MITHOO LAL TEK CHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference arises out of three cases, two of them relate to income-tax assessment for the years 1943-44 and 1946-47 and the third to excess profits tax assessment for the year 1946-17. The assessee is a Hindu undivided family which carries on business in grain, cloth, commission agency, speculation etc. The method of accounting, as given in the assessment orders, is mercantile. The relevant account period for the assessment year 1943-44 was from 20-10-1941 to 8-11-1942. The Income-tax Officer found a cash deposit of Rs. 5,000/- in the capital account of the assessee in the name of Surajmal Suraj Bam entered on 25-10-1941. When he asked the assessee from where this amount had come the assessee stated that it was a part of the amount unspent out of the withdrawal of Rs. 30,000/- on 18-7-1940. For the assessment year 1946-47 the relevant account year was from 17-10-1944 to 4-11-1945. On the first day i.e. 17-10-1944, there were three credit entries in the capital account, a sum of Rs. 50,000/- in the name of Surajmal Suraj Ram as having been received from him, another sum of Rs. 10,000/- as having been received from Srikishan Dass and a third sum of Rs. 5,000/-as having been received from Dharam Dass. Surajmal Sura] Ram, Shrikishan Dass and Dharam Dass are all members of the Hindu undivided family.

(2.) THE explanation given by the assessee was that Surajmal Suraj Ram had withdrawn a sum of Rs. 50,000/- on 10-9-1936, andamp; two sums of Rs. 10,000/- andamp; Rs. 5,000/- were respectively withdrawn by Srikishan Dass and Dharam Das on 18-7-1940, and that it is these three items that had been brought back and redeposited on 17-10-1944. THE explanation given by the assessee as regards these 3 items was rejected. THE Tribunal pointed out that the assessee could not have kept such large sums of money lying idle for such long periods and the assessee must have utilised the amounnts withdrawn to make other profits; that the assessee carried on business on a large scale and it was not expected that the assessee would instead of investing these large sums let them remain idle; that it was not believable that all these sums would be kept at the family house at Jaselmair where only women and servants resided; and that the assessee had bank accounts and it was not likely that if the money was withdrawn and not utlised the money would not be put back in the business or deposited in the bank and would be allowed to remain unproductive in the hands of the various members of the family, THE Tribunal might also have noticed that, if the sum of Rs. 50,000/- withdrawn by Surajmal Suraj Ram on 10-9-1936, (and not 1933 as mentioned by the Appellate Assistant Commissioner) had remained undisposed of in the hands of the assessee, there was no reason why on 18-7-1940, he should have withdrawn from business another sum of Rs. 30,000/- and deposited Rs. 5,000/- out of the latter sum on 25-11-1941, and the sum of Rs. 50,000/- not till 17-10-1944. We have no hesitation, therefore, in agreeing with the Tribunal that there was sufficient material on which the Tribunal could hold that the explanation given toy the assessee was false.

(3.) THE relevant portion of Section 10A, Excess Profits Tax Act reads as follows: