1948 (3) TMI 35 - HC - Income Tax

High Court upholds Income-tax assessment for Hindu family's secreted profits, citing legal evidence and circumstantial proof.

JADUNANDAN SAHU DEOKISANRAM Versus COMMISSIONER OF INCOME-TAX, BIHAR AND ORISSA

JADUNANDAN SAHU DEOKISANRAM Versus COMMISSIONER OF INCOME-TAX, BIHAR AND ORISSA - [1948] 16 ITR 175 (Pat) Issues:Assessment of income-tax and excess profits tax for an undivided Hindu family.Analysis:The judgment involves two references to the Patna High Court under Section 66(2) of the Income-tax Act regarding the assessment of income-tax and excess profits tax for an undivided Hindu family. The primary question raised was whether there was legal evidence to support the finding of the Income-tax authorities that a specific amount was part of the assessee's income during the relevant accounting year. The Income-tax Officer contended that certain cash credits in the family's business account represented secreted profits rather than capital sums brought from the family chest. The Assistant Commissioner, upon appeal, reduced the sum added to profits from Rs. 84,000 to Rs. 49,300, which was the subject of the reference. The Tribunal was asked to make the reference to the High Court under Section 66(2) for a final decision.The High Court emphasized that the issue at hand was not to evaluate the merits of the conclusion reached by the Income-tax authorities but to determine if there was legal evidence to support their finding. The evidence presented was primarily circumstantial, including the discrepancy in net income compared to the sales turnover and the failure to keep proper accounts of the family's funds. The Court noted that the low profits shown by the assessee, coupled with the lack of clarity regarding the source of funds drawn from the family chest, provided a basis for the Income-tax authorities to draw their conclusion.The Court addressed the argument raised by the assessee's counsel regarding the relevance of the comparison with other mills' profits and the lack of disclosure of their names. It was clarified that the names of other mills were irrelevant, and the assessee was given a fair opportunity to respond to the evidence presented. The Court found that the objection raised by the assessee did not challenge the accuracy of the statement but rather questioned the weight assigned to it, which was a factual matter.In conclusion, the High Court held that there was sufficient legal evidence to support the Tribunal's finding, and therefore, the reference was answered in favor of the Income-tax authorities. The costs were awarded to the Income-tax Commissioner, assessed at Rs. 250. The Chief Justice concurred with the judgment, and the reference was answered accordingly.