T. L. Yenkatarama Aiyar, J. - (1.) The appellant was a Hindu undivided family carrying on business as piece goods merchants in the city of Calcutta. The present proceedings relate to the assessment of its income for the year 1946-47, the previous year thereto being June 12, 1944 to April 24, 1945. In the course of the assessment, the appellant filed a petition under S. 25A of the Income-tax Act, 1922, claiming that there had been a partition in the family on April 24, 1945. On May 27, 1945 the Income-tax Officer enquired into both these matters, the factum of partition and the quantum of income chargeable to tax, and pronounced orders thereon on June 30, 1945. On the petition under S. 25A, he held that the partition was true, and that the family had become divided into five groups. As regards the income assessable under S. 23, the dispute related to six sums aggregating to Rs. 2,30,346 shown in the accounts as the sale proceeds of ornaments. The case of the appellant with reference to these sums was that at the partition the jewels of the family were sold in six lots, that the price realised therefrom was invested in the business, and that the credits in question related thereto. The Income-tax Officer declined to accept this explanation. He observed that while the books of the appellant showed that what was sold was ornaments, the accounts of Chunilal Damani to whom they were stated to have been sold, showed sale of gold. He also pointed out that while the weight of the ornaments according to the partition agreement Ex. A was 3422 tolas, the weight of gold which was actually sold to the purchaser was 3133 tolas. The explanation given by the appellant for this discrepancy was that the jewels in question had come down to the family through several generations, and were not pure. The Income-tax Officer rejected this explanation, because he held that the weight which was actually deducted for impurities in the accounts of the purchaser was almost negligible, and that what was sold was thus pure gold and not gold in old family jewels. He also remarked that the sales were in round figures of 500 tolas, and that "if the assessee had been taking old ornaments broken or unbroken for sale it is inconceivable that on three occasions out of six he took gold weighing 500 tolas in round figure." He also referred to the fact that there was no list of the family jewels, and that there was nothing in the family accounts to show what jewels were held by the family. He accordingly held that the story of sale of family jewels was not true, and that the sum of Rs. 2,30,346 represented concealed profits of the business, and he included the said amount in the taxable income. He also followed it up by an order imposing tax on the appellant under the Excess Profits Tax Act.
(2.) The appellant took both these orders in appeal to the Appellate Assistant Commissioner who again went into the matter fully, and observed that the appellant had been changing his version as to the true character of the sales from time to time. Dealing with the discrepancy of 289 tolas between the weight shown in the partition agreement Ex. A and that appearing in the accounts books of Chunilal Damani, he remarked that while the explanation of the appellant before the Income-tax Officer was that it was due to alloy and brass in the jewels, before him the position taken up was that it was due to pearls and stones which had been removed from the jewels, and that the gold contained in the jewels was pure gold. He did not accept this explanation as, in his opinion, the jewels which were stated to have been in existence for three or four generations should have contained much more of alloy than was shown in the accounts of the purchaser. He also considered that the sale of gold in round figures of 250 or 500 tolas was a circumstance which threw considerable doubt as to the truth of the appellant's version. In the result, he confirmed the findings of the Income-tax Officer, and dismissed the appeals.
(3.) Against these orders, the appellant appealed to the Appellate Tribunal. There, he sought to rely on a certain proceedings book as showing that the family jewels were really broken up, and that what was sold to Chunilal Damani was the gold thus separated. As this proceedings book forms the real sheetanchor of the appellant's contention before us, it is necessary to refer to the facts relating thereto in some detail. On February 20, 1945, the members of the family entered into an agreement, Ex. A, to divide their joint properties among the five branches, of which it was constituted. In Sch. B to this document are set out the jewels to be divided, and their total weight is, in round figure, 3422 tolas. Then we have the proceedings book, and that purports to be a record of the decisions taken by the members of the family from time to time for implementing Ex. A. The minutes of the meeting held on February 23, 1945, show that the pearls and stones imbedded in the jewels were to be removed and divided among the members, and that a goldsmith called Inderban was engaged for the purpose of breaking up the jewels. Then we have the minutes of a meeting held on February 28, 1945, and therein, it is recited that the weight of the pearls, stones and copper removed was, again in round figure, 289 tolas, and deducting this out of 3422 tolas being the weight of the jewels set out in Ex. A, the gold which was available for partition was 3133 tolas. It is recorded that this quantity should be sold in the market and the sale proceeds credited in the capital accounts of the business. And then we have the last of the proceedings dated April 21, 1945, which record that gold weighing 3133 tolas was sold and the price credited in the accounts:Now, if these minutes are genuine and give a correct picture as to what really took place, they would go a long way to support the version given by the appellant as to how he came by the making up a total Rs. 2,30,346. Quite naturally, therefore, the appellant applied to the Tribunal to receive the proceedings book in evidence, and the ground given in support of the application was that it had been filed before the Income-tax Officer but had not been considered by him.;