1. This is a reference at the instance of the assessees under s. 66(2) of the Indian I.T. Act, 1922. As directed, the Tribunal has referred the following two questions to the High Court for its advisory opinion :
'(1) Whether, on the facts and in the circumstances of the case, there was any material to support the Tribunal's findings that the sums of Rs. 1,91,984 and Rs. 1,81,772 representing the sale proceeds of gold bars and jewellery were liable to be assessed as the undisclosed income of the assessees and whether the said finding is merely based on conjectures, suspicion and surmises
(2) Whether, in any event, the Tribunal having accepted the genuineness of the sale of gold bars and jewellery and having only doubted the origin of the gold and jewellery, the said amounts of Rs. 1,91,984 and Rs. 1,81,772 could be legally brought to tax as income for the assessment year 1957-58, without any evidence or finding that the gold and jewellery sold had been purchased out of or represented the income of the relevant previous year ?'
2. It may be mentioned that the reference arises from two appears disposed of by the Tribunal by a common judgment inasmuch as the points involved were identical. The two assessees concerned were Gordhandas Hargovands and Dharamdas Hargovandas, brothers, and the sum of Rs. 1,91,984 mentioned in question No. 1 pertained to the assessment of Gordhandas, whereas the other sum of Rs. 1,81,772 pertained to the assessment of Dharamdas. In this reference, we are concerned with the assessment year 1957-58, and the accounting year, so far as the disputed income is concerned, is the financial year 1956-57.
3. The question which arose before the ITO, the AAC and the Tribunal, which the Tribunal disposed of by a common judgment, was whether the I.T. authorities were justified in adding the sum of Rs. 1,91,984 in the case of Gordhandas and Rs. 1,81,772 in the case of Dharamdas as income from undisclosed sources. During Samvat years 2012 and 2013, the personal accounts of the two brothers disclosed large amounts of credit and the Tribunal has in its statement of case mentioned that according to the assessees these represented sale proceeds of ornaments inherited by them. It would be more correct to say that the assessees' case has throughout been and was before us that they represented the sale proceeds of gold bars sold by them in these years, which gold bars were got prepared by them from melting of or conversion from gold ornaments in their possession which they had inherited from their parents. A substantial part o these two amounts was ultimately taken for use in the partnership business in cloth carried on by the assessees. The ITO examined the correctness of the explanation for the credits. We accepted that the gold had been actually sold, by did not accept that there was any evidence to show that the sale was of gold in the shape of ornaments, nor did the ITO accept that the assessees had at their disposal any inherited gold ornaments or jewellery at the material time. In a well-considered order, which is fairly exhaustive unlike most of the scrappy orders of the ITO which we see in references, the ITO observes that in his opinion the assessees had purchased gold, etc., during the years, which had been sold under the guise of being family ornaments for the purpose of bringing in undisclosed income for the year. He accordingly chose to treat the sale process as the assessee's income from undisclosed sources. A similar view was taken in the assessment for the other brother also.
4. The assessees carried the matter in appeal to the AAC, who fully upheld the conclusions of the ITO. The matter was thereafter carried in second appeal before the Tribunal. Before the Tribunal, the assessees' case was that their parents left them gold (in bars and in ornaments) and other jewellery, that the ornaments were inherited by them and there was proof of melting and sale of gold and jwellery. The sale of gold and jwellery was not disputed by the department though there was some dispute about melting. It may be mentioned that this dispute was whether it was any ornament that was got melted at the time of preparation of the bars, which were subsequently sold. The more serious question, however, was about the origin of the gold ornaments sold, alleged to have been got melted. It was contended for the assessees that there was evidence of purchase in the books of account of Hargovandas, the father of the assessees, of gold bars and guineas in the years 1939 and 1940. The extracts from the accounts for these years showed purchase of 1,500 guineas and gold bars weighing altogether about 4,074 totals of gold. The aggregate sales of gold made by both the assessees in the various years including the material year came to 9,048 1/2 tolas. The relevant weight of gold that was required to be considered, therefore, was the difference between 9,048 1/2 and 4,074, i.e, 4,974 1/2 tolas. According to the assessees, this quantity of gold was obtained from the melting of gold ornaments left by Hargovandas.
5. Various factors and arguments were examined by the Tribunal. We will not refer to these at this juncture in as much as it will become necessary to examine the entire approach of the Tribunal and the factors it has considered in some detail in view of the first question which has been referred to us. The factors, however, which were considered and the arguments which were advanced on behalf of the assessees before the Tribunal appear to have been well summarized in paras. 5 to 12 of the statement of case. After examining the entire evidence, the Tribunal upheld the additions in both the assessments. In its view there was nothing to show that in the certificates given by the refineries which prepared the bars, to which we shall advert a little later on, there was anything to show that any ornament had been offered for melting. It considered the probabilities and ultimately upheld the action of the ITO against both the assessees.
6. Mr. Dastur, on behalf of the assessee, submitted that the entire approach of the Tribunal was based upon conjectures, surmises and founded upon irrelevant considerations. In his submission, further, the Tribunal had erred in ignoring very vital and relevant factors. By such approach, according to him, the Tribunal had arrived at a conclusion which no reasonable person or Tribunal adopting a judicial approach would have arrived at, and that the decision was one which was required to be characterised as perverse and, therefore, liable to be quashed.
