N. H. Bhagwati J. - (1.) This appeal with special leave is directed against the order of the Income-tax Appellate Tribunal, Madras "A" Bench dated 8-8-1952 made in I. T. A. No. 3254 of 1951-52 allowing the appeal and reversing the order of the A. A. C. in I. T. A. No. 130 of 1949-50 for the assessment year 1948-49 dated 23-6-1951 whereby the A. A. C. had allowed the appellant's claim for a reduction of his total income by Rs. 1,59,240.
(2.) The appellant is a cloth merchant dealing in cloth piece goods and yarn both on wholesale and retail basis at Madurai. The appellant and his brother Abdulla Salay Mohammed were originally carrying on the business in partnership. But the partnership was dissolved during the year 1947-48 and the appellant took over the entire business and became the sole proprietor thereof. For the assessment year 1948-49 (the accounting year being the year ending 31-3-1948) he submitted a return on 7-9-1948 in which he showed a net loss of Rs. 7,224 in his business under the head "business, profession or vocation."
(3.) In the course of the investigation the I.T.O. Madurai found two cash credits in the books of account produced by the appellant showing a sum of Rs. 1,05,000 under date 1-3-1948 representing a draft from the Imperial Bank of India Ltd., Porbandar and a sum of Rs. 53,199-12-6 under date 15-3-1948 representing a draft from the Porbandar State Bank through the Central Bank of India Ltd., Bombay credited to the account of Yamna Bai Ahamed, the maternal grandmother of Kathija Bai Habib, wife of the appellant. The appellant was called upon to explain these entries and he made his statement on 26-1-1949 berate the I. T. O. who recorded the same. His explanation was that the said two sums represented the sale proceeds of gold, jewellery and sovereigns which belonged to Yamunabai who was a native of Ranavav near Porbandar in Saurashtra. His case was that she was living in Ranavav but had come away to Madurai some time in 1947, that she decided not to return to Ranavav owing to the communal disturbances which broke out in August 1947 and empowered the appellant to sell the jewellery, gold and sovereigns situate in her house in Ranavav and bring over the sale proceeds to Madurai and invest the same there, that thereupon he proceeded to Ranavav, took the gold, jewellery and sovereigns from the house to Porbandar and got the same sold through M/s. Shariff Hassan and Brothers and remitted the sale proceeds through Bank drafts to Madurai Rs. 1,05,000 on 1-3-1948 and Rs. 53,200 on 15-3-1948, and that these amounts were credited in her name as deposits in the books of account of the appellant. In proof thereof the appellant produced before the I.T.O. the original invoice relating to the sale of jewels and gold, furnished by M/s. Shariff Hassan and Bros., Shroff Merchants, Porbandar through whom the sales were effected along with a copy of their accounts. The letters received from the Imperial Bank of India and the Central Bank of India evidencing the transmission of funds were also produced.;