TaxTMI 
TaxTMI 
1964 (4) TMI 22
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....with free board and lodging. Clause 4 of the agreement provided that the net profits of the business shall be as shown in the profit and loss account of the business. On the same day, a power of attorney (annexure " B ") was executed by Ayyaru in favour of the assessee, enabling him to carry on the business of a cloth and general merchant, being carried on at No. 182, Selgie Road, Singapore. It appears that on September 29, 1945 (annexure " C "), Ayyaru sold the said business and the goodwill thereof, with the other assets of the said business, at the price of $ 4,441.78. By an assessment order dated December 30, 1950, for the assessment year 1947-48, the Income-tax Officer assessed the remittances from Singapore at Rs. 61,538. He assessed profits at Rs. 2,10,600 which covered the remittances. The Income-tax Officer came to the following conclusion : " (1) The assessee was the sole manager of the old Thyagesan and Company remunerated by a large share of profits for his sole conduct of the business. (2) The alleged profits of $ 1,10,000 for the entire period of five years and the assessee's share thereof $ 11,000 are not correct and they have not been proved to be correct by t....
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....ture of this credit. He agreed with the Income-tax Officer that the income declared by the assessee could not be accepted, but he held that all the credits in Ayyaru's account could not be treated as unexplained and suspicious. He came to the conclusion " that in the absence of accounts showing the exact income which the appellant got from this source I think his income inclusive of the profit from his own business may be put at Rs. 1,80,000. This will be substituted for the sum of Rs. 2,10,600 estimated by the Income-tax Officer ". He estimated the remittance at Rs. 30,000, instead of the sum of Rs. 61 538 adopted by the Income-tax Officer. Regarding the assessment year 1948-49, the Appellate Assistant Commissioner estimated the income of the asseessee from business in Singapore as follows : -------------------------------------------------------------- Rs. A. P. ----------------....
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....per to evidence this transaction. There is, of course, the affidavit of Ayyaru Mudaliar speaking to the version put forward by the assessee, but we are not inclined to place any reliance upon it. Dealing with the question of remittances, it held as follows : " The intention with which the monies were sent to Pudukkottai is quite plain. It cannot be said that the income-tax department was wrong in concluding that the assessee would not have remitted monies to Pudukkottai, if the same were not his own profits. Even judging from another angle, the assessee's version cannot be believed. If the money was needed for business what need was there for putting the money as fixed deposit in Pudukkottai banks? Then again, the assessee says that he kept a sum of $ 87,500 belonging to Ayyaru Mudaliar to finance the business operation in Singapore. That obviously seems not to have been done. The purchase of properties soon after would only strengthen the conclusion of the department. We see no basis whatsoever for the assertion of the assessee that the purchases of properties were made from borrowings and that the fixed deposit was kept safe at Pudukkottai so that Ayyaru Mudaliar may be rep....
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....ns. The assessee's case, it should be remembered, was that his 10 per cent. of the profits came to 11,000 dollars. If so, the total profit of Thyagesan and Company for five years should have been 1,10,000 dollars, which was the assessee's case. The Tribunal was not inclined to accept the claim of the assessee that his share of the profits amounted only to 11,000 dollars. In arriving at an estimate of the assessee's share of the profits, the Tribunal should also take into account what the total profits should have been and what the assessee's share of the profits was. " We may mention that a further statement of the case, with the directions reproduced above, was uncalled for. As held by this court in Petlad Turkey Red Dye Works Co. Ltd. v. Commissioner of Income-tax the supplemental statement of the case may contain such alterations or additions as the High Court may direct but the statement must necessarily be based on facts which are already on the record. The High Court had no power to ask for additional evidence to be taken. The Tribunal submitted a fresh statement of the case, and it stated that it had come to the following conclusion : " (i) that there is no proof that ....
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.... The appellant having obtained leave from this court, the appeals are now before us for disposal. As the High Court rightly observed, the real controversy between the assessee and the department was on the issue whether the sum of 87,500 dollars, which was credited to Ayyaru in the assessee's account on January 7, 1946, was Ayyaru's money, which had been borrowed by the assessee or, whether the entry was fictitious and the money really belonged to the assessee himself. This question is really one of fact and unless the finding of the Tribunal is vitiated, the High Court had no jurisdiction in a reference to reverse the findings. The High Court was cognizant of the limitations of its jurisdiction. The High Court, however, has held that the finding of the Tribunal that 87,500 dollars represented the accumulated income of the assessee was vitiated by a wrong approach of the Tribunal. It has been urged by Mr. Kapur, the learned counsel for the appellant that the Tribunal adopted the right approach. It was for the assessee to explain the credit of 87,500 dollars standing in his books, and he having failed to show that this sum was borrowed from Ayyaru, the conclusion was irresistibl....
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...., 1946: ------------------------------------------------------------------------------ "Sale proceeds of balance of goods relating to the business carried on in the name of Thyagesan and Company (Old Thyagesan and Company)from 23rd September, 1940, to 29th September, 1945 87,500.00 Value of goods of old Thyagesan and Company, transferred to No. 180 12,035.15 Value of sundries of old Thyagesan and Company being the entire balance transferred to No. 180 6,807.95 India....
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.... --------------- Net credit 79.899.07 --------------- ------------------------------------------------------------------------------ In respect of the first item of 87,500 dollars, the case of the assessee was that this represented sale proceeds of goods belonging to Ayyaru, and that he loaned this money to the assessee. The assessee had no capital with him when he started life in Singapore, on a salary 18 dollars a month, plus 10% profits. That the sum of 87,500 dollars was actually not used for business at Singapore is clear from the remittance....