7. Before dealing with the order of the Tribunal we may briefly refer to the diverse material which is on record, after which we shall consider whether this material has been properly considered in the appropriate perspective by the Tribunal. In the first place, it was emphasised that the father of the two assessees, Hargovandas, was a multimillionaire, who at the date of his death had left extensive properties and the value of these properties and charities, to which he had made donations in the lifetime, was estimated at Rs. 1,11,55,001 (see annex. E-6 to the statement of case). That Hargovandas was a multimillionaire and that in 1939 and 1940 Hargovandas had purchased gold bars of the weight of 4,074 tolas and 1,500 guineas is the admitted position, and not disputed by the department. As a matter of fact in his books of account Hargovandas had shown these purchases. We may then refer to the will of Hargovandas which is one dated April 9, 1941. The original will is in Gujarati and we have the English translation thereof at annex. E-4. Clause 4 of the said will provides for disposal of ornaments, trinkets and jwellery. These are all left to be divided between his two sons, viz., Gordhandas and Dharamdas. It may be mentioned that Hargovandas died on July 13, 1942, and it was urged that bearing in mind the recitals in the will, the wealth of Hargovandas and the general conditions of the society of which he was a member, it is inconceivable that he would not have with him considerable jwellery and other gold ornaments at the time of his death. It was submitted that it would be perverse to hold that the entire amount of gold din his possession would be the gold bars and the guineas purchased by him during the years 1939 and 1940 as mentioned earlier, viz., 1,500 guineas and 4,074 tolas of gold. We were similarly referred to the will of Harkorbai, the mother of the two assessees, who died on March 10, 1941. Her will, however, is one made on February 10, 1934. In cls. 4, 5 and 8 of the said will, which is also in Gujarati (annex. E-5), there is reference to gold, silver, diamonds, rubies and emerald ornaments. The same submissions were made in her case as were made in the case of Hargovandas, and we are invited to hold that at the time of their respective deaths Harkorbai and Hargovandas must have left considerable quantity of jwellery and gold ornaments which must have been inherited by and came into the possession of the two assessees.
8. Since we are considering what may be referred to as a positive piece of evidence, we may now refer to details of the melting of gold and details of gold sold by the two assessees. At pages 160 to 183 of the paper book are to be found memos issued by the refinery dept. of the Bombay Bullion Association Ltd., and National Refinery Private Ltd., which show that certain gold was melted at the concerned refinery and bars, numbers of which are indicated, prepared. The weight of such bars and all other extra material (left overs) is also indicated. We also find in certain cases certificates pertaining to the purity of these bars. We have been referred to several such certificates by counsel which do seem to show that the gold was not of the highest purity and the fineness varied approximately from 0.82 to 0.89. The suggestion made at the bar was - and this was also argued before the Tribunal - that although the memos did not mention that ornaments had been given to the assessees was suggestive of the fact that it was ornaments which had been offered for melting by the assessees.
9. We have then as the next piece of 'positive' evidence various bills or purchase memos issued by parties to whom these bars were sold. Such memos for Dharamdas are to be found at pages 184 to 199 of the paper book and we were shown how each of these purchase memos could be correlated with the earlier memos issued by the refineries for the melting and preparation of bars. There is identical material available for Gordhandas also. That these memos were issued by the refineries and the purchasers and these certificates obtained by the assessees in respect of the gold bars sold, had not been disputed by the taxing authorities at any time and it was submitted that it would be proper to proceed upon the footing that during this period the assessees had given some gold for melting, had got gold bars prepared by the refineries and had sold these gold bars to various bullion merchants. We were then referred to the entries in the personal books of account of the assessees. We are not really concerned with how much of the total amount realised was later on taken to the partnership business in cloth in which the two brothers were the sole partners. It may be mentioned that a tabular statement has been prepared which would show the total sales of gold made by the two brothers during all the years including S. Y. 2012 and 2013. This statement is annexed as annex. E-20 to the statement of case and shows the aggregate sales by Dharamdas of 4,211 1/2 tolas of gold and by Gordhandas of 4,837 tolas of gold. This brings the quantity of gold by Gordhandas of 4,837 tolas of gold. This bring the quantity of gold sold by the two brothers in all these years, and, there are four such years, to 9,048 1/2 tolas. As admitted, Hargovandas had purchased 4,074 tolas of gold in the two years 1939 and 1940, which amount was shown in his personal books of account. We have, therefore, to consider the source from which the two brothers could have obtained the balance quantity of gold of the weight of 4,974 1/2 tolas. As stated earlier, it was the assessees' case that there were certain gold ornaments which they had inherited from their parents. These ornaments were got melted at the two refineries and gold bars got prepared as disclosed in the certificates or memos issued by the refineries. These were the bars which were subsequently sold to various bullion merchants, whose purchase memos were produced and the proceeds of these sales were taken in the two years to the personal books of the assessees in the first instance, of which a large portion was thereafter taken to the partnership business. It may be pointed out that the assessees had themselves made certain purchases personally of jewellery and ornaments, but it was their positive case that the sales of gold, with which we are concerned, were not out of the gold or jewellery personally purchased by either of the assessees but specifically from the gold obtained as a result of melting of the ornaments inherited by the assessees from their father and mother under the two wills (see portion of the statement dated February 13, 1962, of Dharamdas referred to by the AAC in his order dealing with the appeal of Dharamdas).
