TaxTMI 
TaxTMI 
TaxTMI 
1960 (9) TMI 99
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...., during the accounting year relevant for the assessment year 1944-45: 1. In the account of Kailash Chand (son of Bachhoolal) ... ₹ 3,200 2. In the account of Mst. Ram Piari (grandmother of Bachhoolal) ... ₹ 3,500 3. In the account of Bachhoolal's mother ... ₹ 1,000 The Income-tax Officer called upon the assessee family under section 23(3) to explain the deposits and to show cause why these amounts should not be treated as revenue receipts of the family. Radhey Shiam, the father of Bachhoolal, made a statement on oath. The statement is as follows: "Ram Piari is my mother. Kailash Nath is my grandson and Kailash Nath's mother is my daughter-in-law. That ₹ 3,500 credited in my mother's name was with her for a long time. ₹ 3,200 are credited in Kailash's mother's account. She was married about 10 years ago. Her father gave her money and on various ceremonial occasions (Munh Dikhai) etc., she was getting money. We also give ₹ 25 p.m. to mother. ₹ 100 credited in Bachhoolal's mother's account are out of savings from the money withdrawn for expenses." 4. This statement of Radhey Shiam was not beli....
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....t. Ram Piari and Bachhoolal's mother respectively were the revenue receipts of the assessee? 2. Whether there was any evidence to prove that this amount could be treated as revenue receipts for the relevant accounting year?" 8. Draft statement of the case was sent to the parties concerned. The Commissioner of Income-tax has no suggestions to make. The assessee desires that some portion of the Income-tax Officer's assessment order for the assessment year 1939-40 be incorporated. The aforesaid assessment order has been made a part of the case and is marked as annexure "B". The statement is finalised. R. L. Gulathi, for the assessee. Gopal Behari, for the Commissioner. JUDGMENT The judgment of the court was delivered by UPADHYA, J.--The questions referred for the opinion of this court are: "1. Whether there was any evidence to prove that the cash deposits of ₹ 3,200, ₹ 3,500 and ₹ 1,000 totaling ₹ 7,700 entered in the account books of the firm Bachhoolal Chotey Lal in the name of Kailash Chand, Mst. Ram Piari and Bachhoolal's mother respectively were the revenue receipts of the assessee? 2. Whether there was any evidenc....
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....lying with Bachhoolal's mother, and these amounts could be available for the deposits in dispute. The Appellate Assistant Commissioner called for the statement of total wealth from the Income-tax, Officer, and annexure "C" is the letter sent by the Income-tax Officer, Lucknow. It appears that the statement of total wealth was not available to the Appellate Assistant Commissioner, and he did not accept the accused's contention. On appeal before the Appellate Tribunal the authorised representative of the Central Board of Revenue attached to the Income-tax Appellate Tribunal, Allahabad, called for the statement of total wealth again and annexure "C" appended to the statement of the case is a copy of the letter sent by the Income-tax Officer to the authorised representative, saying that the miscellaneous file for 1939-40 was not traceable and that the statement of total wealth filed by the assessee as mentioned in the assessment order was also not traceable. The assessee's explanation, therefore, was not accepted and the decision of the Income-tax Officer was affirmed by the Appellate Tribunal in appeal. Learned counsel for the assessee contended that ....
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....e. When the assessee furnishes an explanation, if that explanation is unsatisfactory, that may in itself be a circumstance which the Income-tax Officer may be entitled to take into consideration but it need not necessarily, in every case, lead to the conclusion that the receipt is a revenue receipt taxable as income received in a particular year. The question must always remain a question of fact which has to be decided on the materials available. In each case the revenue authorities are entitled to take into consideration the fact that the explanation given by the assessee is either unreasonable or is false and then to consider whether that circumstance alone or the other materials available along with that circumstance would entitled them to hold that the amount so deposited represented the undisclosed income of the assessee in the year in question." In that case the assessee was a Hindu undivided family and certain deposits appeared in the account books of the assessee in the names of members of the family. On enquiry the assessee offered an explanation that these deposits had been made out of money withdrawn in earlier years. The explanation was not accepted and the amoun....
