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of <h1>High Court: Rs. 15,000 Not Undisclosed Income; Rs. 10,000 Deemed Undisclosed</h1> <h3>S. HASTIMAL Versus COMMISSIONER OF INCOME-TAX, MADRAS.</h3> S. HASTIMAL Versus COMMISSIONER OF INCOME-TAX, MADRAS. - [1963] 49 ITR 273 (Mad) Issues Involved:1. Whether the Tribunal was right in law and had material to hold that the sum of Rs. 25,000 was income from undisclosed sources in the year of assessment 1948-49 and assessable under the Act.Issue-wise Detailed Analysis:1. Tribunal's Decision on Rs. 25,000 as Undisclosed Income:The Tribunal had to determine if Rs. 25,000 contributed by the assessee to the firm of Hastimal Jayantilal & Co. was from an undisclosed source. The assessee claimed he borrowed Rs. 25,000 from Vijayaram Ganeshdas of Bikaner. However, the Income-tax Officer did not accept this explanation, citing the lack of proof and the inability to locate Vijayaram Ganeshdas or his agent, Gourishankar Bagdy. The Tribunal upheld the Income-tax Officer's decision, adding the Rs. 25,000 as income from undisclosed sources.2. Appellate Assistant Commissioner's Reversal:The Appellate Assistant Commissioner disagreed with the Income-tax Officer, finding that the officer had approached the issue negatively and had not given due consideration to the assessee's explanations. He deleted the addition of Rs. 25,000, stating that the absence of Gourishankar Bagdy should not lead to adverse inferences against the assessee.3. Tribunal's Reaffirmation:Upon the department's appeal, the Tribunal reaffirmed the Income-tax Officer's decision, stating that the assessee failed to prove the origin of the Rs. 25,000 beyond doubt. They noted inconsistencies in the assessee's explanations, particularly regarding the Rs. 10,000 portion of the sum.4. High Court's Examination:The High Court noted the difficulty faced by the assessee in explaining a decade-old transaction. They examined the evidence and found that the assessee had provided a reasonable explanation for Rs. 15,000 of the Rs. 25,000. The assessee borrowed Rs. 15,000 from the Punjab National Bank, Coimbatore, against a fixed deposit of Rs. 16,000 at the Punjab National Bank, Jodhpur, which was obtained through a draft from Gourishankar Bagdy.5. Inconsistencies in Assessee's Explanation for Rs. 10,000:The High Court found inconsistencies in the assessee's explanation for the remaining Rs. 10,000. Initially, the assessee claimed this amount was deposited with Sagarchand Sujanmull of Phalodi and withdrawn from Sagarchand Sujanmull of Madras. Later, he changed his explanation, stating that Rs. 8,000 was sent to Poonamchand Gulabchand of Bombay. The High Court agreed with the Tribunal that there was no proof that Rs. 8,000 credited to the assessee in the firm's accounts came from the borrowing of Rs. 25,000 from Vijayaram Ganeshdas.6. Conclusion and Judgment:The High Court concluded that there were no materials to hold that Rs. 15,000 was income from undisclosed sources, as the assessee provided sufficient evidence for this portion. However, they found materials to support the Tribunal's decision that Rs. 10,000 was from undisclosed sources due to the inconsistencies and lack of proof in the assessee's explanations.Final Judgment:The High Court answered the question by stating that there were no materials to hold that Rs. 15,000 was income from undisclosed sources, but there were materials to hold that Rs. 10,000 was income from undisclosed sources. No order as to costs was made.
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