10. It is in this background that we must now proceed to consider as to what was the material available before the Tribunal, what factors it considered, what weight it attached to the various arguments advanced before it and whether it adopted any process of reasoning which can be described as fallacious or whether it based its conclusions on conjectures or surmises or whether the total approach and the 'final conclusion was one which could be characterised as perverse in the sense of the word as judicially determined.
11. Turning to the order of the Tribunal, the Tribunal at the outset considered in broad terms the principal issue in dispute, stating that the sale of gold was not disputed but that the major dispute was about melting of the ornaments and the more serious question is about the origin of the gold ornaments purportedly got melted. It then considers the financial position of the assessees' father and the purchase made by him of gold bars and guineas in 1939 and 1940. It mentions the will of Hargovandas after extracting the clause mentioning ornaments, trinkets and jewellery. After these facts and materials have been extracted, the Tribunal comments that the will gives no details regarding any ornaments, trinkets and jewellery forming part of the estate of the testator either as regards the value or weight or even by description. The Tribunal thereafter mentions the absence of any entries in Hargovandas' books of account regarding these items of ornaments and jewellery. The Tribunal then applies its mind to the question whether at the of his death or thereafter any inventory was made of such ornaments and jewellery and mentioned the answer it receives, viz., that there was no such inventory made then or at any time thereafter, with the explanation offered on behalf of the assessees that there was no need or occasion for any one on account of the very cordial relations between the two brothers. The Tribunal thereafter refers to the will of Harkorbai and the brief provisions regarding the ornaments made therein. From these facts to be found in paras. 3 to 7 of the order of the Tribunal it is not possible to say that any aspect concerning the financial position of Hargovandas or the wills left by Hargovandas and Harkorbai have been omitted from consideration by the Tribunal. It was very vehemently urged that it was impossible for any reasonable person to hold that Harkorbai and Hargovandas left no other jewellery or ornaments (apart from 4,074 tolas of gold and 1,500 guineas). Whether anything was left, and, if so, of what value or what description or what were the items of jewellery and gold existing at the time of death of these two persons cannot be decided on such consideration, of financial ability or status or the social state to which these persons belonged. It was pointed out to us on behalf of the assessees that if its is assumed that ornaments weighing about 4,900 tolas of gold were required to be prepared in the years 1920 to 1930 when the prices o gold were low and in which years Hargovandas had established a mill at Bhavnagar and can, therefore, be said to have sufficient moneys for making such purchases, an outlay of only about a lakh and twenty thousand rupees or so would be required to be made. On the other had, although the wills refer to disposal of ornaments, trinkets and jewellery (Hargovandas' will) and gold, silver, diamonds, rubies and emerald ornaments (Harkorbai's will), the fact remains that we have no particulars of any item of jewellery being specifically left by either of these two persons by specific mention in the will. There is no yadi of such ornaments found along with the will. There is no inventory made at the time of death or subsequently made by the two assessees. There are no particulars of such ornaments and no entry is made as regards the alleged inherited ornaments in the assessee's books of account.
12. The Tribunal thereafter in para. 8 of its order proceeds to consider the assessments of the two assessees for the assessment year 1945-46. As the tabulated statement (annex. E-20) shows, this was the very first year in which each of the two assessees had sold gold of 1,064 1/2 tolas by weight. The question arose of explaining certain credit items which represented the sale proceeds of such gold; and, according to the assessees' explanation as set out in the assessment order, each of the sons had come into possession of 2,037 tolas, i.e., a moiety of the 4,074 tolas of gold, which had been purchased by Hargovandas during the years 1939 to 1940. After referring to these sales and the order, the Tribunal has made the following observation : 'It also appears that the Income-tax Officer in that year was not aware of or was not made aware of any gold ornament left by the father'. The comment made by Mr. Dastur on this part of the order of the Tribunal was that there was no obligation on the assessees to give any such information to the ITO. We agree with him that there was indeed no legal obligation on the assessees to convey any such information to the ITO. The Tribunal, however, has referred to what happened in this year for the two assessees because the question of sale of gold by them which they had inherited from their father arose for the first time in this year, i.e., assessment year 1945-46. As far as 4,074 tolas of gold was concerned, a credit had been shown by Hargovandas in his personal books of account. A larger quantity of gold in the shape of ornaments supposed to have been left to the assessees and inherited by them. Once the question of sale of gold had arisen (which sale was out of the gold for which there was some specific mention in the father's books of account), would it not be appropriate and natural for the assessees to make an inventory of the other items of gold, i.e., ornaments in their possession and inform the ITO that apart from this gold there was other gold in the form of ornaments or jewellery which also they had inherited and which was not being reflected in any books of account The Tribunal was not referring to any obligation of the assessees to make the ITO aware of the inherited ornaments but was considering the simple question whether occasion had arisen for the assessees to refer to them in an appropriate manner. The Tribunal is obviously considering what would be the normal natural conduct on the part of persons placed in a situation similar to the one in which the assessees found themselves in that year. The observation made by the Tribunal does not appear to us to be inapposite; rather it is the comment thereon made by Mr. Dastur that would seem to be unjustified. We are, therefore, unable to accept his contention that this would amount to an irrelevant, immaterial consideration or indicate an erroneous approach adopted by the Tribunal. It is also to be remembered in the context of such argument that each comment or observation or argument is not being considered and can never be considered separately and in isolation. As stated earlier, there is no direct evidence in the shape of any documents, e.g., entries in the books of account or inventory made either by the parents or the assessees at any time, to show details of these ornaments. It is in this background that the various items and factory are being considered by the Tribunal to examine the probabilities of the matter and to decide whether the explanation given by the assessees regarding the source of gold given for melting can be accepted by them or not. In isolation each such factory may appear to be of little weight, but on an overall appreciation it would be permissible for a Tribunal to consider their cumulative effect and to decide one way or the other.
