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Ram Lal Ganpat Rai Vs. Commissioner of Income-tax, Bombay - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Reference No. 49 of 1967
Judge
Reported in[1978]112ITR462(Bom)
ActsIncome Tax Act, 1961 - Sections 68
AppellantRam Lal Ganpat Rai
RespondentCommissioner of Income-tax, Bombay
Appellant AdvocateS.E. Dastur, Adv.
Respondent AdvocateR.J. Joshi, Adv.
Excerpt:
direct taxation - undisclosed source of income - section 68 of income tax act, 1961 - whether there is any material data or evidence on record to show that income of assessee was from undisclosed source - material on record clearly showed that amount represented by cash credits in books of assessee's firms belong to hindu undivided family which were deposited in name of adoptive mother of 'karta' of family - material produced proved that income of assessee was from undisclosed source - assessee to pay cost to revenue. - - kaluram puranmal from november 9,1947, onwards till february 16,1950, he noticed that there were discrepancies between the evidence of shrimathi parwatibai and the evidence on onkarmal and that shrimathi parwatibai's statement clearly showed that she was completely.....tulzapurkar, j.1. in this reference which has been made to this court under section 66(2) of the indian income-tax act, 1922, at the instance of the assessee, the following two questions have been referred to us for our opinion : '(1) whether is any material, data or evidence on record in support of the findings of the tribunal that the sum of rs. 50,000 (rupees fifty thousand) and the sum of rs. 1,40,000 (rupees one lakh forty thousand) was income of the assessee from undisclosed source for the assessment year 1948-49 and 1949-50 respectively (2) whether there is any material, data or evidence on record to support the finding of the tribunal that the] sum of rs. 70,000 (rupees seventy thousand) was the income of the assessee from undisclosed source for the assessment year 1950-51 ?' 2......
Judgment:

Tulzapurkar, J.

1. In this reference which has been made to this court under section 66(2) of the Indian Income-tax Act, 1922, at the instance of the assessee, the following two questions have been referred to us for our opinion :

'(1) Whether is any material, data or evidence on record in support of the findings of the Tribunal that the sum of Rs. 50,000 (Rupees fifty thousand) and the sum of Rs. 1,40,000 (Rupees one lakh forty thousand) was income of the assessee from undisclosed source for the assessment year 1948-49 and 1949-50 respectively

(2) Whether there is any material, data or evidence on record to support the finding of the Tribunal that the] sum of Rs. 70,000 (Rupees seventy thousand) was the income of the assessee from undisclosed source for the assessment year 1950-51 ?'

2. These questions arise out of the facts and circumstances which may be briefly stated : The assessee Messrs. Ram Lal Ganpat Rai is a Hindu undivided family consisting of Onkarmal, the karta, his two major sons, Hanuman Parsad and Mahabir Parshad, two minor sons, Vijay Kumar and Ajay Kumar, and the adoptive mother of Onkarmal, Shrimati Parwatibai. it appear that the assessment for the year 1948-49 was originally made on July 27, 1951, while the assessment for the years 1949-50 and 1950-51 was made on July 28,1951. While the Income-tax Officer was dealing with assessment proceedings of the Hindu undivided family for the assessment year 1951-52 he came by certain information regarding certain deposits which stood in the name of Shrimati Parwatibai in the books of Messrs. Kaluram Puranmal of Bombay and Messrs. Ishwardas Hanuman Parshad. He found that a sum of Rs. 50,000 stood deposited in the name of Shrimati Parwatibai on November 9, 1947, with the previous year relevant for the assessment year 1948-49 and three sums of Rs. 50,000, Rs. 40,000 and Rs. 50,000 as standing deposited in her name on April 21,1948, October 22,1948, and January 2,1949, respectively, within the previous year relevant for the assessment year 1949-50. These deposits were noticed by him in the name of Shrimati Parwatibai in the books of Messrs. Kaluram Puranmal. In regard to the assessment year 1950-51, he noticed that there were in the aggregate cash credits of Rs. 2,60,00 in the books of Ishwardas Hanuman Parshad; but whereas in regard to three cash credits of Rs. 1,05,000, Rs. 60,000 and Rs. 25,000 (i.e., in all Rs. 1,90,000 the assessee's explanation was accepted, in regard to two further deposits which stood in the name of Shrimati Parwatibai, one of Rs. 40,000 under date December 30,1949, and the other of Rs. 30,000 under date February 10,1950, aggregating to Rs. 70,000, the assessee's explanation was not satisfactory. He was of the view that the source of the aforesaid deposits was not explained and since he had reason to believe that the said deposits represented the assessee's suppressed income which had escaped assessment, he initiated proceedings under section 34(1)(a) of the Act with the prior approval of the Commissioner of Income-tax. In the proceedings thus initiated by him under section 34(1)(a) the assessee was called upon to explain the nature and source of the aforesaid deposits and to produce evidence in support of the explanation therefor. The assessee's explanation in regard to these cash credits that stood in the name of Shrimati Parwatibai was that in November, 1943, Shrimati Parwatibai had separated from Onkarmal by a deed dated November 29,1943, and under this separation or partition that was effected between the mother and the son, the mother received three amounts, particulars whereof were given as follows :

