Circumstantial evidence can support an inference that head office accounts existed, and non-production may remain unexplained.

In an income-tax reference, the Court held that while the sufficiency of evidence is a question of fact, the existence of some material supporting the authority's finding remains open to judicial review. Circumstantial evidence, business structure, money flows between the private chest, bank account and separate businesses, unexplained receipts and payments, and the absence of house-construction accounts were enough to support an inference that a head office set of accounts existed. The Court further accepted that probabilities and circumstantial evidence may be relied upon where relevant facts lie within the assessee's special knowledge. The finding that no sufficient cause was shown for non-production of the accounts was therefore upheld.

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Issues: Whether there were materials upon which the Assistant Commissioner could find that a head office set of accounts was in existence and that no sufficient cause was shown for non-production of those accounts.

Analysis: In a reference under the Income-tax Act, the Court confined itself to the question of law whether there was any evidence, direct or circumstantial, supporting the finding reached by the income-tax authorities. It held that the sufficiency of the evidence was a question of fact, but the existence of some material on which the finding could be based was open to judicial review. The assessee's business structure, the flow of money between the private chest, the bank account and the separate businesses, the unexplained payments and receipts, and the absence of accounts for house construction constituted circumstances from which the existence of a head office set of accounts could reasonably be inferred. The Court also accepted that circumstantial evidence and probabilities may be relied upon, especially where the relevant facts are within the special knowledge of the assessee.

Conclusion: There were materials on which the Assistant Commissioner could lawfully find that a head office set of accounts existed and that the assessee had not shown sufficient cause for failing to produce them.

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