13. The next year considered by the Tribunal was the assessment year 1948-49 in which Gordhandas is supposed to have sold 567 1/2 tolas of gold. The Tribunal has considered the orders made by the various authorities at several stages in para. 10 of its order. The ITO, according to the Tribunal, made additions of Rs. 75,000 and Rs. 79,000, respectively, to the total income of Gordhandas for the year as income from undisclosed sources. Before the ITO the assessee's case was that the item of Rs. 75,000 was attributable to the sale proceeds of ornaments. Before the AAC both the said items, viz., of Rs. 75,000 and Rs. 79,500, were attributed to sale proceeds of ornaments. The AAC's order, however, of which the passage is not extracted, seems to suggest that the assessee was not referring to sale of ornaments as such but to the sale of gold bars which Hargovandas had purchased of the weight of 4,074 tolas (referred to in the order as 4,075 1/2 tolas of loose gold). When the matter was carried to the Tribunal, the Tribunal referred to certain ankdas which had been produced by the assessees which were from one G. Valiji. The Tribunal referred to the statement of this G. Valiji who had mentioned that he had purchased guinea gold. The Tribunal in its order for that year made some comment as regards similar ankdas given by this person, G. Valiji, and ultimately held that there should be no addition in respect of the sum of Rs. 79,500 but confirmed the addition of Rs. 75,000. After setting out all these proceedings for the assessment year, the Tribunal, from whose order the reference has been made to us, comments that there were total contradictions in the assessee's story before the I.T. authorities for this year at different stages. It is very clear from a proper perusal of this paragraph that the Tribunal was not considering as a relevant circumstance the fact that in the earlier year Gordhandas had produced some ankdas from G. Valiji which were of a suspicious character and which had come to the adverse attention of the Tribunals in other proceedings or that he had given contradictory explanations at different stages. It was not that the Tribunal was considering the past conduct of this assessee as somewhat improper and, therefore, inclined to dispose of the appeal for the year 1957-58 against him on the basis of his past impropriety. The Tribunal has, in our opinion, referred in details to these previous proceedings to suggest that the question of sale of gold and gold ornaments had arisen earlier, in which year one of the assessees, Gordhandas, had faced considerable difficulty in satisfying the I.T. authorities regarding certain credits alleged by him to be the proceeds of sale of gold. It would appear that the Tribunal regards it as somewhat strange that even at that juncture the assessees did not proceed to make any inventory of the gold ornaments purportedly left to them by their parents and inherited by them after their parents' death or appraise the tax authorities that they had inherited such ornaments.
14. The Tribunal thereafter in para. 17 of its order considers the assessment year 1952-53 where both Dharamdas and Gordhandas had sold gold and credited the sale proceeds in their personal accounts. The quantity sold by Dharamdas was 833 tolas of gold and that sold by Gordhandas was 982 tolas of gold. The ITO made certain additions which were deleted by the AAC. The ITO had proceeded to act on the footing that the assessees may have purchased gold during the year and then sold it in order to bring in some undisclosed income. The AAC different from this approach; he considered various facts and circumstances. There was no evidence in the opinion of the AAC to support the aforesaid suggestion of the ITO, and he accordingly deleted the addition. The Tribunal referred to this assessment year and the proceedings inasmuch as they were invited by counsel for the assessees to apply the same test as was applied by the AAC in the assessment year 1952-53. The test is indicated in para. 14 of the Tribunal's order, and the Tribunal has expressly stated that the general background of the financial status of the assessees; father and of the assessees themselves which had weighed with the AAC for the assessment year 1952-53 was again stressed before the Tribunal by counsel for the assessee. The Tribunal thereafter considers what had transpired in the two Samvat years in question, viz., 2012 and 2013. For both these years taken cumulatively it is found that the sales by Dharamdas are of 2,332 tolas of gold and by Gordhandas of 2,241 tolas of gold. The assessees' case and claim before the Tribunal was that in the first place they got these inherited gold ornaments melted and refined at various refineries. According to the assessees, thereafter, the gold bars which were prepared were taken to Dharamna-kanta where they were weighed and certified. Finally, these bars had been sold to various merchants. The certificates issued by the various refineries, to which we have adverted earlier, were shown to the Tribunal. The Tribunal at this point comments that there was nothing in the refinery certificates to show that any ornaments had been offered by the assessees for melting. This is a very pertinent comment and it cannot be regarded as irrelevant or immaterial or having no relevance to the question being considered by the Tribunal. Even at this stage when, according to the assessees, ornaments on different dates were submitted to the refineries for being melted and prepared in bars of different weights, it is curious that the assessees do not prepare any list of the items of jewellery which were sent for being melted from which the bars were to be prepared. The only argument which appears to have strenuously canvassed before the Tribunal and which the Tribunal considers as not conclusive was based on the certificates of purity which ranged between 82.29% and 92.90%. According to counsel who appeared on behalf of the assessees, the bars which were got prepared and which were subsequently sold were not, therefore, pure gold or gold of the highest purity, and it was urged that from this it would be possible to infer that ornaments had been offered for melting. In our opinion this is a possible argument and a permissible inference, but it was entirely for the Tribunal to consider the same and attach necessary weight to the circumstances.
