TaxTMI 
TaxTMI 
1961 (7) TMI 3
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....alcutta Bench) in appeals filed by the department against the order of the Appellate Assistant Commissioner. The Tribunal reversed the order of the Appellate Assistant Commissioner and restored that of the Income-tax Officer. Kanhaiyalal Lohia made petitions under section 66(1) to the Tribunal setting out a number of questions of which the following was referred to the High Court : " Whether in the circumstances of this case where the Income-tax Officer, District III(2), separately assessed the business run in the name of Brijlal Nandkishore as belonging to a partnership firm consisting of Brijlal and Nandkishore, the Income-tax Officer, Non-Companies E.P.T. District, can assess the income from the same business in the hands of the asses....
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....Brijlal's son Nandkishore Lohia. The properties of Kanhaiyalal Lohia were self-acquired, and he was always assessed as an individual. He maintained accounts according to the Ramnavami year. In his return for the account year, April 14, 1943, to April 1, 1944 (corresponding to the assessment year 1944-45), he indicated that he had closed down in the middle of 1943 his purchasing centres in East Bengal, which stood in the name of Nandkishore, and that he had gifted to his brother Rs. 5,11,101 on July 12, 1943, and to his nephew, Rs. 2,50,000 on September 30, 1943. He showed the income of his East Bengal business only up to the closure of that business. Brijlal and Nandkishore entered into partnership between themselves, and started a busin....
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....Mazumdar who was questioned by the Income-tax Officer without notice to Kanhaiyalal Lohia and whose statement was also recorded. Kanhaiyalal Lohia objected to this procedure, but the Income-tax Officer, it is alleged, paid no heed to his protests, and on March 31, 1950, the assessment was completed, and the income of the branches under the direct control of " Brijlal Nandkishore " was pooled with the income of Kanhaiyalal Lohia. The Income-tax Officer held that the gifts were not bona fide and were colourable transactions. He relied upon the statement of Sri A. L. Mazumdar, which was recorded when Kanhaiyalal Lohia was not present. Against the assessment, Kanhaiyalal Lohia appealed to the Appellate Assistant Commissioner, before whom two....
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....ry 8, 1953. This court has pointed out in Chandi Prasad Chokhani v. State of Bihar and Indian Aluminium Co. Ltd. v. Commissioner of Income-tax that the two cases in which this court interfered with appellate orders of a Tribunal and relied upon before us, were of a special kind. In Dhakeswari Cotton Mills' case there was a breach of the principles of natural justice, and that was held sufficient to entitle an aggrieved party to come to this court against the appellate order of the Tribunal under article 136. In Baldev Singh's case, this court entertained an appeal against the appellate order of the Tribunal because limitation to take other remedies was barred without any fault of the assessee concerned. The ratio in each of these cases i....
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....orded as follows : Mr. Mazumdar is questioned by me as to what he knows regarding the alleged gift as recorded in the books of Kanhaiyalal Lohia in favour of Brij Lal and Nand Kishore. He says that I don't remember things very distinctly but I can say that the gifts to Brij Lal or Nand Kishore were not made in my presence as alleged. Mr. Kanhaiyalal Lohia used to tell me that his brother and nephew are idling away their time, hence I shall give them a gift and make them work by that money. The partnership deed was most probably drawn up by me. The gift was reported to have been made to Brij Lal and Nand Kishore before I should have taken up the drafting of the deed. Kanhaiyalal told me several times that he wanted to separate his brot....
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....as made to them to put them on their legs. Suddenly in the year 1943, Kanhaiyalal Lohia made up his mind to put them in business with a gift of the order of Rs. 7,60,000 odd. For this purpose, he had to overdraw his accounts with the bank and to pay interest to the bank. It does not appear why he felt that the establishment of his brother and nephew in business should be made on such a grand scale, which involved him in debt. This circumstance, taken with the fact that Mr. Mazumdar stated that he had always complained that they were good for nothing and were idlers, makes the transactions suspicious. It was presumably done with a view to reduce the assessable profits in the hands of Kanhaiyalal Lohia, and, on the evidence, the Tribunal w....