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....roperly based on the material on the record in the circumstances of that case. In Lal Mohan Krishna Lal Paul v. Commissioner of Income-tax [1944] 12 I.T.R. 441 the assessee was a Hindu undivided family carrying on business and in the account books a sum of ₹ 50,000 was introduced as capital. The Income-tax Officer called for an explanation relating to this amount. It was explained that this sum of ₹ 50,000 was obtained by the sale of gold ornaments. In support of this explanation vouchers were filed as issued by some Poddars. The Poddars denied the transaction but when they were shown the vouchers they admitted that the vouchers appeared to be of their firm. An examination of the vouchers, however, revealed that entries made in them had been made after other entries, which originally existed on them, had been deleted. There was no mention in the assessee's books about the Poddars. The explanation offered was found to be false. The court held that the Income-tax Officer had disclosed to the assessee the material which he had before him and even the source of the information and had invited the assessee to give any further information in support of his story that S....
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....eipt evidenced by the credit entry is a revenue receipt. This case also was one in which the credit entries appeared in the assessee's account books. The Nagpur High Court in R.B.N.J. Naidu v. Commissioner of Income-tax [1956] 29 I.T.R. 194 felt that the view expressed in Madappa's case [1948] 16 I.T.R. 385 by the Madras High Court appeared to be "much widely stated" and chose to agree with the view taken by this court in Mahabir Prasad Munnalal's case [1947] 15 I.T.R. 393. The case before the Nagpur High Court was one where the assessee carried on the business of exhibiting pictures at various cinema houses in Nagpur. He had withdrawn from his accounts considerable sums of money for his expenses. A sum of ₹ 8,500 was credited in the bank account in the name of the assessee's wife. When the Income-tax Officer called for an explanation the assessee stated that he had withdrawn about ₹ 26,000 annually for domestic expenses and the amount represented savings effected by his wife in several years. The Income- tax Officer rejected the explanation and treated the amount as the assessee's money. The Nagpur High Court observed that while the rejec....
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.... these amounts as the income of the firm. The rule, therefore, enunciated by the Supreme Court which is also the basis of the decisions of the various High Courts mentioned above is not available to guide the decision of the court in this case. In Narayan Das Kedar Nath v. Commissioner of Income-tax [1952] 22 I.T.R. 18, 26 the Bombay High Court had to consider a case where certain deposits appearing in the name of the partners of a firm had been taxed as the undisclosed income of the firm. It had been found by the Tribunal that these amounts were actually brought in by means of bank drafts by the partners of that firm. The partners could not give a satisfactory explanation as to how they came by the large amounts introduced by them in the capital of the firm. Chagla, C.J., observed: "Now it seems to me that the assessee firm has discharged the burden which was upon it to explain these credit entries and it has discharged the burden by satisfying the Department that these entries represent genuine remittances received from Jaipur which have gone into the coffers of the firm. When that burden is discharged, it would be for the Department to find that notwithstanding the fact ....
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....he income-tax authorities. In Chaturbhuj & Co. v. Commissioner of Income-tax [1959] 36 I.T.R. 386, 395 a Bench of this court drew a distinction between cases where the explanation given by the assessee is found to be false or unreasonable and cases where the explanation is rejected but is not found to be false or unreasonable or unsatisfactory. Bhargava, J., observed: "In a case where the explanation is only rejected as not proved or for want of proof, no positive circumstance comes into existence which provides material for the Tribunal to draw an inference against the assessee and the inference has to be drawn on other materials available to the Income-tax Appellate Tribunal." In the instant case also the explanation given by the assessee family was not accepted by the income-tax authorities and by the Tribunal but that could not justify an inference that the deposits belonged not to the persons in whose names they appeared but to the assessee family who admittedly had not received it. Mr. Gopal Behari, learned counsel for the Income-tax Department, conceded that the cases on which he relied on behalf of the Department were distinguishable. But if the explanation o....