15. According to the Tribunal, this, however, would not conclusively establish that ornaments had been given to the refineries for melting. It is difficult to say that this conclusion of the Tribunal is based on any fallacious approach or erroneous appreciation of the arguments advanced at the bar or one which no reasonable person can arrive at. The Tribunal considers the absence of any specific inventory at the stage, the absence of mention of ornaments in the refineries' certificates and holds that merely on account of the certificates or purity the case of the assessees that ornaments had been given for melting could not be accepted. It is important also to realise the sales were taking place in 1956 and the parents of the assessees had died in March, 1941, and July, 1942, respectively. Apart from a reference to the jewellery, trinkets and ornaments in Hargovandas' will and the more expansive reference to various items of jewellery in Harkorbai's will, up to this stage there is nothing on record to suggest positively that any gold ornaments of this value were left by the parents of the assessees and retained by the assessees right from 1942 to 1956 and that it was these ornaments which were got converted into gold bars from the two refineries. As against the absence of any positive material, there are indeed certain suggestions in the will and certain suggestions based on the purity, which aspects have been referred to by the Tribunal, considered and found wanting as conclusive. This approach does not seem to us to be an improper or unsound approach.
16. In paras, 18 and 19 of its orders the Tribunal refers to the statement of Dharamdas recorded by the officers and the wealth-tax returns of the two brothers. Perusing these paragraphs it is not found that the Tribunal has drawn any adverse inference or conclusion from the wealth-tax returns. It cannot be said that they irrelevant material has been pressed into service or relevant material ignored by the Tribunal. In para. 20 of its order the Tribunal winds up the discussion of the case by considering the main aspects of the evidence available before it. It would be appropriate to set out this paragraph :
'20. The main point is whether the two brothers got as large a quantity as 4,974 1/2 tolas in gold ornaments from their parents and as per their wills. There is no evidence from Hargovands' accounts. The wills do not support any such large quantity. No inventory was made at any time. If the ornaments left were as large a quantity as contended, there should have been some inventory, some evidence. It cannot be said that there is any specific disclosure in any of the income-tax proceedings. Hargovandas was indeed a millionaire, but it could not be said that the purchase of the gold bars weighing 4,074 tolas was sufficient as a status symbol. It is not that people do not buy ornaments, but if they buy as a status symbol in large quantities and not merely for the use of the family members, there would be some evidence somewhere of the purchases, the possession and the quantities involved. It was contended by Shri Palkhivala that the Tribunal, for the assessment year 1948-49, was influenced by the circumstance that the purchaser was G. Valiji and that in the present case there is no such purchaser of doubtful repute and that the sales have all been accepted by the department. It appears to us, however, that although the sales have been accepted by the department, the origin of the gold is not, and it is difficult, on the evidence in this case, to trace the origin in respect of the gold ornaments in dispute to the parents of the two assessees. In these circumstances, the additions made by the income-tax authorities are maintained and the appeals dismissed.'
17. Substantially the Tribunal has summarized what had been earlier referred to by it at various places and indicated the principal basis of its ultimate conclusion that the additions made by the officers deserved to be sustained and for dismissing the two appeals.
