MOTILAL BAWALAL Vs. COMMISSIONER OF INCOME TAX
LAWS(BOM)-1962-6-4
HIGH COURT OF BOMBAY
Decided on June 28,1962

MOTILAL BAWALAL Appellant
VERSUS
COMMISSIONER OF INCOME TAX Respondents


Cited Judgements :-

MARUBENI INDIA PVT. LTD. VS. COMMISSIONER OF INCOME TAX [LAWS(DLH)-2010-9-331] [REFERRED TO]


JUDGEMENT

Y.S.TAMBE, J. - (1.)ON a requisition made by this Court the Tribunal has drawn up a statement of case and referred a question of law to this Court under Sub -S. (2) of S. 66 of the IT Act. We are here concerned with the asst. year 1945 -46, the relevant accounting year being 1st April, 1944 to 31st March, 1945. It appears that in May, 1944, the assessee had purchased 425 shares of M/s Suren & Co. Ltd. of Jamnagar, in his own name. Similarly, 425 shares were also purchased by the assessee's wife, Mrs. Manhar Motilal. This fact, however, came to the knowledge of the ITO long after the assessment for the year 1945 -46 had been completed. By a letter dt. 19th Jan., 1954, the ITO made certain enquiries from the assessee and the assessee informed him that the shares were purchased about the month of April or May, 1944. It appears that the ITO made further enquiries as to the source of the funds with which these shares had been purchased. Certain explanations were given by the assessee but not to the satisfaction of the ITO. The ITO, therefore, after obtaining the approval of the CIT, issued notice under S. 34 of the Act for reopening the assessment of the asst. year 1945 -46. During the assessment proceedings it was disclosed that the assessee had made four deposits, three in the month of March, 1944, and the fourth in the month of August, 1944, in his account in the books of M/s Suren & Co. totalling to Rs. 42,500. An account also was opened in the name of the assessee's wife and in that account an amount of Rs. 42,500 was deposited on 17th March, 1944. Almost all the shares of M/s Suren and Co. Ltd. were held either in the name of the assessee or his wife. As regards the source of Rs. 42,500 standing in the name of the assessee's wife, the explanation of the assessee was that it partly came from the sale proceeds of ornaments of the assessee's wife and partly from her savings in the past. As regards the amount of Rs. 42,500 standing to the credit of the assessee himself, the assessee explained that this amount represented the withdrawals made by him from his own business during the Samvat Years 1996, 1999 and 2000. This explanation of the assessee in respect of these two deposits was not accepted by the ITO and the entire amount of Rs. 84,900 was brought to tax by the ITO as income from undisclosed source. As already stated, the assessment was reopened in respect of the asst. yr. 1945 -46. The assessee took an appeal to the AAC but to no avail. He took a further appeal to the Tribunal. Before the Tribunal it was contended by the assessee that the assessee had satisfactorily explained the source from which those deposits were made and his explanation should have been accepted. It was further contended that even if the said sum of Rs. 84,900 was found liable to be taxed, then the appropriate assessment year was not the asst. year 1945 -46 but the asst. year 1944 - 45 as all the amounts except Rs. 300 were already deposited in the financial year 1943 -44. The Tribunal held that the assessee's wife was merely a benamidar, and the IT authorities were justified in holding that the source of Rs. 42,500 was not satisfactorily explained by any satisfactory material on record. The Tribunal also agreed with the Departmental authorities that the assessee had failed to explain the source of the amount in deposit in his own name and that the IT authorities were justified in rejecting the explanation offered by the assessee in that respect. It also agreed with the view of the income -tax authorities that the assessee's wife was merely a benamidar of the assessee. The Tribunal, however, accepted the appeal of the assessee on taking the following view:
"We are of the opinion that while we agree with the IT authorities that the assessee had failed to account for the source of Rs. 84,900 that sum cannot be brought to tax as income of the 'previous year' 1944 -45 ended 31st March, 1945, but must be brought to tax as the income of the account year 1943 -44, except for a small sum of Rs. 300. The sum of Rs. 300 is too small to require any specific explanation from the assessee. We would, therefore, hold that the ITO was not justified in including the sum of Rs. 84,600 (Rs. 84,900 minus Rs. 300) as income of the account year 1944 - 45 relevant for the asst. year 1945 -46. If so advised, the ITO may take suitable action for the asst. yr. 1944 -45."

(2.)THE assessee made an application to the Tribunal under sub - s.(1) of S. 66 of the Act urging that a question of law arose out of the aforesaid observations of the Tribunal and prayed that the question be referred to the Court. His application, however, was rejected by the Tribunal. The assessee then moved this Court under Sub -S. (2) of S. 66 of the Act and on a requisition made by this Court, the Tribunal has referred the following question of law to this Court:
"Whether in law and in the circumstances of the case the Tribunal was justified in finding that the assessee has failed to account for the amount of Rs. 84,600 and observing that the said amount must be brought to tax as income of the accounting year 1943 -44 ?"

Before we proceed to deal with the contentions, it may be stated that during the pendency of this reference, the assessee died and his legal heirs have been brought on record.

(3.)MR . Pandit appearing for the assessee did not advance any argument before us on the first part of the question, i.e., whether in law and in the circumstances of the case, the Tribunal was justified in finding that the assessee had failed to account for the source of Rs. 84,600. The arguments advanced were confined to the other part of the question, i.e., whether in law and in the circumstances of the case, the Tribunal was justified is observing that the said amount must be brought to tax as income of the accounting year 1943 -44, and it is only this part of the question which we are now called upon to answer.


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