1960 (9) TMI 8 - SC - Income Tax

Supreme Court affirms Tribunal & High Court decisions on income assessment appeal under section 66(2).

Homi Jehangir Gheesta Versus Commissioner Of Income-Tax, Bombay City

The Supreme Court upheld the Tribunal's findings and the High Court's summary dismissal of the petition under section 66(2). The appeal was dismissed with ... Whether every material fact, for and against the assessee, has been considered fairly and with due care? Whether the evidence pro and con has been considered in reaching the final conclusion? Whether the conclusion reached by the Tribunal has been coloured by irrelevant considerations or matters of prejudice? Held that:- We do not think that in a case like the one before us the Department was required to prove by direct evidence that the sum of ₹ 87,500 was income in the hands of the appellant. Indeed, we agree that it is not in all cases that by mere rejection of the explanation of the assessee, the character of a particular receipt as income can be said to have been established ; but where the circumstances of the rejection are such that the only proper inference is that the receipt must be treated as income in the hands of the assessee, there is no reason why the assessing authorities should not draw such an inference. Such an inference is an inference of fact and not of law. For the reasons given above we are of the view that no question of law arose from the order of the Tribunal and we see no grounds for interference with the judgment and order of the Bombay High Court, dated October 4, 1956. The appeal accordingly fails and is dismissed. Issues Involved:1. Validity of the assessment of Rs. 87,500 as income.2. Relevance of discrepancies in the appellant's statements.3. Justification of the Tribunal's findings.4. Appropriateness of the High Court's summary dismissal of the petition under section 66(2).Issue-wise Detailed Analysis:1. Validity of the assessment of Rs. 87,500 as income:The appellant was assessed to income-tax on a total income of Rs. 87,500 for the assessment year 1946-47 under section 23(3) of the Indian Income-tax Act, 1922. The appellant claimed that the amount represented a legacy from his mother, invested by his father and uncle. However, the Income-tax Officer, after considering the materials, concluded that the true nature of the receipt was not disclosed and treated the amount as the appellant's income from an undisclosed source.2. Relevance of discrepancies in the appellant's statements:The Tribunal identified several discrepancies in the appellant's statements:- The declaration dated January 24, 1946, stated that the legacy was invested by both the father and uncle, while the letter dated January 7, 1947, mentioned only the uncle managing the estate.- The letter dated January 7, 1947, claimed that the uncle handed over the money before his death, whereas the affidavit dated September 29, 1949, stated that the executor handed over the money after the uncle's death.- The executor, Kaikhusroo, provided inconsistent statements about finding and handing over the money.The Tribunal concluded that these discrepancies indicated that the appellant failed to satisfactorily explain the source of the Rs. 87,500.3. Justification of the Tribunal's findings:The Tribunal's findings were based on the lack of credible evidence supporting the appellant's claims. It noted the absence of evidence regarding the value of the mother's estate and the investments made. The Tribunal also considered the improbability of the story, given the lack of explanation for why the uncle managed the estate instead of the father and why the money was not handed over to the appellant's sister when she became major or got married. The Tribunal emphasized that the appellant's failure to provide a satisfactory explanation justified treating the amount as income.4. Appropriateness of the High Court's summary dismissal of the petition under section 66(2):The High Court summarily dismissed the appellant's petition under section 66(2), which sought to refer certain questions of law to the High Court. The Supreme Court considered whether the Tribunal's order raised any question of law. The appellant argued that the Tribunal's decision was based on irrelevant considerations and conjectures. However, the Supreme Court found that the Tribunal's considerations were relevant for judging the probability of the appellant's story. The Supreme Court held that the Tribunal's order was not vitiated by irrelevant considerations or prejudice and that the inference drawn by the Tribunal was an inference of fact, not law.Conclusion:The Supreme Court upheld the Tribunal's findings and the High Court's summary dismissal of the petition under section 66(2). The appeal was dismissed with costs, affirming that the assessment of Rs. 87,500 as income was justified based on the circumstances and discrepancies in the appellant's explanations.