COMMISSIONER OF INCOME TAX CENTRAL CALCUTTA Vs. HARDUTROY MOTILAL CHAMARIA

JUDGEMENT

(1.) This appeal is brought, by special leave, from the judgment of the Calcutta High Court dated March M, 1964 in Income-tax Reference No. 29 of 1961.

(2.) The respondent (hereinafter called the 'assessee') is an individual carrying on business in Jute, Cloth and Films. The assessment year is 1952-53, the corresponding accounting year being the calendar year 1951 for all business except Katihar Cloth Importing Co. and the Jute Mills for which the accounting year is financial year ending March 31, 1952. During the year of account the assessee claimed that he had borrowed three sums of Rs. 2,50,000, Rs. 1,50,000 and Rs. 30,000 from three parties from Nepal, Kharag Bahadur Nepali, Jiwanmal Santockchand and Sohanlal Subhkaran respectively. The Income-tax Officer added these amount' to the total income of the assessee on the ground that the assessee had inflated the purchase of raw jute. The Income-tax Officer was not satisfied that these three were genuine loans but considered that they represented secret profits made by the assessee by inflating the purchase of raw jute. The income-tax Officer noted that the assessee had withdrawn at Calcutta on March 31, 1952, a sum of Rs. 5,30,000 from a Calcutta bank and had sent a sum of Rs. 5,85,000 to his Forbesganj branch on the same day to enable that branch to make payments including the repayment of Rs. 2,50,000 to Sri Kharag Bahadur one of the alleged creditors noted above. The Income-tax Officer discussed the impossibility of the amount having reached Forbesganj branch in Bihar on the very same day in order to enable discharge of the creditors there on March 31, 1952. In regard to this amount of Rupees 5,85,000 the Income-tax Officer observed as follows:

(3.) Section 31 of the Act is to the following effect: