stated that he did not know. In another statement recorded on February 19, 1960, Roshan Lal admitted that his brother, Prem Nath, had been living with his parents all along and that after the death of his father his mother continued to stay with him. Affidavits of a number of persons were filed by Roshan Lal to the effect that he was doing extensive business in Lahore and was possessed of stocks worth lakhs of rupees. Statements of some of them were also recorded. Apart from that, the statement of Hira Lal, father-in-law of Roshan Lal, was recorded. According to Hira Lal, he had been told by Roshan Lal that the sealed box kept with the bank contained jewellery and cash worth lakhs. In addition to the above, the assesses filed before the Income-tax Officer certificates from the Punjab National Bank Limited dated February 19, 1960 in regard to the receipt of Rs. 6000.00 from the Lahore city office in the name of the wife of Roshan Lal, and Rs. 13,000.00 in the name of Roshan Lal in July, 1947. Roshan Lal also filed receipts of cash paid by the assessed to various customers who sold ornaments to the assessed at Lahore.

(17) The Income-tax officer observed that the assessed had never declared the amount of investment before any income-tax authorities by 1951 to avail himself of the benefit of the concession given to displaced persons. Regarding the affidavits of persons filed by the assessed it was observed that they had been obtained by influence as the language of the affidavits indicated that the aforesaid persons had been made to sign those affidavits. Note was also made of the fact that the assessed had not been assessed to income-tax in Pakistan or in India. After referring to the evidence brought on record, the Income-tax Officer held that the assessed's contention that he was able to put in assets to the of Rs. 3,33,414.00 out of the business carried on in Pakistan was untenable. The Income-tax officer accordingly gave the assessed credit for Rs. 20,000.00 for assets brought from Pakistan The balance of Rs. 3,13,414.00 was treated as the assessed's income from undisclosed sources.

(18) When the matter came up before the Appellate Assistant Commissioner, he took note of the fact that the assessed had transferred an amount of Rs. 12,094..00 from the Punjab National Bank account at Lahore to the same Bank in New Delhi in June, 1947. The assessed had also transferred two amounts, one of Rs. 13,000.00 in his own name and another of Rs. 6,000.00 in the name of his wife from the Punjab National Bank Lahore to the same Bank at Minto Road, New Delhi. Note was also made of the fact that the assessed had taken-a fixed deposit receipt of Rs. 19.000.00 from the Delhi Bank in July, 1947. Roshan Lal was also found to have taken life insurance policies for Rs. 22,000.00 at Lahore. Some of the papers filed by the assessed showed that there were dealings of Rs. 10,000.00 or more at one time in the course -of his business at Lahore. The Appellate Assistant Commissioner, after reviewing all the evidence, held that the allowance of Rs. 20,000.00 made by the Income-tax officer towards capital brought over from Pakistan was very low. He noted that the capital disclosed in the books as on March 30, 1948 was mostly the verifiable and even on the basis that the assesses had been doing reasonably well in his business at Lahore, it could not be believed that assessed had accumulated so much capital as claimed by him. Looking to the circumstances, the Appellate Assistant Commissioner held that a much Larger allowance for old capital than had been allowed by the Income-tax officer was justified. He therefore, allowed further reduction of Rs. 80,000.00. When the assessed came up in appeal before the Tribunal, it dealt with the matter in the following words:- "4(A)Coming to the facts of the case and the quantum of assessment, we are aware certainly that the cases of the refugees from Pakistan have to be sympathetically considered. In fact, the Government of India themselves issued a press note requiring all the evacuees to declare their correct financial position and, inter alia, the amounts of money they had brought from Pakistan. Although this press-note was issued as early as in June, 1952. the assessed made no disclosure to the Income-tax officer that any such assets were brought into India at any stage prior to the commencement of the assessment proceedings. The assessed himself is to be blamed for bringing himself to the present position. As regards sympathetic consideration, the assessed, on his own showing, is not a destitute who left everything in Pakistan. 5(a) That leaves us with the question whether the assessed has furnished any satisfactory evidence in support of the stand he has taken. The assessed now says that he was a well-to-do business man of Lahore and earned enough to save a sum of Rs. 3,33,000.00. However, he admitted that he had neither filed any income-tax return nor was ever assessed to tax there. To say the least, this in any event shows that the assessed has not been every straight-forward in his dealings with the income-tax Department. (b) The evidence produced is in the form of oral testimony of some persons coming from Pakistan. After careful perusal of such deposition of these gentlemen, we find that they are vague and were necessarily based on hearsay. They are of little evidentiary value in the absence of any contemporaneous primary evidence, particularly when the assessed did not himself furnish a declaration of the amount he had brought from Pakistan. We agree with the authorities below that the assessed has not properly explained and adduced necessary evidence in support of his contention that he had brought in Rs. 3,33,414.00 from Pakistan, this means that the origin and source of Rs. 3,33.414.00 remains unsubstantiated. (c) Coming to the quantum of income assessed, we find that the authorities below have given the assessed credit for rupees one lakh (Rs. 20,000.00 by the Income-tax Officer and Rs.80,000.00 further by the Appellate Assistant Commissioner) . This is a matter of guess and the assessed has not helped the authorities, by furnishing convincing material on the basis of which they could come to satisfactory conclusion. This is a matter of estimates and we are per force led to make an estimate ourselves. (d) During the course of hearings, L. Roshan Lal was present and on a. question from us he stated that the valuables were brought in a chest measuring 2"'x 1"' x 1'. Finally on a specific question from us, he stated that its weight was about 8 seers. Now eight seers of gold, even at the then prevailing rate would not be worth more than Rs. 65,000.00 and therefore, we are of opinion that at best the assessed could not have brought in valuable worth much more than this figure. As it is, the Department has already given the assessed "credit for rupees one lakh and we do not see how we could interfere with this estimate of the Appellate Assistant Commissioner. In short, in our opinion, the estimate of sum brought from Pakistan calls for no interference, which would necessarily mean that the assessment of Rs. 2,33,414.00 as income from some undisclosed source is justified. We are of opinion that the assessment has been made on correct lines and that the Appellate Assistant Commissioner has given adequate consideration and relief to the claims of the assessed. Further interference is not justified. The appeal is dismissed."

