TaxTMI 
TaxTMI 
1950 (4) TMI 25
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....uestion was effected, was the avoidance or reduction of Excess Profits Tax Liability." 2. The facts of this case are that one Ganga Sahai had four sons, viz., Umrao Singh, Shimbhumal, Raghubir Saran and Ram Sarup. Shimbhumal had a son, Radhey Lal. Umrao Singh had three sons, namely Shib Charan Das, Tirloki Nath and Ram Richhpal. Parbhu Dayal is the son of Shib Charan Das. The family remained a joint Hindu family up to some date in the year 1920 and it used to carry on business of whole-sale cloth dealers, retail cloth dealers and of commission agents. The business was carried on in the names and styles of Firm Gangasahai Umraosingh, Firm Shimbhumal Raghubirsaran and Firm Gangasahai Ramsarup. In 1920 there was a partition in the family....
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....amily business and under these two documents the family business was split up into two parts--Firm Gangasahai Umraosingh and Firm Shimbhumal Raghubirsaran. In the wholesale cloth business, which was being carried on by Firm Gangasahai Umraosingh, Umrao Singh was given one anna share though, under the law, he would have been entitled to two annas, Shib Charan Das got a three annas share instead of two annas and the other two sons of Umrao Singh got two annas share each and this business was placed in the charge of Umrao Singh's sons. The other two firms, Shimbhumal Raghubirsaran and Gangasahai Ramsarup, were combined into one firm under the business name of Firm Shimbhumal Raghubirsaran and in this firm Umrao Singh was not given any shar....
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....Profits Tax. The circumstances are as follows : (1) That no satisfactory reason was furnished as to why Umrao Singh was not given any share in Firm Shimbhumal Raghubirsaran; (2) that no satisfactory reason was given as to why the parent partnership was split up into two units; and (3) that the assessee firm knew that they would have to pay the Excess Profits Tax if the amount of profits was in excess of ₹ 36,000/-. 4. So far as the first two circumstances are concerned, they only go to show that the assessee firm had failed to explain the reason for the splitting up of the parent partnership and for non-allotment of a share to Umrao Singh in the second partnership. It is not disputed that Umrao Singh was not given a share in th....
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.... is again shifted and the prosecution has to prove that the accused is guilty. This case was considered by me in the case of Rex v. Ram Bharosey 1949 A. C. J. 445 : 1949 A. W. C. 532 where I pointed out that the observations of their Lordships partly embodied the provisions of Section 114, illus. A, Evidence Act, and what their Lordships intended to emphasise was that it was for the prosecution to prove that the accused was guilty and the accused had only to explain his possession. Though the observations were made in a criminal case still they are helpful to show to what extent the Court can go when a plausible explanation has been given but the party has failed to convince the Court of the truth thereof. The explanation given on behalf of....
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....atore [1950]18ITR213(Mad) where one of the learned Judges held that the assessee having failed to prove the motive or the reason for the change, the time at which the alteration was made becomes significant and it can properly be assumed that it was done with the main purpose of evading payment of the excess profits tax. Firstly, this would mean that after the Excess Profits Tax Act was amended and Section 10A was added to it, the burden was shifted on to the assessee 10 prove the reason for the alteration if the result of the alteration was to effect a saving in the payment of the Excess Profits Tax. The law is well settled that both under the Income Tax Act as well as under the Excess Profits Tax Act, the burden is on the department to pr....