Rs.(i) From the account of Bhagatram-Ki-Chachi in thebooks of M/s. Ramlal Ganpatrai, Bombay 36,930(ii) From the account Ishwardas Saraugi(deceased husband) 73,442(iii) Cash paid by Onkarmal at the timeof partition 50,000--------1,60,372--------

3. The explanation further was that the first two items represented Shrimati Parwatibai's moneys which she had kept deposited with Messrs. Ram Lal Ganpatrai, first at Amritsar and thereafter at Bombay, and the last item was paid to the mother by the son at the time of the separation. It was further explained that after Shrimati Parwatibai got the aforesaid amounts under the aforesaid deed of separation she had kept those moneys with herself and between 1943 to 1947 she used to advance portions of these moneys on interest to various persons and ton November 9,1947, the first deposit of Rs. 50,000 was made by her with the firm of Messrs. Kaluram Puranmal of Bombay and subsequently further amounts of Rs. 50,000, Rs. 40,000 and Rs. 50,000 (aggregating to Rs. 1,40,000) were similarly deposited with that firm on April 21,1948, October 22,1948, and January 4,1949, respectively. In other words, during the two previous years, relevant for the assessment years 1948-49 and 1949-50, an aggregate amount of Rs. 1,90,000 comprising of the initial receipt of Rs. 1,60,372 under date November 29,1943, and the interest earned thereon in the meantime, came to be deposited with the firm of Messrs. Kaluram Puranmal in the name of Shrimati Parwatibai. It was further explained that the deposits made with the firm of Messrs. Kaluram Puranmal were withdrawn on February 16, 1950, and the three cash credits of Rs. 1,05,00, Rs. 60,000 and Rs. 25,000 aggregating to Rs. 1,90,000 standing in the books of Ishwardas Hanuman Parshad within the previous year relevant for the assessment year 1950-51 were from out of the withdrawals made from Messrs. Kaluram Puranmal and as regards the two sums of Rs. 40,000 and Rs. 30,000 aggregating to Rs. 70,000 which stood in the name of Shrimati Parwatibai in the books of Ishwardas Hanuman Parshad under dates December 30,1949, and February 10,1950, respectively, within the year relevant for the assessment year 1950-51, these were stated to have come out of interest amounting to Rs. 70,000 received from Messrs. Kaluram Puranmal for the period of money was laying in deposit with that firm. In regard to this explanation that was given by the assessee, Shrimati Parwatibai was examined by the Income-tax Officer and here statements were recorded on two days, viz., February 15,1955, and February 18,1956. A declaration of Shrimati Parwatibai dated January 22, 1959, was also filed and she was cross-examined on February 14,1959. Onkarmal, the karta of the Hindu undivided family, was also examined by the Income-tax Officer on two occasions, first on February 21,1956, and again on March 5,1956. The partition deed or the deed of separation dated November 29,1943, written out on a stamp paper of Rs. 10 was also produced. On a consideration of the material that was put before the Income-tax Officer and having regard to the several discrepancies that were noticed in the statements that were made by Shrimati Parwatibai and the statements that were made by Onkarmal, and the other circumstances surrounding the deed of partition, the Income-tax Officer by his order dated March 20,1959, rejected the explanation given by the assessee, and he came to the conclusion that the time of deposit of Rs. 50,000 under date November 9,1947, in the assessment year 1948-49, the three items of Rs. 50,000, Rs. 40,000 and Rs. 50,000 under dates April 21,1948, October 22, 1948, and January 2,1949, respectively, aggregating to Rs. 1,40,000 in the assessment year 1949-50, and the two items of deposit of Rs. 40,000 and Rs. 30,000 under dates December 30,1949, and February 10,1950, aggregating to Rs. 70,000 represented the income of the assessee in those relevant years from undisclosed source and in each of the relevant years he made the requisite additions. In coming to this conclusion, the Income-tax Officer relied upon several circumstances which emerged on the record. The manner in which the deed of partition had been