(19) It would appear from the above that the finding of the Tribunal regarding the value of assets brought by the assessed from Lahore has been arrived at on consideration of the circumstances of the case and the relevant material on record. The finding being essentially on a question of fact would have to be accepted by this Court in these proceedings. It is well established that when a conclusion has been reached on an appreciation of a number of facts, the question whether that conclusion 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. It is also obvious that in a case like the present herein satisfactory material as not furnished by the assessed the estimate made by the Income-tax authorities and conclusion arrived at by them regarding the value of assets brought from Lahore by the assessed could not be very exact and precise.

(20) We are unable to accept the contention advanced on behalf of the assessed that as the Tribunal had accepted the stand of the assessed that he had been carrying on business in Lahore and had brought assets from that place, it should have also accepted his statement that the value of those assets was Rs. 3,33,414.00 and should not have drawn the line at the figure of Rs. 1,00,000.00. The Tribunal considered the various circumstances of the case and came to the conclusion that the Appeallate Assistant Commissioner had given adequate consideration and relief to the claim of the asessee. The material question before the Tribunal was regarding the value of the assets brought by the assessed from Lahore and the mere fact that the Tribunal accepted the stand that the assessed had carried on business at Lahore and had brought assets from that place would not lead to the conclusion that those assets were of the value of Rs. 3,33,414.00 as claimed by the assessed. There was, in our opinion, nothing to prevent the Appellate Assistant Commissioner or the Tribunal to reject the claim of the assessed regarding the value of the assets brought by him, if on consideration of the material on record the stand of the assessed in this respect was considered to be not correct.

