Decided on November 13,1951



RAM LABHAYA, J. - (1.) THIS is reference under Section 66(1) of the Income-tax Act from the Income-tax Appellate Tribunal, Calcutta Bench. Two questions of law have been referred to this Court by this reference.
(2.) THESE question arose under the following circumstances. The assessee is a Hindu undivided family firm known as Mangalchand Gobardhandas, Tinsukia. The firm was a dealer in vegetable ghee, ground-nut oil, coconut oil, spices, iron, pans, etc. In its return the firm disclosed a total turnover of Rs. 3,01,053. On this turnover a loss of Rs. 36,803 was shown. The year of assessment was 1946-47. It was conceded that the account books of the firm were defective and it was not possible to ascertain profits or losses of the firm accurately therefrom. The assessment had to be made on estimate. In consequence the turnover was estimated at Rs. 4 lakhs and by applying a flat rate of 6 1/4 per cent, profits were assessed at Rs. 61,803. This finding of the Income-tax Officer was upheld at the appellate stages and is not now in dispute. To the income of Rs. 61,803 as ascertained above, another sum of Rs. 90,000 was added. This sum is composed of moneys received by the encashment of high denomination notes of Rs. 1,000 each. The total sum received by encashment on 21st January, 1946, in different names was larger. Out of a total of 143 notes 97 were encashed by Gobardhandas Agarwalla, the karta of the undivided Hindu family, 40 notes of Rs. 1,000 each were encashed by Sreemati Narbadi Agarwalla, wife of Gobardhandas Agarwalla, and 6 notes were encashed by his driver Sorju Singh. In the view of the Tribunal the assessee could give reasonable explanation for about 47 notes encashed by him. The balance of Rs. 50,000 for which no reasonable explanation was offered was added to his estimated income of Rs. 61,803 as income from undisclosed sources. The assessee is not questioning this finding of the Tribunal also. The sum of Rs. 40,000 which was received by encashment of 40 notes of Rs. 1,000 each in the name of Sreemati Narbadi Agarwalla was according to the assessee property belonging to Sreemati Narbadi Agarwalla exclusively. The assessee had no interest in these notes. The sum received by her represented her stridhan. This contention of the assessee did not prevail with the taxing authorities. The Income-tax Officer when dealing with this contention of the assessee observed as follows : "It has been stated in a written statement before me that the money was received by the assessees wife from her parents. Assessee is an old man and I am not inclined to believe this cock and bull story that the money was given to the assessees wife by her parents. If that was proved then this should have been brought into the business, because, from the accounts I find that there is a running account in the name of Babu Gobardhandass wife, balance of which at the end of 2002 S. stands at Rs. 708-8-9. In the absence of any evidence in support of the contention that this money was received by the assessees wife from her parents, I take it to be the income of the firm not disclosed".
(3.) THE Assistant Commissioner agreed with this finding. It was contended before him that a further opportunity be given to the assessee to prove the source from which the wife of the assessee got the sum of Rs. 40,000 which was in dispute. He declined to give this opportunity, observing that there was no point in giving any further chance to the assessee to produce evidence as he himself admitted that the family including Sreemati Narbadi Agarwalla had no further evidence to produce. He also referred to the amount of Sreemati Narbadi from which it was inferred that the sum of Rs. 40,000 received by encashment of 40 notes in the name of Sreemati Narbadi Agarwalla could not have been her property. The Tribunal also concurred in the above view observing that the story of the assessee that his wife received the sum of Rs. 40,000 from her parents had been rightly disbelieved by the Department.;

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