executed and the stamp paper therefor had been purchased, made him take the view that the alleged partition between Onkarmal on the one hand and Shrimati Parwatibai on the other had not been established, that the deed filed before him was no genuine and that it has further not been established that Shrimathi Parwatibai had been given the amount of Rs. 1,60,372 as stated in the alleged deed. He further noticed that all the credits in the books of Kaluram Puranmal were stated to have come from Messrs. Ramlal Ganpat Rai but the books of Ramlal Ganpat Rai were not produced though called for and are excuse for their non-production that those books were lost in communal riots at Amritsar in August,1947, could not be accepted as it was not understood why 1943 books of Bombay head office should have been sent to Amritsar in 1947 for adjustment purposes. As regards the diverse amounts that were received by way of interest from Messrs. Kaluram Puranmal from November 9,1947, onwards till February 16,1950, he noticed that there were discrepancies between the evidence of Shrimathi Parwatibai and the evidence on Onkarmal and that Shrimathi Parwatibai's statement clearly showed that she was completely ignorant as to how and in what manner and who had actually collected the interest on those deposits that had been kept with the firm of Messrs. Kaluram Puranmal. The entire is in the books of Messrs. Kaluram Puranmal showed collection of interest on the deposits by 4 or 5 named persons who were not known to Shri Parwatibai an all these circumstances showed that Parwatibai was a benami of Onkarmal and the moneys introduced in her name belonged to Onkarmal as the karta of the Hindu undivided family. The Income-tax Officer, therefore, rejected the explanation and upon the available material held these deposits to be income of the Hindu undivided family from undisclosed source. When the matter 3was carried by the assessee to the Appellate Assistant Commissioner in appeal, the assessee made some sort of improvement in the record by producing for the first time before that authority the balance-sheets for the years 1942-43 and 1946-47, which had not been produced by the assessee before the Income-tax Officer and strong reliance was placed upon this documentary evidence in support of the contention that since the two amounts of Rs. 36,930 and Rs. 73,442 found place in the balance-sheet for the year 1942-43, and since these amounts did not find place in the balance-sheet for the year 1946-47, a reasonable inference could be drawn that these liabilities had been discharged or satisfied and the two amounts had been paid by the assessee-firm to Shrimathi Parwatibai. It was explained that the books relating to the intervening years were not available as they had been destroyed in the communal riots that broke out at Amritsar. This explanation was not accepted by the Appellate Assistant Commissioner who took the view that it was not understood as to how and why the Bombay books should have gone to Amritsar long after the end of the accounting years and the non-production of these books clearly gave rise to an adverse inference against the assessee. The additional material which was thus produced by the assessee before the Appellate Assistant Commissioner was not accepted by the Appellate Assistant Commissioner as lending any support to its case and after considering all the other facts and circumstances which emerged on record, the Appellate Assistant Commissioner confirmed the Income-tax Officer's additions and dismissed the appeals. When the matter was further carried in second appeal to the Tribunal, on an appreciation of the material that had been placed on record the Tribunal confirmed the additions that were made by the taxing authorities as representing suppressed income of the assessee from undisclosed source in the relevant years. The application for reference was rejected by the Tribunal and thereafter the assessee applied to this court for a reference under section 66(2) and, as stated earlier, at the instance of the assessee the Tribunal has referred the two questions set out at the commencement of this judgment to this court for our decision.

