MASUD, J. - (1.) THE question required to be answered in this reference is stated as follows: "Whether there was any legal admissible evidence to justify the Tribunal's finding that the deposits of Rs. 1,40,000 were the assessee's income from undisclosed source ?"
(2.) THE reference has arisen under the following circumstances. THE applicant, a limited company, was carrying on business at all material times in jute. In the books of accounts of the assessee- company, maintained at Raninagar, Darwani and Domar, there were several cash credits totalling Rs. 1,40,000 in the names of some persons, as stated below : In Raninagar Books : The assessee was asked by the ITO to explain the source of these amounts. The assessee's explanation before the ITO was that the amount in question was received from the firm of M/s Surajmull Nagarmull to which the assessee was an associate company. The names of the parties, according to the assessee, were suggested by the said firm. The assessee produced from the said firm a statement to the effect that the loans in question were advanced by the firm in the names of the above persons. The assessee also stated that the said firm had a cash amount of Rs. 16 lakhs, possession of which was admitted by them before the Income-tax Investigation Commission and that the amounts shown in the said assessee's books of accounts in Raninagar, Darwani and Domar came out of the said amount. In the premises, the assessee contended that the amount belonged to the said firm and should not be added to the income of the assessee-company. The ITO rejected the explanation of the assessee and the said sum of Rs. 1,40,000 was added as the income of the assessee-company from undisclosed sources. An appeal was filed by the assessee before the AAC without any success. The Tribunal also, on second appeal, rejected the said explanation put forward on behalf of the assessee-company. The Tribunal found that the amounts had been introduced in the names of petty employees of the assessee- company and there was no evidence that these employees were the benamidars of M/s Surajmull Nagarmull. Further, the Tribunal was of opinion that mere acceptance of the deposits by the said firm as their own, two years after their own affairs with the Investigation Commission were disposed of, could not be a satisfactory explanation. On these facts, the above question was referred to this Court. Dr. D. Pal (with Mr. A. K. Roy Choudhury) has contended before us that the finding of the ITO to the effect that the said amount of Rs. 1,40,000 is the suppressed income of the assessee-company from undisclosed source is a finding arrived at without any evidence at all. The amounts credited in the books of account of the assessee-company are admitted in writting by M/s Surajmull Nagarmull as their own money and, as such, the inference of law that the said sums belonged to a secret Names : Date : Amounts : . . Rs. 1. Suresh Chandra Podder 28-10-46 20,000 2. Do. 23-11-46 10,000 3. Pannalal Agarwalla 28-10-46 40,000 In Darwani Books : . . 4. Satnarain Agarwalla 24-10-46 20,000 5. Debi Dutta Agarwalla 30-11-46 15,000 In Domar Books : . . 6. Banwarilal Oswal 3-12-46 20,000 7. Nripendra Chandra Roy 8-12-46 15,000 . Total 1,40,000 income of the assessee- company is based on no positive evidence. According to Dr. Pal, the initial discharge of explaining the cash credits certainly lies with the assessee, but the assessee has explained satisfactorily the said receipts by getting the explanation corroborated by M/s Surajmull Nagarmull. This fact is further supported by the fact that M/s Surajmull Nagarmull before the Investigation Commission did admit that a sum of Rs. 16 lakhs remained as an idle cash of the firm. Further, it is urged that when M/s Surajmull Nagarmull's identity is established and it is well- known that the said firm has means to pay, the Department should not have refused the assessee's explanation without any materials. Thus, one onus to explain the receipt of the said sum of Rs. 1,40,000 has been discharged by the assessee and the Department should not have included the said sum of Rs. 1,40,000 as the suppressed income of the assessee from an undisclosed source.
(3.) MR. Balai Pal, learned counsel for the respondent, has submitted that the Tribunal's order should not be interferred with by the High Court in its jurisdiction under s. 66(1) of the IT Act, inasmuch as the Tribunal's conclusion cannot be said to be based on no evidence or that such conclusion is perverse. Further, by referring us to the records of the income-tax proceedings for 1948-49 and 1947-48, he has asked us to hold that, although the assessee was given all the opportunities to the assessee and also M/s Surajmull Nagarmull, no satisfactory evidence was made available by the assessee-company to the Department (sic). He has therefore argued that the said sum being the income of the assessee-company from undisclosed source has rightly been included in the assessee-company's income and assessed. Several cases were referred to us by the learned counsel for the assessee and the Revenue and we may now discuss them. The first case relied on by Dr. Pal is Mehta Parikh and Co. vs. CIT (1956) 30 ITR 181 (SC). which happened to be a case on high denomination notes. The assessee encashed on 18th January, 1946, high denomination notes of Rs. 1,000 each, of the face value of Rs. 61,000. The ITO rejected the assessee's explanation and assessed the whole amount as undisclosed profit. Before the AAC, however, the assessee produced affidavits from some persons to the effect that Rs. 43,000 were paid in one thousand rupee notes during the relevant period. The AAC did not accept the affidavits and confirmed the order of the ITO. The Tribunal thereafter accepted the assessee's explanation as to Rs. 31,000, but rejected as to Rs. 30,000. The Bombay High Court confirmed the Tribunal's order. The Supreme Court, in allowing the appeal and reversing the High Court's order, made the following observations at page 189 : "It follows, therefore, that facts proved or admitted may provide evidence to support further conclusions to be deduced from them, which conclusions may themselves be conclusions of fact and such inferences from facts proved or admitted could be matters of law. The Court would be entitled to intervence if it appears that the fact finding authority has acted without any evidence or upon a view of the facts, which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question." ;