18. The question which then arises is whether the findings of the Tribunal can be said to be on conjectures, suspicion or surmises and whether it had no material to support its findings that these amounts of Rs. 1,91,984 and Rs. 1,81,772 were liable to be assessed as undisclosed income of Gordhandas and Dharamdas; the two assessees, respectively. In connection with the proper approach to be adopted by courts in dealing with such decisions we were referred by learned counsel for the assessees to a number of decisions of the Supreme Court and of High Courts. The first of these decisions is that of the Supreme Court in Roshan Di Hatti v. CIT : 107ITR938(SC) . The assessee before the Supreme Court was an HUF of which one R was the karta. The assessee was carrying on business in gold and jewellery in Lahore since June, 1947. In that month he transferred from Lahore certain amounts of money to banks in New Delhi. He left Lahore for Mussorie in June, 1947, with a sealed trunk which he deposited with the Imperial Bank at Amritsar. He stayed at Mussoorie till October, 1947, and came down to Delhi. He secured premises for commencing business in February 1948, where he started gold and jewellery business. The first entry in the books of account of the assessee was dated March 30, 1948; the entry was for bringing in an aggregate capital of Rs. 3,33,414 including gold ornaments for Rs. 1,19,320, gold rawa for Rs. 1,69,020 and stones for Rs. 4,000 and cash balances amounting to Rs. 38,074. He was asked to explain the source of capital brought into the business. The assessee's case was that the gold rawa, ornaments and cash were brought by him, when he migrated from Lahore, in a sealed trunk which had been kept at Amritsar and later on deposited in a locker with a bank at Delhi. According to him, from June, 1947, till March 30, 1948, neither the assessee nor R had any other business or means of income from which the assets of Rs. 3,33,414 could be earned. Certain persons were examined to show that the assessee was having a large business in Lahore before migration and that they did not carry on any business till March 30, 1948. The ITO treated the sum of Rs. 20,000 only as explained and the balance of Rs. 3,17,414 was brought to tax as income from undisclosed sources. On appeal, the AAC treated a further sum of Rs. 80,000 as explained. The Appellate Tribunal confirmed the order of the AAC. On a reference, the High Court held that there was material before the Tribunal on the basis of which the Tribunal could have come to the conclusion that the sum of Rs. 2,33,414 represented the undisclosed income of the assessee. The matter was thereafter carried in appeal to the Supreme Court by special leave. It was observed by the court that the findings of the Tribunal were clearly findings of fact and could be assailed only if it was shown that the Tribunal had acted without any material or upon a view of the case which could not be reasonably entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law would have come to that determination. The Supreme Court thereafter examined the material which was available on the record. It was found established that the assessee had a fairly large business in Lahore; it was found that he had brought the entire ornaments, jewellery and cash from Lahore and deposited the same in a sealed trunk with the Amritsar branch of the Imperial Bank of India. Judicial notice was taken of the condition of the refugees in general and other facts pertaining to the partition of the country. The Supreme Court then considered the question whether the assessee could have earned such a huge amount of profit of Rs. 2,33,414 within a few months even if it could be assumed that the assessee had started some business in October, 1947. From all such facts it was concluded that there was no material on the basis of which the Tribunal could have come to the conclusion that the ornaments, jewellery and cash brought by the assessee were worth not more than rupee one lakh. Accordingly, the appeal was allowed, the order of the High Court was set aside and the question referred to the High Court by the Tribunal was answered in favour of the assessee.
19. Mr. Dastur submitted that on various aspects the above decisions completely cover the case of the two assessees before us. In our view, the decision in Roshan Di Hatti's case : 107ITR938(SC) , turns on its own special features and it is on these aspects that the Supreme Court had observed that there was no material for the Tribunal to have concluded, in the manner that it did, that only jewellery and ornaments for rupees one lakh had been brought by the refugee-firm to India from Lahore. In our opinion, it was on the special features of the case that the Supreme Court took such a view. Some of these features we have also indicate earlier. No such features exist in our case.
20. We were then referred to a decision of the Allahabad High Court in Kanpur Steel Co. Ltd. v. CIT : 32ITR56(All) . This was a case concerning 32 currency notes of Rs. 1,000 each which the assessee encashed on January 12, 1946, when the High Denomination Bank Notes (Demotisation) Ordinance, 1946 came into force. A certain explanation had been offered by the assessee which the Tribunal had rejected, holding against him. According to the High Court, the Tribunal rejected the explanation of the assessee on surmises. The opinion of the Tribunal, according to the High Court, was not based on any material but on fallacious reasoning, which was not accepted. Accordingly, the High Court found in favour of the assessee. It was pointed out by Mr. Dastur that in Lalchand Bhagat Ambica Ram v. CIT : 37ITR288(SC) , which was also a case of high denomination notes, the Supreme Court has referred to the decision of the Allahabad High Court in Kanpur Steel Co. Ltd.'s case : 32ITR56(All) , with approval (see pages 300-301). In Lalchand Bhagat Ambica Ram's case : 37ITR288(SC) , the Supreme Court referred to its earlier decisions in Dhirajlal Girdharilal v. CIT : 26ITR736(SC) , Dhakeswari Cotton Mills Ltd. v. CIT  26 ITR 775, Mehta Parikh and Co. v. CIT  30 ITR 181, Sree Meenakshi Mills Ltd. v. CIT : 31ITR28(SC) and Omar Salay Mohamed Sait v. CIT : 37ITR151(SC) , and set out the proper approach to be adopted by the High Courts in such cases; this has been summarized in the headnote (pp. 290-91) in the following words :
'The Income-tax Appellate Tribunal is a fact-finding tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it, the court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence before it. The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which are required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises, nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures and surmises, and if it does anything of the sort, its findings even though on questions of fact will be liable to be set aside by the court.'