(21) Reference has been made by Mr. Desai to the memorandum regarding the question which was put to the assessed by the Tribunal about the weight of the chest containing the valuables. It is urged that if the Tribunal wanted to take additional evidence it should have done so inaccordance with rules 29, 30 and 31 of the Appellate Tribunal Rules which deal with the production of additional evidence before the Tribunal and the mode of taking such additional evidence. There is no doubt that the Tribunal did not act in accordance with the procedure as prescribed in those rules. It seems that to satisfy itself about the correctness of the stand of the assessed a question was put by the tribunal regarding the weight of the chest. Assuming that the procedure adopted by the Tribunal in this respect suffered from an irragularity, the perusal of the order of the Tribunal tends to show that the Tribunal otherwise was also not going to interfere with the estimate of the Appellate Assistant Commissioner. As observed by their Lordships of the Supreme Court in the case of Homi Jehangir Cheesta v. Commissioner of Income-tax, Bombay City, (1961) 41 Itr 135, it) is not required that the order of the Tribunal must be examined sentence by sentence, through a microscope as it were, so as to discover a minor laps here or an incautious opinion there to be used as a peg on which to hang an issue of law. In considering probabilities properly arising from the facts alleged or proved, the Tribunal does not indulge in conjectures, surmises or suspicions.

(22) Question then arises whether there was material for the Tribunal to come to the conclusion that Rs. 2,33,414.00 represented income from undisclosed sources. In this context we find that the assessed made a credit entry dated March 31, 1948 in his books of account regarding the investment of capital of Rs. 3,33,414.00. The Appellate Assistant Commissioner had some suspicion about the entry being ante-dated but he did not dilate upon this aspect of the matter. Be that as it may, the Income-tax authorities found that about 7 or 8 months before that date the value of the entire assets, which the assesse had brought with him from Pakistan, was Rs. 1,00,000.00. The assessed failed to give any satisfactory explanation regarding the source and nature of the amount of Rs. 2,33,414.00. In the circumstances, the Tribunal was entitled to draw the inference that the amount of Rs. 2,33,414.00 represented receipt of an assessable nature. We may in this context refer to the case of A. Govindarajulau Mudaliar v. Commissioner of Income-tax, Hyderabad, (1958) 34 Itr 807. (6) In that case there were some credit entries in the books of a firm of which the assessed-appellant was a partner. The assessed furnished explanation in respect of the amounts of the credit entries but the explanation was rejected. Question arose whether the amounts in question could be considered to be receipts of an assessable nature. The question was answered in the affirmative in the following words: "WHETHER a receipt is to be treated as income or not. must depend very largely on the facts and circumstances of each case. In the present case the receipts are shown in the account books of a firm of which the appellant and Govinda swamy Mudaliar were partners. When he was called upon to give explanation he put forward two explanations, one being a gift of Rs. 80.000 and the other being receipt of Rs. 42,000 from business of which he claimed to be the real owner. When both these explanations were rejected, as they have been, it was clearly open to the Income-tax officer to hold that the income must be concealed income. There is ample authority for the position that where an assessed fails to prove a satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature."

(23) In Sovachand Said v. Commissioner of Income-tax, (1958) 34 Itr 650, the assessed, who had encashed high denomination notes of the value of Rs. 2,68,000.00 explained that the notes formed part of the assets of his father which devoted on him upon his father's death in 1942, and produced his father's account books in order to prove his explanation. The Tribunal did not accept the account books produced by the assessed as genuine. It estimated that Rs. 1,28,000.00 out of the sum of Rs. 2,68,000.00 must have been the assessed's income from undisclosed sources. Their Lordships of the Supreme Court held that the view taken by the Appellate Tribunal was a reasonably possible view. Sarkar, J. (as he then was), speaking for the Court, observed that when the Tribunal decided that only Rs. 1,28,000.00 was the income of the assessed from undisclosed sources it was really making a concession and giving a benefit to the assessed to which he was strictly not entitled.

(24) In Sreelekha Banerjee and others v. Commissioner of Income-tax, Bihar and Orissa, (1963) 49 Itr 112,(s) the assessed, who was a colliery proprietor and a coal raising contractor, had encashed high denomination notes of the value of Rs. 51,000.00 in January, 1946. The explanation of the assessed that the high denomination notes formed part of the cash balance at his head office was rejected. Their Lordships of the Supreme Court held that die source of the money not having been satisfactorily proved the department was justified in holding it to be assessable income of the assessed from some undisclosed source. Hidayatullah, J. (as he then was), speaking for the Court, observed: "IF(here is an entry in the account books of the assessed which shows the receipt of a sum on conversion of high denomination notes tendered for conversion by the assessed himself, it is necessary for the assessed to establish, if asked, what the source of that money is and to prove that it does not bear the nature of income. The department is not at this stage required to prove anything. It can ask the assessed to bring any books of account or other documents or evidence pertinent to the explanation if one is furnished, and examine the evidence and the explanation. If the explanation shows that the receipt was not of an income nature, the department cannot act unreasonably and reject that explanation to hold that it was income. If, however, the explanation is unconvincing and one which deserves to be rejected, the department can reject it and draw the inference that the amount represents income cither from the sources already disclosed by the assessed or from some undisclosed source. The department do not then proceed on no evidence, because the fact that there was receipt of money is itself evidence against the assessed."