4. Mr. Dastur appearing for the assessee has principally contended that the taxing authorities as well as the Appellate Tribunal have reached the conclusion that the cash credits which stood in the name of Shrimathi Parwatibai in the books of Messrs. Kaluram Puranmal for the assessment years 1948-49 and 1949-50, and the two cash credits which stood in her name in the books of Messrs. Outwards Hanuman Parshad for the assessment year 1950-51 represented the suppressed income of the assessee from undisclosed source merely on the basis that the explanation offered by the assessee was not acceptable and that the deed of partition or the deed of separation dated November 29,943, was not genuine. He urged that mere rejection of the explanation given by the assessee with regard to the cash credits so found in the names of one of the members of the Hindu undivided family cannot reasonably lead to the conclusion that the said cash credits represented the suppressed income from undisclosed source so as to enable the taxing authorities to make additions to the income of the Hindu undivided family. He contended that there was no material or evidence eon record from which an inference could reasonably be drawn that the amounts represented by the cash credits really belonged to the Hindu undivided family. He further contended that there was further no material to show that these amounts represented by the cash credits were of revenue or income nature; and, lastly, he urged that even if it were assumed of the purpose of argument that there was material to show that these amounts belonged to the Hindu undivided family and that these were of revenue nature, the material on record clearly showed that these were not referable to the three assessment years in question and as such the additions made to the assessee's income in the three relevant assessment years deserve to be quashed. On the other hand, Mr. Joshi appearing for the revenue contended that there was enough material on record to show that these amounts represented by the cash credits which stood in the name of Shrimathi Parwatibai were moneys which belonged to the Hindu undivided family and not to Shrimathi Parwatibai as suggested by the assessee, and that these amounts were of revenue or income nature. He pointed out that so far as the last contention urged by Mr. Dastur is concerned, no case was made out nor was any such contention urged either before the taxing authorities or before the Tribunal by the assessee. He urged that prima facie the cash credits appeared under dates which fell within the years relevant for the assessment years in question and in the absence of any material brought on record to show that these cash credits which appeared in the books of Messrs. Kaluram Puranmal and Ishwardas Hanuman Parshad were traceable to the initial amounts which appeared in the books of the assessee in the year 1943 it could not be said that these amounts were not referable to the three assessment years in question and since this aspect of the matter was not raised before the taxing authorities or even before the Tribunal, it would not be open to the assessee to raise it before this court. In any event, he contended that there was no material on record to show that the cash credits which stood in the name of Shrimathi Parwatibai in the books of Messrs. Kaluram Puranmal and Ishwardas Hanuman Parshad were traceable to the items which stood in the name of the lady in the books of the assessee for the year 1942-43 and as such the taxing authorities as well as the Tribunal were right in coming to the conclusion that the additions were required to be made to the assessee's income for the three relevant assessment years in question.

5. From the manner in which Mr. Dastur has approached the questions that have been raised for our consideration in this reference it will appear clear that the first and foremost question which will have to be considered is whether the taxing authorities as well as the Tribunal have really reached the conclusion which they have done, merely on the basis of rejecting the explanation offered by the assessee in regard to these cash credits or whether there is any other material on record available on the basis of which the inference drawn by the taxing authorities and the Tribunal could be drawn. Mr. Dastur has taken us through the entire material on record which principally consists of two statements of Shrimathi Parwatibai (February 15,1955, and February 18,1956), one declaration of hers (January 22,1959) and her evidence in cross examination which was recorded on February 14,1959, two statements of Onkarmal, the karta of the Hindu undivided family, one dated February 21,1956, and the other dated March 5, 1956, the partition deed or the deed of separation dated November 29,1943, and copies of statement of account of Parwatibai for the Maru years 2004-2005, 2005-2006 and 2006-2007 in the books of Messrs. Kaluram Puranmal Bombay, and copies of statement of account of Shrimathi Parwatibai for the Maru year 2006-2007 in the books of Messrs. Ishwardas Hanuman Parshad. The question is whether the aforesaid material and the circumstances which emerge from that material do lead to the inference that the amount represented by the cash credits really belonged to the Hindu undivided family, that these were of revenue nature and that these were referable to the three assessment years in question or not.