21. Kanpur Steel Co. Ltd.'s case : 32ITR56(All) and Lalchand Bhagat Ambica Ram's case : 37ITR288(SC) were explained by the Supreme Court in Sreelekha Banerjee v. CIT : 49ITR112(SC) . A very pertinent observation is to be found at page 117 of the report, which reads : 'Each case must depend upon its own peculiar facts'. Whether the decision of the Tribunal on a finding of fact can be sustained or not would depend upon what was the question in issue before the Tribunal, what was the material which was required to be considered, on whom was the burden of proof and how has the Tribunal assessed all the material in the light of the proper approach required to be made on the facts of that case. A case involving high denomination notes is not comparable with a case involving ornaments or jewellery. The ornaments and jewellery found or alleged to be in the possession of a jeweller or a bullion merchant or a goldsmith may stand on a different footing from such ornaments and jewellery found in the possession of persons trading in cloth or who are owners of textile mills. The explanation of an assessee as regards the origin or source of gold and ornaments may differ from case to case. Therefore, it cannot be said that any observation in any case pertaining to some argument or some aspect of the evidence in that case must be regarded as one which is universally applicable to all cases and binding in all matters irrespective of the facts under consideration. Further, as stated earlier, materials being considered by a fact-finding body, whose decision is final, normally cannot be considered in isolation, and the total cumulative effect there of will be required to be considered. The proper approach to the decision of the Tribunal in the instant case is to ask : (1) whether there is any relevant material or aspect which it has ignored and failed to consider (2) whether there is any material on which it has based its decision which appears to be irrelevant (3) whether it has refused to accept the version or explanation of the assessees by reason of any prejudice against them (4) whether any of the conclusions reached have been based on conjectures or surmises (8) whether the probabilities have been properly considered and the onus properly put on the assessees or revenue, as the case may be All these questions will be required to be answered before the Tribunal's decision or any finding can be said to be perverse. It was submitted that the decision in the assessees' appeals must be regarded as perverse and totally unreasonable inasmuch as it was held that the assessees' explanation that they had inherited the ornaments was totally rejected, which would tantamount to holding that Hargovandas and Harkorbai had left no ornaments. In our opinion, this is over simplifying the question. The Tribunal was considering Samvat years 2012 and 2013, i.e., assessment year 1956-57. The parents of the two assessees had died in 1941 and 1942, respectively. By refusing to accept the assessees' case that the ornaments in their possession were got melted in these two Samvat years and that the ornaments were inherited ornaments, the Tribunal, in our opinion, has not held that Hargovandas and Harkorbai had left no ornaments or other jewellery. It was submitted that on various aspects the assessees had furnished material, from which their version was quite probable, and a reasonable tribunal should have accepted their version and held in their favour. On the other hand, a number of factors have been brought on record by the Tribunal which would suggest that what the two assessees were contending for, rather strenuously, was unusual and improbable. It appears to us that the fact that there was no written record of any nature whatsoever regarding the inherited ornaments is an item of considerable importance, which the Tribunal has stressed against the assessees and, in our opinion, rightly so. On two previous occasions the question of sales of gold had arisen in the assessments, once for both the assessees and once for one of the two brothers. No inventory was made nor any information given to the ITOs. Even when the ornaments are supposed to have been handed over to the refineries for melting, it is the assessees' contention that no record of the ornaments, either individually or collectively, was kept. This behaviour does not appear to be a normal or natural behaviour. But we are not concerned with adjudging the probabilities of the case. As there is no direct evidence of what ornaments, if any, were left by Hargovandas and Harkorbai and inherited by the two assessees and what ornaments remained in their possession up to 1956-57, the matter will have to be judged on various pieces of evidence, from which it would have to be held whether the assessees' version is to be accepted or not. If all these pieces of evidence have been properly considered, none of any relevance ignored and none irrelevant emphasised, then, in our opinion, it would not be proper to reappraise the evidence for ourselves and hold that the Tribunal was in error in not accepting the assessees; claim in toto or at least partially. These observations are not to be taken to suggest that in our opinion there is sufficient material on record to hold that we, as a tribunal of fact, would have taken a view different from the one taken by the Tribunal. It would appear to us that the approach of the Tribunal is the one which is proper and the view taken by it is a possible one which could be taken on the material on record; and if that is so, then it is not possible for us to hold that the decision of the Tribunal is perverse or so erroneous that it is required to be quashed in the limited reference jurisdiction either under s. 66 of the Indian I.T. Act, 1922, or under s. 256 of the I.T. Act, 1961.
22. Indeed, reference may be made at this juncture to the observations to be found at page 946 of the report in Roshan Di Hatti's case : 107ITR938(SC) . It was observed as follows :
'Now, the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him. If he disputes the liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the revenue is entitled to treat it as taxable income.'
23. In the case before us certain moneys are found credited to the personal account of the two assessees. The assessees' explanation is that they represented the sale proceeds of the gold bars. The gold bars, according to the assessees, had come into their possession by reason of melting and conversion of gold ornaments which they claim to have inherited from their parents. It is at the last stages that the assessees' version has not been accepted by the Tribunal, viz., that it is not proved that the gold bars are the result of melting of gold ornaments and that those gold ornaments were the ones inherited by the assessees from their parents. Thus, according to the Tribunal, the assessees must be deemed to have failed to prove satisfactorily the source and the nature of this gold which was got melted by them and converted into gold bars which were subsequently sold. The value of this gold is not in dispute and has been taken to be the amounts of sale proceeds of the gold bars which were credited in the assessees; books. It would appear to us, therefore, that on the question of the liability of the assessees to account for the amounts, the view taken by the Tribunal was correct. In any case, it was a view which they, as the final tribunal of facts, were entitled to take, as such, a view with which we cannot interfere in our reference jurisdiction.
