1. The two questions which have been referred at the instance of the assessee under s. 256(1) of the I.T. Act, 1961, have to be clearly answered against the assessee in view of the material which has been considered by the Tribunal to come to the finding that the sum of Rs. 29,000 in question was the income of the assessee. The two questions referred are as follow :
'(1) Whether, on the facts and in the circumstances of the case, there was any material to justify the assessment of the sum of Rs. 29,000 as the income of the assessee ?
(2) If the answer to question No. 1 is in the affirmative, whether the interest income of Rs. 4,275, Rs. 4,670 and Rs. 3,713 was rightly assessed in the hands of the assessee for the assessment years 1963-64, 1964-65 and 1965-66, respectively ?'
2. The assessee, who is an individual, derived share income from two registered firms and had also interest income. The relevant assessment years are from 1963-64 to 1965-66.
3. The assessee was married on August 8, 1962, and the ITO found that his wife, Smt. Meena Hariram, carried on money-lending business in which she claimed to have invested Rs. 29,000. The assessee's wife who had filed returns of income for five years from 1958-59 to 1962-63 on February 16, 1963, that is, after the marriage, was assessed to income which was shown to have been derived from tailoring business. The ITO, on questioning the wife of the assessee, took the view that there was nothing to show that she had earned an amount of Rs. 29,000. In reaching this conclusion he considered the fact that no bank account was opened and that apart from the word of the wife there was nothing to show that she had earned this much amount. He also considered the answers given by the assessee's wife to certain questions put by the ITO relating to the alleged tailoring business. Having found that no tangible proof has been produced to show that the amount belonged to the assessee's wife, the ITO held that this amount of Rs. 29,000 was the secreted profit of the assessee. Consequently, he added this sum of Rs. 29,000 to the income of the assessee, and interest thereon, which has been shown to have accrued to the wife, was also added as the income of the assessee for all the three assessment year.
4. When the assessee went in appeal to the AAC, some new material was sought to be produced before the AAC. This new material consisted of receipts evidencing deposits of Rs. 12,000 with the cousin of the wife and a certificate issued by one Ghanshamdas showing that Rs. 7,500 and Rs. 5,000 were deposited with him by the wife on or about April 4, 1962, and April 7, 1962, respectively. Thus, within a span of a week from April 1, 1962, to April 8, 1962, a sum of Rs. 24,500 is said to have been deposited by the wife. Relevant entries in the books of account of the wife were also produced. The AAC found that the alleged deposits were with persons who were relatives of the wife and that the returns for the four years filed by the assessee's wife were filed at the instance of the husband and that the relatives must have obliged the assessee's wife by making entries in books and passing receipts and it was, therefore, not possible to believe that the wife would save an amount of Rs. 29,000 and keep the same with her cousin sister without investing anywhere or keeping it in a bank. He further considered the fact that those who certified that the wife was doing tailoring business had no accounts to prove that they had transactions with the lady on a large scale as stated in their certificate and that the wife was an illiterate lady and could not have carried on banking business as represented by her. The AAC, therefore, confirmed the order of the ITO.
5. When the matte was taken to the Tribunal, the Tribunal re-appreciated all the circumstances relied upon by the AAC. The circumstances considered by the Tribunal were as follow :
(a) The assessee's wife had no source of income and no account books of tailoring business and no record from which it could be found that the assessee's wife earned any income and was liable to be taxed.
(b) It was difficult to see why the husband should ask the wife to file the returns as the wife would have herself done this if the income in question was in truth her own income and if she was capable of understanding all the methods of earning this income.
(c) The wife had really no source of income on which an assessment could be made, whereas the assessee had very good sources of income on which substantial assessment could be made.
(d) Maintenance of account books of the wife in respect of money-lending business was clearly an after-thought, and, therefore, no importance can be attached to the said account books.
(e) The deposits with the two parties were made just to create evidence.
6. After referring to the above circumstances, the Tribunal found that 'there was plenty of material to show that the amount alleged to be the income of the assessee's and was, therefore, rightly assessed in the assessee's hands'. With these observations the appeal came to be dismissed.
7. The two questions reproduced above are said to arise out of the above order of the Tribunal. Mr. Munim, appearing on behalf of the assessee, has contended that the burden to show that the amount of Rs. 29,000 in respect of income from which the wife has filed the income-tax returns belongs to the assessee, lies on the department and there was no material before the income-tax authorities to substantiate the case of the department. Now, the orders of the AAC and the Tribunal clearly show that when the question as to whom the amount of Rs. 29,000 belonged was being inquired into, the evidence produced by the assessee was rejected, and it has been found on facts that the assessee's wife had really no source of income independently. The several circumstances which have been considered by the Tribunal have been reproduced by us earlier. It was permissible for the department to substantiate its stand that the amount does not belong to the wife but belongs to the assessee on the basis of the material produced by the assessee himself. There is no doubt in our mind that every material that has been considered by the Tribunal and rejected, clearly indicated that the amount of Rs. 20,000 did not belong to the assessee's wife at all but belonged to the assessee. The circumstances referred to above by us were clearly material to justify the assessment of Rs. 29,000 did not belong to the assessee's wife at all but belonged to the assessee. The circumstances referred to above by us were clearly material to justify the assessment of Rs. 29,000 as the income of the assessee. It was for the Tribunal to appreciate the material evidence and to reach a conclusion as to the circumstances on which an inference could be drawn against the assessee. The circumstances on which an inference could be drawn against the assessee. The circumstances reproduced above were clearly material in respect of the finding of the Tribunal. Therefore, question No. 1 has to be answered against the assessee. It is not in dispute that once question no. 1 is answered against the assessee, question no. 2 would automatically stand answered against the assessee.
8. The questions are accordingly answered as follow :
Question No. 1 - In the affirmative and against the assessee.
Question No. 2 - In the affirmative and against the assessee.
9. The assessee to pay costs of this reference.