JANAB ABUBUCKER SAIT Vs. COMMISSIONER OF INCOME TAX MADRAS

JUDGEMENT

(1.) THE following questions have been referred to us for our decision :

(2.) WHETHER on the material on record the Appellate Tribunal could reasonably come to a finding that the sum of Rs. 30, 000 was an income from undisclosed source "" * These question arise in proceedings relating to the assessment of one Abu Bucker Sait for the year 1948-49, the year of account being the corresponding financial year. The assessee owns a coffee plantation at Yercaud and he also grows oranges and gall-nut on other lands. The income from the former source is received through the India Coffee Board that from the latter directly. In one year, the income by the sale of oranges and gall-nuts is said to have approximated Rs. 3, 000. The assessee says that he maintains no accounts. He did not file any return of income for the year 1948-49 within the prescribed time. After a number of reminders from the department he submitted on March 7, 1952, a "nil return" for that year. The assessee was then called upon by the Income-tax Officer to file his wealth statements the response was a mere statement that he had no accounts and that he had given over his properties to his wife and children. His bank account, however, told a different tale. There were large deposits during the course of the year. On September 30, 1947, he withdrew a sum of Rs 1, 00, 000, and he took this entire sum to Pakistan presumably to secrete it in that country. He himself admitted on one occasion that he deposited a sum Rs. 58, 500 out of that sum in the Central Bank at Karachi and spent the rest on charities. With an assessee of that kind, whose strong point was neither strict regard for truth nor even consistency, the department was hard put to ascertain whether he had received any assessable income during the year of account. There was, however, one source of information available from which it was evident that the assessee's income could not be attributed purely to an agricultural source namely, the current account he had with his bank. We shall refer to the relevant entries therein presently.The assessee purchased on August 9, 1945, for a sum of Rs. 35, 500 an extent of nine acres of land in Kichilipalayam village adjoining Salem town. The purchase was made through a broker, Abdul Azeez. The rental income from this property was not, however, much. It was stated to be on an average Rs. 500 per annum. At any rate evidence shows that the income from this property could never have exceeded Rs. 700 to Rs. 750 per annum. Some years later, in the year 1953 the lands were converted into house sites. But that was long after the assessee had parted with them. On April 30, 1947, the assessee sold the lands to one Narayana Pillai, who was for some time the vice-chairman of Salem municipality. The consideration recited in the sale deed was Rs. 50, 000. Out of that sum, the assessee claimed that he had paid Rs. 7, 500 to the broker and by way of rebate to the tenants. There was every reason to suspect whether the true price received by the assessee had been set out in the document. In the course of assessment for the year 1947-48 the assessee made a statement on February 14, 1952, that he had received a sum of Rs. 40, 000, some time earlier than April 30, 1947, and that the balance of Rs. 10, 000 was received on that date from Narayana Pillai in respect of the sale price. This he evidently did to explain certain deposits in his bank account during the year of account relative to the assessment year then in question, namely, 1947-48. A scrutiny of the bank pass book in the following year (which was made) with respect to the assessment in question showed that other amounts must have been received by the assessee as part of the sale price for the same lands. There was an entry of Rs. 57, 500 on May 10, 1947, in the name of Narayana Pillai in the pass book. There was further entry two days thereafter of a sum of Rs. 10, 000, which the assessee himself admitted as having been received from the purchaser.

(3.) IT does not, however, appear from the order of the Tribunal whether they at all considered the question whether the transactions by the assessee amounted in law to an adventure in the Tribunal whether they at all considered the question whether the transaction by the assessee amounted in-law to an adventure in the nature of trade. In paragraph 7 of the statement of the case, the Tribunal has set out the contentions raised by the assessee to show that there was no adventure in the nature of trade so as to attract the tax liability in respect of profit made in the transaction. In paragraph 8 of the statement the Tribunal has stated their reasons for upholding the order of the department as those contained in paragraph 4 of its order on appeal. But it does not appear from paragraph 4 that the Tribunal at all considered any of the circumstances to support the conclusion that the assessee's act was an adventure in the nature of trade. The Tribunal had merely considered the first aspect of the question that we have referred to, namely, whether at all there was a profit by reason of the sale of the lands. A mere answer in the affirmative to the question without a finding that the profit was attributable to an adventure in the nature of trade will not be sufficient to justify the assessment. The omission on the part of the Tribunal to consider the real question in the case is a matter to be regretted but there is little doubt that they must have considered the matter and come to the conclusion that the transaction amounted to an adventure in the nature of trade. But whatever that may be having regard to the question referred to us, it is our duty to answer them.