TaxTMI 
TaxTMI 
1957 (2) TMI 57
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....mmission for the sugar produced in the season 1944-45 and onwards. A copy of the said letter is made a part of this case and is annexure 'A'. In the assessment year 1946-47, relevant for the accounting year ending on 7th November, 1945, the assessee company received a sum of Rs. 20,270-5-3 as commission which amount was earned by it on sales of sugar from 1st October, 1944, to 30th September, 1945. This amount was sent by cheque by the said Aira Sugar Factory as evidenced by the said factory's letter dated 10th October, 1945. The assessee company however did not receive any commission in the assessment year 1947-48 although according to the terms of the agreement the sum of Rs. 15,432 accrued to the assessee company. Since the company did not receive any commission in the year relevant for the assessment year it did not incorporate the income in its trading and profit and loss account for the year ending 27th October, 1946, relevant for the assessment year and having received the said sum of Rs. 15,431-9-0 it incorporated the amount in the trading and profit and loss account for the year ended 13th November, 1947, relevant for the subsequent assessment year 1948-49. Thi....
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.... the assessee from 20th December, 1945, to 12th January, 1946, is also enclosed as annexure 'D' showing that on 20th December, 1945, the balance remained at Rs. 13,537-8-9 and steadily increased to Rs. 34,313-1-9. The assessee company's counsel argued before the Tribunal that these high denomination notes were kept in the cash balance for the purpose of facilitating counting of money. The Tribunal held as follows : " We cannot entertain this argument because cash is maintained by a businessman for the purpose of his business and not because it facilitates his counting. We however consider that there will be some force in an argument that in such a large cash balance collected during the course of business there will be some currency of high denomination." The Tribunal however for reasons given in its order estimated that there might be the possibility of 7 high denomination notes amounting to Rs. 7,000 remaining in the company's cash balance and therefore it directed the exclusion of this amount from the total computation of the income. The balance was held by the Tribunal to be inc....
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....essee company as income relating to the subsequent assessment year 1948-49. The Income-tax Officer, however, held that this income had accrued to the assessee during the previous year corresponding to assessment year 1947-48 and, consequently, added it to the income for that year and included it in the assessment. A second point, that cropped up before the Income-tax Officer, related to the encashment of 32 high denomination currency notes of Rs. 1,000 each by the assessee company on 12th January, 1946, when the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, came into force. The Income-tax Officer called upon the assessee to explain how those 32 currency notes of Rs. 1,000 each came into possession of the assessee. The assessee claimed that the currency notes represented part of his cash balance which, on 12th January, 1946, stood at the figure of Rs. 34,313-1-9. The Income-tax Officer rejected this explanation and, consequently, held that the amount of Rs. 32,000 represented by those currency notes of Rs. 1,000 each to be suppressed income of the assessee from some undisclosed source. The assessee appealed unsuccessfully before the Appellate Assistant Commission....
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....session of high denomination currency notes. The use of high denomination currency notes depended upon convenience of the individual possessing them and upon the nature of the transaction that he may have to go through. It was only when the High Denomination Bank Notes (Demonetisation) Ordinance of 1946 came into force on the 12th of January, 1946, that it became necessary in this case for the assessee company to explain its possession of those currency notes. The assessee company had naturally not kept any statement indicating when it received each one of those currency notes, because, at the time when it received them, it had no idea that it would be required to give such an explanation and, therefore, it was not in a position to prove how and when it came into possession of those currency notes. The assessee company, however, gave an explanation which, it appears to us, was fairly satisfactory and which the Tribunal has not found to be false. On 12th January, 1946, the assessee company had a cash balance of Rs. 34,000 and odd and, consequently, there is the possibility that the assessee company had 32 currency notes of Rs. 1,000 each in its possession as part of that balance. Th....
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....nsactions amounting to several hundreds, such as Rs. 380 (which is a figure that occurs very frequently on these dates the payer might have chosen to hand over currency notes of Rs. 1,000 asking for the return of the balance in notes of lower denomination. These entries could not, therefore, in any way, indicate that these 32 currency notes of Rs. 1,000 each could not have come into the hands of the assessee in the course of its business transactions and could not have formed part of its cash balance. The Tribunal has also referred to another statement of the cash balance of the assessee on each day beginning with 20th December, 1945, and ending on 12th January, 1946. The Tribunal noted from this statement that the cash balance of the assessee company was steadily increasing. If the cash balance of the assessee company was steadily increasing it would not be at all unreasonable to accept the explanation given by the assessee company that, for the sake of convenience, the cash balance was being kept in high denomination currency notes. High denomination currency notes could be stored more easily and, at the time of accounting, they would have facilitated counting. Since the balance ....