(25) In Kale Khan Mohammad Hanif v. Commissioner of Income-tax, Madhya Pradesh & Bhopal, (1963) 50 Itr l, Sarkar, J. (as he then was), speaking for the Court, observed:    "IT is well established that the onus of proving the source of a sum of money found to have been received by the assessed is on him. If he disputes 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 Income-tax Act. In the absence of such proof, the Income-tax officer is entitled to treat it as taxable income."  

(26) In Commissioner of Income-tax Madras v. M. Ganapathi Mudaliar, (1964) 53 Itr 623(10), Sikri, J. (as he then was), speaking for the Court, observed that once it is held that an amount credited in the account books of the assessed was the income of the assessed it was not necessary for the department to locate its source.   

(27) In Commissioner of Income-tax, U.P. v. Devi Prasad Vishwanath Prasad, (1969) 72 Itr 194(11), there was an unexplained credit entry of Rs. 20,000.00 in the account books of the assessed. Question arose whether the amount of Rs. 20.000.00 could be treated as the assessed's income from undisclosed source. The High Court, in disposing of the application under section 66(2), expressed the view that because the amount of Rs. 20,000.00 was entered in the books of account of the business, there was some material to hold that the amount was income of the assessed from the business and not from some other source. The matter was then taken up in appeal to the Supreme Court. Shah, J. (as he then was), speaking for the Court while reversing the order of the High Court, observed :   

(28) But it was not open to the High Court to direct the Tribunal to state a case on a question which was never raised before or decided by the Tribunal at the hearing of the appeal. The question again assumes that it was for the Income-tax officer to indicate the source of the income before the income could be held taxable and unless he did so the assessed was entitled to succeed. That is not, in our judgment the correct legal position. Where there is an unexplained (sic) cash credit, it is open to the Income-tax officer to hold that it is income of the assessed and no further burden lies on the Income-tax officer to show that that income is from any particular source. It is for the assessed to prove that even if the cash credit represents income it is income from a source which has already been taxed."   

(29) Keeping the principles laid down in the above cited cases and applying them to the facts of the present case, we are of the opinion that there was material for the Tribunal to come to the conclusion that Rs. 2,33,414.00 represented income from undisclosed sources.   

(30) Reference on behalf of the assessed has been made to the cases of Metha Parikh and Co. v. Commissioner of Income-tax, Bombay. (1956) 30 Itr 181(12), and Lalchand Bhagat Ambica Ram v. Commissioner of Income-tax, Bihar and Orissa, (1959) 37 Itr 288(13).   

(31) Both these cases related to the encashment of high denomination notes by the assessed. Bhagwati, J., speaking for the Court, observed in both the cases that the assessment orders whereby part of the amount represented by those high denomination notes had been treated as undisclosed profits, were based upon conjectures an surmises. Those cases were decided on their own facts and the decision therein cannot be of much assistance to the assessed because the assessment order in the present case does not suffer from the infirmity which was adverted to in the two cited cases.   

(32) Reference at the time of arguments was also made to some High Court decisions, but, in our opinion, it is not necessary to deal with them as the matter has been dealt with by their Lordships of the Supreme Court in a number of cases to which reference has been made above.   

(33) We would, therefore, hold that there was material for the Tribunal for coming to the conclusion that 2,33,414.00 out of the capital of Rs. 3,33,414.00 credited in the books of account of the assessed on March 31, 1948 represented income from undisclosed sources. Both the questions referred to this Court are consequently answered in. the affirmative in favor of the Revenue. In the circumstances, we leave the parties to bear their own costs.