Malik, C.J. - (1.) THIS reference arises out of three cases, two of them relate to income-tax assessment for the years 1943-44 and 1946-47 and the third to excess profits tax assessment for the year 1946-17. The assessee is a Hindu undivided family which carries on business in grain, cloth, commission agency, speculation etc. The method of accounting, as given in the assessment orders, is mercantile. The relevant account period for the assessment year 1943-44 was from 20-10-1941 to 8-11-1942. The Income-tax Officer found a cash deposit of Rs. 5,000/- in the capital account of the assessee in the name of Surajmal Suraj Bam entered on 25-10-1941. When he asked the assessee from where this amount had come the assessee stated that it was a part of the amount unspent out of the withdrawal of Rs. 30,000/- on 18-7-1940. For the assessment year 1946-47 the relevant account year was from 17-10-1944 to 4-11-1945. On the first day i.e. 17-10-1944, there were three credit entries in the capital account, a sum of Rs. 50,000/- in the name of Surajmal Suraj Ram as having been received from him, another sum of Rs. 10,000/- as having been received from Srikishan Dass and a third sum of Rs. 5,000/-as having been received from Dharam Dass. Surajmal Sura] Ram, Shrikishan Dass and Dharam Dass are all members of the Hindu undivided family.
(2.) THE explanation given by the assessee was that Surajmal Suraj Ram had withdrawn a sum of Rs. 50,000/- on 10-9-1936, andamp; two sums of Rs. 10,000/- andamp; Rs. 5,000/- were respectively withdrawn by Srikishan Dass and Dharam Das on 18-7-1940, and that it is these three items that had been brought back and redeposited on 17-10-1944. THE explanation given by the assessee as regards these 3 items was rejected. THE Tribunal pointed out that the assessee could not have kept such large sums of money lying idle for such long periods and the assessee must have utilised the amounnts withdrawn to make other profits; that the assessee carried on business on a large scale and it was not expected that the assessee would instead of investing these large sums let them remain idle; that it was not believable that all these sums would be kept at the family house at Jaselmair where only women and servants resided; and that the assessee had bank accounts and it was not likely that if the money was withdrawn and not utlised the money would not be put back in the business or deposited in the bank and would be allowed to remain unproductive in the hands of the various members of the family, THE Tribunal might also have noticed that, if the sum of Rs. 50,000/- withdrawn by Surajmal Suraj Ram on 10-9-1936, (and not 1933 as mentioned by the Appellate Assistant Commissioner) had remained undisposed of in the hands of the assessee, there was no reason why on 18-7-1940, he should have withdrawn from business another sum of Rs. 30,000/- and deposited Rs. 5,000/- out of the latter sum on 25-11-1941, and the sum of Rs. 50,000/- not till 17-10-1944. We have no hesitation, therefore, in agreeing with the Tribunal that there was sufficient material on which the Tribunal could hold that the explanation given toy the assessee was false. The next question that arises is whether it was a reasonable inference that these sums represented secret profits made during the relevant account year. We find from the assessment order of the year 1943-44 that in that year the business income of the assessee was computed at a figure of Rs. 47,666/-. The assessee, as has already been said, carried on extensive business in grain, cloth,, commission agency and speculation. The explanation given by the assessee having been rejected andamp; it having been found that he had given false explanation as to the receipt of these items, it could not be said that the inference drawn by the revenue authorities that this represented secret profits of the year in which the amounts were entered was unreasonable. It has been urged by Shri Pathak that the burden of proving that any receipt is assessable income rests on the Income-tax Officers and the mere fact that the explanation given by the assessee is false does not warrant the inference that the receipt is taxable income. Shri Jagdish Swamp on behalf of the Department has urged that if it appears from the account books of the assessee or otherwise that, in the relevant account period, the assessee has received a sum of money, the burden lies on the assessee to show that that amount is not taxable income; and, if the explanation given by the assessee is unsatisfactory, the Income-tax Officer can assume that the amount must be taxable income. A large number of cases have been cited at the Bar which Shri Jagdish Swarup has divided into three groups. The first group relates to cases under Section 10A, Excess Profits Tax Act, the second group relates to cases under Section 34, Income-tax Act and the last group relates to the question of assessment under Section 23 (3), Income-tax Act. According to Shri Pathak, there is no justification in this grouping and he has contended that the same principle should govern all these cases. We are, however, inclined to agree with Shri Jagdish Swarup that the cases have to be grouped in the manner suggested by him.
(3.) THE relevant portion of Section 10A, Excess Profits Tax Act reads as follows: "10A (1) Where the Excess Profits Tax Officer is of opinion that the main purpose for which any transaction or transactions was or were effected ............. was the avoidance or reduction of liability to excess profits tax, he may .............make such adjustments as respects liability to excess profits tax as he considers appropriate ........" If, as a result of a transaction entered into by an assessee, the liability to excess profits tax is affected and the Excess Profits Tax Officer claims that that transaction was entered into with the definite purpose of evading liability to excess profits tax, the burden must be on him to prove that the main purpose behind the transaction was avoidance of the payment of the tax. To this effect are decisions in -- 'Ganga Sahai Umrao Singh v. Commr. of Excess Profits Tax, U. P., C. P. and Berar', A. I. R. 1950 All. 595 (A), a decision by this Bench; in -- 'Hajee Mohammad Ibrahim andamp; Co. v. Commr. of Excess Profits Tax, Madras', AIR 1953 Mad. 221 (B), a decision of the Madras High Court; and in -- 'Amritsar Rayon and Silk Mills, Ltd. v. Commr. of Income-tax East Punjab', (1952) 21 I. T. R. 548 (Punj) (C), a decision of the East, Punjab High Court. In the second group of cases falling under Section 34, Income-tax Act, it must be borne in mind that the assessment was once completed and the Income-tax Officer wants to reopen the same, the burden must, therefore, lie on him to show that there was sufficient justification for re-opening the proceedings which had once been concluded. The cases cited before us relate to a period before 1948 when Section 34, Income-tax Act was not amended, and it is not necessary for us in this case to consider the effect of the amendment, nor is it necessary to discuss those cases at any length. Those cases are -- 'Laljimal Girdhar Das v. Commr. of Income-tax', U. P.', 1951-19 I. T. R. 418 (All.) (D) again a decision by this Bench; -- 'Radhey Lal Jawahar Lal v. Commr. of Income-tax, U. P.', Misc. Case No. 3 of 1949, D/-16-1-1952, (All) (E), by this Bench but (unreported); -- 'Lal Mohan Krishna Lal v. Commr. of Income-tax, Bengal', A. I. R. 1945 Cal. 62, (P), and a Full Bench case of this Court in -- 'In re Ram Datta Sita Ram of Basti', 1947-15 I. T.R., 61 (All) (P. B.) (G). In those cases the burden of proving that it was taxable income of the relevant years was placed on the Income-tax Officer. On the other hand, in--'Mahabir Prasad Munna Lal v. Commr. of Income-tax', AIR 1947 All. 414 (H) where the assessee's explanation was rejected, it was held that in each case it would be a question of fact andamp; the answer would depend on the finding whether the inference was a reasonable inference from the assessee's failure to prove his case.;