Existence of evidence versus sufficiency of evidence: circumstantial material upheld to justify an inference from special knowledge.

The existence of material supporting an inference is a question of law, while the sufficiency of evidence is ordinarily one of fact. On the facts, the assessee gave no satisfactory explanation of the source, quantum, or investment of the capital said to have been advanced, and the circumstances justified a presumption that additional account books existed and were withheld. Circumstantial evidence and general probabilities were treated as adequate material, particularly where the relevant facts lay within the assessee's special knowledge. The finding that the Income-tax authorities had material on record was upheld, and no direction to state a case was warranted.

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Issues: Whether the Income-tax authorities had any material on record to support the finding that the assessee maintained other account books and had failed to show sufficient cause for non-production of them, so as to justify refusal to direct a reference under Section 66(3) of the Income-tax Act, 1922.

Analysis: The distinction between sufficiency of evidence and the existence of any evidence was recognised. While the sufficiency of evidence is ordinarily a question of fact, the existence of material from which an inference can be drawn is a question of law. On the facts, the assessee and his father gave no satisfactory explanation of the source, quantum, or investment of the capital said to have been advanced, and the circumstances justified a presumption that additional account books existed and had been withheld. Circumstantial evidence and general probabilities were treated as adequate material for such a finding, especially where the relevant facts were within the special knowledge of the assessee.

Conclusion: The finding that there was material to support the Income-tax authorities was upheld, and no direction to state a case was warranted.

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