Sabyasachi Mukhakji, J. - (1.) The assessee, one S. C. Madha (since deceased), migrated with his father to Burma some time in the year 1901, from their native village at Variav in the erstwhile State, of Baroda. In Burma, the assessee started a business in partnership with his father in the name and style of E. C. Madha & Bros, and this firm became prosperous. The father of the assessee, Mr. E. C. Madha, died in 1946, and, thereafter, the firm had been carried on in partnership between the assessee and his sons. It appears that the assessee had an ancestral property in Calcutta being premises Nos. 68/1 and 68/2, Lower Chitpur Road, which had been let out to tenants. After the bombing of Rangoon and threat of invasion of Burma by the Japanese, the assessee evacuated to India, some time in January, 1942, and returned to Burma on or about the 10th of February, 1946. On instructions from M/s E. C Madha & Bros, of Rangoon, the National Bank of India Ltd., remitted a total amount of Rs. 5 lakhs between 5th April, 1946, and 10th April, 1946, to its branch in Calcutta where an account had been opened in the name of the firm. Again, on 26th October, 1947, a further sum of Rs. 2 lakhs was transferred from the firm's account with the National Bank of India Ltd., Rangoon, to its account in the National Bank of India Ltd., Calcutta. Out of this amount of Rs. 7 lakhs remitted from Rangoon to the firm's account in Calcutta, Rs. 5 lakh's was utilised for the purchase of two properties in Calcutta being premises No. 12, Ram Lochan Mullick Street, Calcutta, and 16, Zakeria Street, Calcutta, in the name of the assessee during the calendar years 1948 and 1949. On 8th April, 1953, the assessee filed a voluntary disclosure petition before the income-tax department, at Calcutta and also filed nine voluntary returns for the years 1944-45 to 1952-53, disclosing certain income from the properties in India and income from business in Burma for these years and also declaring the status to be non-resident. Inasmuch as returns were filed beyond the time the Income-tax Officer issued notices under Section 34(1)(a) of the Indian Income-tax Act, 1922, for the assessment years 1947-48 and 1948-49. The Income-tax Officer assessed the assessee in the status of a resident but not ordinarily resident on the total income of Rs. 6,24,478 and Rs. 3,55,214 for these two years respectively including therein remittances from Burma at Rs. 5 lakhs and at Rs. 2 lakhs, respectively. In determining the assessee's residential status in these two assessments, the Income-tax Officer had relied on the fact that the assessee had not given him the information that was required for determining the assessee's residential status and also the fact that the assesses had property in Calcutta and Bombay. The Income-tax Officer had presumed that it would be reasonable in those circumstances to hold that the assessee had resided during his long stay in India and wherefrom the assessee attended to his multifarious business activities in Bombay and Calcutta. It is admitted that the assessee purchased a piece of land in Bombay some time in 1942, but no house had been constructed therein up to the end of the two accounting years.
(2.) The assessee preferred appeals before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held that the Income-tax Officer had proceeded merely on the basis of surmise and he remanded the case back to the Income-tax Officer to make certain enquiries. The Income-tax Officer made certain enquiries and made a remand report which is at pages 20 to 22 of the paper-book. When the matter again came up before the Appellate Assistant Commissioner, he observed that again the Income-tax Officer had merely gone on presumption which was not enough, according to the Appellate Assistant Commissioner, to determine the residence of the assesses in the taxable territories. The Appellate Assistant Commissioner, therefore, decided the issue of residence on the basis of the materials before him. He took into consideration the disclosure petition filed by the assessee on the 8th April, 1953, and the assessee's affidavit affirmed on 1st July, 1953, and certain income-tax proceedings of the assessee before the State authorities of the then Indian State of Baroda within which the assessee's native village, Variav, was situated before its merger with the Union of India. In his disclosure petition the assessee had stated that the assessee was a resident in India upto the year 1945 and a semi-resident from 1945 to 1947 and since then, according to the assessee, he had been a non-resident in India. From this the Appellate Assistant Commissioner concluded that on his own admission the assessee was a resident in India fromt 1942 to 1949 and during the years 1945 to 1947 he was in India for a part of the period and for the remaining part he was outside India. The Appellate Assistant Commissioner also referred to the assessee's income-tax proceedings in the State of Baroda before its merger with the Union of India for the assessment year 1942-43. Certain statements of the assessee's son, Ahmad Suleman Madha, who represented the assessee in these proceedings were recorded, Ahmad Suleman Madha had stated that in 1942 as the war broke out they had come and settled in Variav with their families. They also maintained a house in Bombay and stayed there and also an office in Bombay. In 1943 a soap shop bad been started in Bombay and accounts of the same were maintained at Bombay, The office