COMMISSIONER OF INCOME TAX Vs. PARSADI SAH AND PARMESHWAR SAH

JUDGEMENT

(1.) This is a reference under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act), by the Income-Tax Appellate Tribunal, Patna Bench, stating the following case for the opinion of this Court, viz:

(2.) The opposite party is an unregistered firm, which was assessed to income-tax during the year 1963-64 for the accounting period which ended on the 28th October, 1962. One of the partners of the firm is Shri Prasadi Sah. The Income-Tax Officer, while scrutinising the accounts of the firm, noticed a cash credit of Rs. 5,000/- in the personal account of Prasadi Sah. When questioned, Prasadi Sah stated that the amount was a gift from his mother-in-law, Musammat Radhia. She was examined before the Income-Tax Officer; but that officer was not satisfied with her evidence, and, while rejecting the same, he held as follows:

(3.) It will be noticed that though the Tribunal is a final Court of fact, it did not discuss or decide as to whether the explanation of Prasadi Sah that this sum was a gift to him from his mother-in-law was acceptable or not. the concurrent findings of the Income-Tax Officer and the Appellate Assistant Commissioner are to the effect that this explanation was not acceptable, that Prasadi Sah has no other source of income, and that consequently this sum, though credited in his personal account, must, in the circumstances, be held to have been obtained from him from secreted profits of the firm. This finding was not disturbed by the Tribunal. Merely because the sum is shown in the personal account of the partner, it does not necessarily follow that it is not the secreted profits of the business unless the Tribunal further holds that Prasadi Sah had other sources of income, and this sum was obtained by him from those source. As no such finding was given by the Tribunal, it must be held that, inasmuch as Prasadi Sah had no other source of income, this sum was obtained from him from the business profits of the assessee firm.