24. That brings us to a consideration of question No. 2. This pertains to the consideration of the question whether these two amounts could be legally brought to tax as income for the assessment year 1957-58, without any further evidence or finding that the gold and jewellery sold had been purchased out of or represented income of the relevant previous year. It was pointed out by learned counsel for the assessees that as far as the Act of 1961 was concerned, there was a specific section, viz., s. 69A which was introduced by the Finance Act, 1964, which provided as follows :
'69 A. Unexplained money, etc. - Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.'
25. Our attention was drawn to the observations to be found in J. S. Parkar v. V. B. Palekar : 94ITR616(Bom) ; these are summed up in the headnote as follows (p. 618) :
'Though section 69A of the Income-tax Act, 1961, was brought on the statute book for the first time with effect from April 1, 1964, and was not in existence during the period of the assessment year, both section 69 and 69A are rules of evidence and as such would be applicable to any proceedings if they happen to be on the statute book on the date when the trial takes place. Section 69A was in existence at the time of the assessment and, such, proceedings before the Income-tax Officer could legitimately be claimed to have been covered by this rule of evidence.'
26. It was submitted that in J. S. Parkar's case : 94ITR616(Bom) it was held that the rule of evidence incorporated in s. 69A could be applied if the section was in existence at the time of assessment. In the case before us, according to counsel, the assessment had taken place prior to April 1, 1964, and, therefore, it was submitted that by reason of the above observations to be found in J. S. Parker's case : 94ITR616(Bom) , the rule of evidence incorporated in s. 69A could not be applied. According to his further submission, the revenue had not brought on record any material or evidence to show that these amounts represented the assessees' income for the assessment year in question and the second question, therefore, was liable to be answered in favour of the assessees. On behalf of the revenue it was submitted that this question does not really arise from the order of the Tribunal. It was pointed out that it is not discussed in the extensive judgment of the Tribunal nor is to be found in the grounds of appeal to the Tribunal. It was pointed out by Mr. Joshi on behalf of the revenue that at the time of refusing the application for reference sought under s. 66(1) of the Indian I.T. Act, 1922, the Tribunal had specifically so stated that this point was not argued before it. On the other hand, it was pointed out to us that in the petition for reference made to the High Court, which was settled by the very counsel who appeared before the Tribunal, it had been urged that such a contention had been urged before the Tribunal though it is not dealt with by it in its order.
27. In our view, it is unnecessary to go into whether the question can be said to arise from the order of the Tribunal. Section 69A of the I.T. Act, 1961 (introduced with effect from April 1, 1964, by the Finance Act, 1964), merely gives statutory recognition to what we may call a commonsense approach. It does not bring on the statute book any artificial rule of evidence, a presumption or a legal fiction. In J. S. Parkar's case : 94ITR616(Bom) , to which reference was made at the bar, the court was not directly concerned with an assessment made prior to April 1, 1964; the assessment before it was after that date and accordingly it was observed that since at that time s. 69A was on the statute book, the rule of evidence incorporated in the section was required to be applied. These observations cannot be taken to mean that the court decided that if the assessment had been made prior to April 1, 1964, the rule of evidence contained in s. 69A was not applicable. Even if the court had expressly so stated, its decision would be obiter since the question did not arise for consideration before it. What we have stated must not be taken to suggest that in our opinion s. 69A would have to be applied to the assessment of the two assessees before us but that s. 69A contains a commonsense principle - an approach, which, if applied to any particular assessment, cannot be regarded as contravening any principle of law or any rule of evidence. To give an example, if an amount is brought into the assessee's s business by the assessee and on being questioned the assessee gives some farfetched explanation, which is rejected, normally and even without the rule of evidence contained in s. 69A, there would be nothing improper in the amount being considered as the assessee's income from undisclosed sources for that year. There may be, however, some intrinsic factory or some material on record already which may have some bearing on the question; such material or circumstance will be required to be considered. After the assessee's explanation is rejected, the assessee can still submit that the amount should not be wholly added as income from undisclosed sources for a particular year or that it should be spread over or that it should be liable to be considered as income from undisclosed sources for another year. It will be open for the assessee to so contend and to point out to the material or circumstance which may support such an argument. The assessee, however, cannot be headed to say that it is for the revenue to bring in some material or evidence on record to suggest affirmatively that the cash amount was the equivalent of some goods or gold (which is the commodity in question) and must be attributable to a particular year in question; and if there is no such evidence brought on the record of the Tribunal, no addition of any amount for any year is permissible. This, in our opinion, would not be the correct approach. There is no material on record to show that these amounts relate to the income of the assessees for any earlier year or any year other than the year under consideration. In our opinion, if there is no material on record, then, the two amounts which represent the sale proceeds of the gold must be regarded as the assessee's income from undisclosed sources in the two years in question inasmuch as they were introduced in the books at the relevant time and as the assessees' explanation for the source and origin of the gold which was got melted has been found unacceptable. The assessees cannot be permitted to give an unacceptable explanation and rest content requiring the department to show that they had purchased or secured the gold or gold ornaments from some source in these years or got such gold melted and then disposed of the bars to bring cash amounts into their books.
28. In the result, the questions are answered as follows :
Question No. 1
There was material to support the Tribunal's findings that the two sums were liable to be assessed as undisclosed income of the assessees, and the Tribunal's findings are not based on conjectures, s suspicion and surmises.
Question No. 2
In the affirmative and in favour of the revenue.
29. The assessees will pay to the Commissioner the costs of the reference.