had been transferred from Rangoon to Bombay. There was also a report from Sar Suba Saheb, who seems to be an officer of the income-tax department of the Baroda State, wherein he had stated that the assessee stayed with his family in a building maintained at Bombay in all luxury. In these circumstances, the Appellate Assistant Commissioner held that on his own statement in the disclosure petition and from the records of the income-tax proceedings of the Baroda State, it was clear that during the four preceding years the assessee had been in the taxable territories for a period of 365 days and after coming to India he had all along stayed in Bombay and was engaged in soap business there. Therefore, according to the Appellate Assistant Commissioner, the first part of Section 4A(a)(iii) of the Indian Income-tax Act, 1922, was fulfilled. The Appellate Assistant Commissioner further held that so far as the second part of the said clause is concerned, the fact that the assessee was in the taxable territories during the previous year and his visit on that occasion was neither casual nor occasional would be established by the affidavit of the assessee filed on the 1st of July, 1953. The Appellate Assistant Commissioner in those circumstances held that for the assessment year 1947-48, the assessee was in the taxable territories during the year otherwise than on occasional or casual visit. The Appellate Assistant Commissioner further held that on the same basis the first part of Section 4A(a)(iii) of the Act was fulfilled also for the assessment year 1948-49 and for the second part the assessee's affidavit showed that he came to India after 9th of September, 1947, where he resided for two months and for the rest of the year he was at Variav. The Appellate Assistant Commissioner, therefore, was of the opinion that for the assessment year 1948-49 the second condition of Section 4A(a)(iii) was also fulfilled. The Appellate Assistant Commissioner, therefore, was of the opinion that the status of the assessee has been correctly determined by the Income-tax Officer. It was then contended before the Appellate Assistant Commissioner that the two amounts had been remitted by the firm of E. C. Madha Bros, of Rangoon from its account in the National Bank of India, Rangoon, to its account in the National Bank of India, Calcutta, Though ultimately the remittances were utilised by the assessee for investment in properties in subsequent years there was no evidence, according to the assessee, by which a finding in terms of Section 4(1)(b)(iii) of the Indian Income-tax Act, 1922, could be sustained. The Appellate Assistant Commissioner rejected the said contentions.
(3.) There was a further appeal before the Tribunal. The assessee died in the meantime and was represented by his legal representatives. Before the Tribunal it was contended on behalf of the assessee that even assuming that the assessee was in the taxable territories for a period of 365 days during the four years preceding the previous year and even assuming that the assessee was on a visit to India during the relevant previous year, there was no evidence upon which it could be held that such visit during the previous year was otherwise than of a casual or occasional nature. So far as the assessment for the year 1947-48 was concerned, the Tribunal was of the opinion that it has not been established that the visit of the assessee during the relevant previous year was not of a casual or occasional nature and, as such, the order of the income-tax authorities could not be sustained. The appeal for the said assessment year was, therefore, allowed. So far as the assessment for the assessment year 1948-49 was concerned the Tribunal agreed with the Appellate Assistant Commissioner that the assessee has stated in his affidavit that on 9th of September, 1947, he went to India and resided there for two months and at Variav for the rest of the year. The Tribunal was, therefore, of the opinion that the Appellate Assistant Commissioner was justified in holding that the assessee was in the taxable territories during the relevant previous year otherwise than on occasional or casual visit as contemplated under Section 4A(a)(iii) of the Act. The Tribunal relied on the statement of the assessee in the disclosure petition as well as the statement made by the assessee in his affidavit. In those circumstances, the Tribunal was of the opinion that all the conditions necessary for the attraction of the provisions of Section 4A(a)(iii) of the Act were there, and, therefore, the assessee had been rightly assessed for the assessment year 1948-49 as a resident. It was then contended before the Tribunal that the remittances were by the firm to its own account in the National Hank and, as such, the same could not be held to be remittances by the assessee. It was next contended that inasmuch as the remittances were utilised for the purchase of the properties in the years 1948 and 1949, that is after the expiry of the relevant previous years the remittances could not be regarded as remittances made by the assessee during the two previous years. It was also contended that, assuming there were remittances by the assessee, there was no evidence that the remittances were out of past income and not out of capital. The Tribunal was unable to accept these contentions. The Tribunal, therefore, upheld the order of the Appellate Assistant Commissioner so far as the order for the assessment year 1948-49 was concerned.;