- (1.) THESE are connected applications under Section 66 (2) of the Income-tax Act (hereinafter called the Act) by Messrs. Chaturbhuj Chhogaial of Beawar against the commissioner of Income-tax and Excess Profits Tax.
(2.) THE facts which have given rise to these applications are these. A Hindu undivided family carried on business under the name Chaturbhuj Chhogaial at bcawar, The main business was the purchase and export of wool. Jagannath was the manager of the joint family firm. A disruption of the joint family took place in the year relevant to the assessment year 1944-45. Thereafter the same business was carried on by the divided members of the family in partnership under the same firm name, the partners being Jagannath, Harnarayan and Rammivas. The case of the assessee was that for purposes of financing the business, short term deposits were accepted. During the accounting year relevant to the assessment year 1944-45, total deposits amounting to Rs. 338000/- were taken according to the account-books. The Income-tax Officer was not satisfied about the genuineness of two items out of these deposits--one of Rs. 11,000/-and the other of Rs. 10,000/ -. In the books of the assessee they appeared as deposits in the names of Kishanlal Bikania and Shrimati Kasturibai respectively. The Income-Tax officer called upon the assessee to prove the genuineness of these two items under Section 23 (3) of the Act. Apart from these two items, the assessee was also called upon to explain the nature of an account headed Radhakishan Satyanarain. It may be mentioned that Radha-kishan and Satyanarain are the sons of jagannath. In his statement made before the Income-tax Officer on 8th February, 1947 in this connection, Jagannath alleged that Satyanarain was, to the best of his knowledge, connected with one Bhagirath of Bikaner who managed the business styled as Radhakishan Satyanarain. When he was confronted with certain facts, which had been elicited by the Income-tax Officer from independent enquiries, jagannath had to admit that he had made a false statement with regard to the account in the name of Radha Kishan Satyanarain. The Income-tax Officer did not accept the genuineness of the above two items which appeared as short term deposits and took them to be concealed income from undisclosed business source. Income-tax as well as excess profits tax was assessed on these items. Against this assessment, an appeal was preferred to the Appellate Assistant Commissioner of income-tax which was dismissed. The assessee then appealed to the Income-tax appellate Tribunal which dismissed the appeal with regard to the item of Rs. 11,000/- but allowed it with regard to the item of Rs. 10,000/ -. Both Income-tax and excess profits tax became leviable on the sum of Rs. 11,000/- as a result of this decision. The assessee filed an application under Section 60 (1) before the tribunal with regard to the excess profits tax only. The Tribunal held that no question of law arose out of their order. Civil Mis-cellaneous. Income-tax appplication No. 43 of 1957 has been preferred under Section 66 (2) with regard to this matter. During the accounting the accounting year relevant to the assessment year 1945-46, total deposits amounting to RS. 6,20,400/- appeared in the account-books of the assessee. The Income-tax Officer was not satisfied about the genuineness of the following five deposits aggregating to Rs. 1,09,200/ -. . JUDGEMENT_55_TLRAJ0_1958Html1.htm
(3.) THE Income-tax Officer accordingly asked the assessee to prove the genuineness of the above items under Section 23 (3 ). Four affidavits were filed on behalf of the assessee after repeated opportunities had been given to him to adduce evidence. They were the affidavits of Manmal son of Tarachand, Girdharilal son of Chaturbhuj, Bhagirath son ofr Kistoorchand and Mohanlal son of Harlal. Uncertified copies of these affidavits were produced before-us. Manmal, Mohanlal and Bhagirath neither stated that they maintained account-books nor filed any copies from them. Only Cirdharilal stated that he maintained account-books and filed a copy of the Khata of the firm Chaturbhuj Chhogaial of Beawar appearing in his account-book. The persons who had filed affidavits were not produced before the Income-fax Officer for cross-examination. In a letter addressed to the Income-tax Officer, it was slated on behalf of the assessee that some of these deposits were made by the depositors on the recommendation of one Badridas Tiwari of bcawar. This Badridas was also not produced on behalf of the assessee before the income-tax Officer. All the alleged depositors were residents of outside places. The assessee did not produce any correspondence relating to the deposits which might have taken place with the depositors either prior to the deposits or subsequent to them. Another circumstance, which appeared to the Income-tax authorities to be suspicious, was that no transaction had ever taken place between the assessee and these alleged depositors prior to these deposits. No collateral document was executed in respect of the deposits. The assessee told the Income-tax Officer that the depositors were not willing to appear before him. Further, no interest was paid to the depositors when the principal amounts were returned. Interest was paid to some of them in the next year and to others in the year after the next year. Some items of interest were alleged to have been paid in the shape of 'hundis' after the Income-tax Officer had called for proof. Taking all these circumstances into consideration, the Income-tax Officer held that the deposits were not genuine and were concealed' income from undisclosed business sources. The assessee preferred an appeal to the Appellate Assistant Commissioner of income-tax who agreed with the Income-tax Officer and dismissed it. He has given adequate reasons in support of his finding in his order dated 31-10-1. 949. He was of the opinion that the amounts involved being very substantial, they could only be earned from business. He accordingly upheld the order assessing the aggregate amount to excess profits tax also. The assessee then appealed to the Income-tax Appellate Tribunal which dismissed both the appeals relating to income-tax and excess profits tax. The assessee then filed applications under Section 66 (1) before the Tribunal which were rejected on the around that no question of law arose out of their order. Civil Miscellaneous application No. 44 of 957 arises out of the order of the Tribunal relating to income-tax and. Civil Miscellaneous Application No. 43 of 1057 arises out of their order relating to excess profits tax. 3a. We have heard the learned counsel for the assessee and the Income-tax Department and we are satisfied that the order of the Tribunal in these cases is not vitiated by any error of law.;