6. It was not disputed before us by Mr. Dastur appearing for the assessee that the copies of statement of account of Shrimathi Parwatibai for the relevant Maru years in the books of Messrs. Kaluram Puranmal and in the Books of Messrs. Ishwardas Hanuman Parshad clearly establish the fact that there were in all six cash credit items representing deposits that stood in the name of Shrimathi Parwatibai with these two firms of the following particulars :

(i) Rs. 50,000 dated 9-11-1947 in the assessment year 1948-49(ii) Rs. 50,000 dated 21-4-1948(iii) Rs. 40,000 dated 22-10-1948(iv) Rs. 50,000 dated 2-1-1949.-----------Rs. 1,90,000-----------

7. all being in the year 1949-50. These four cash credits representing the deposits standing in the name of Shrimathi Parwatibai are in the books of Messrs. Kaluram Puranmal. The last two items of Rs. 40,000 dated December 30,1949, and Rs. 30,000 dated February 10, 1950, totalling Rs. 70,000 appear in her name in the books of Messrs. Ishwardas Hanuman Parshad.

8. Two things stand out clearly in regard to the aforesaid cash credit items and these are that, in the first place, these cash credits representing the deposits are not cash credit items in the books of account of the assessee firm, but these are cash credits appearing in the third party's books like Messrs. Kaluram Puranmal and Messrs. Ishwardas Hanuman Parshad though in the latter firm Onkarmal is the major partner. The other aspect which must be stated is that these cash credits appear in the name of Shrimathi Parwatibai who, at the highest, could be regarded as a member of the Hindu undivided family and not in the name of either the karta or any of the coparceners of the Hindu undivided family. Having regard to these aspects the question that will have to be considered is whether Shrimathi Parwatibai was merely a benamidar for the Hindu undivided family so far as the cash credit items are concerned, or she was merely the name lender and the moneys really belonged to the Hindu undivided family or not, as it is only if such inference is possible from the material on record that there will be no difficulty coming to the conclusion that these cash credits were of revenue nature an represented the suppressed income of the Hindu undivided family inasmuch as such latter conclusion cannot be drawn from the mere fact that these cash credits stood in the name of a female member of the Hindu undivided family.

9. Turning to the documentary evidence, we shall first deal with the deed of partition dated November 29,1943, copy where of has been annexed as annexure 'C' to the statement of the case, and this was the principal document that was relied upon by the assessee for the purpose of showing that it was under this deed dated November 29,1943, that Shrimathi Parwatibai has received three amounts of Rs. 36,930 from the account maintained in the name of Bhagatram-ki-Chachi in the books of Messrs. Ramlal Ganpatrai, Bombay, Rs. 73,442 from the account maintained in the name of Issardasji Sarogi (deceased husband of parwatibai) and Rs. 50,000 paid to her in cash by Shri Onkarmal on the occasion of the partition. The deed undoubtedly recites that Parwatibai had adopted Onkarmal of her own free will that they were living together in a family, that Onkarmal was the karta of the family, but that recently the mother and the son felt that it was not desirable to live in state of unpleasantness and it was better to get separated, and the deed goes on to record the terms on which the separation took place. The deed further recites that Parwatibai has got her money which standing partly in her name, (i.e., Bhagatram-ki-Chachi) and partly in the name of Issardasji Sarogi,i.e., the deceased husband's name and father of Onkarmal), that the amount standing in her name is Rs. 36,930 and the amount credited in the name of Issardasji Sarogi is Rs. 73,442 totalling in all Rs. 1,10,372 and that the said amount has been given to Shrimathi Parwatibai. It is also recited in the deed that the house in which Parwatibai has been residing is also given her for her residence and that after her death that house will belong to Onkarmal. It is further recited that a sum of Rs. 50,000 has also been given to her by Onkarmal under the deed. As regards these amounts it is recited that Shrimathi Parwatibai has become the owner thereof and she could spend those moneys, as she liked. As regards the residential house a term is mentioned that Shrimathi Parwatibai will have only a right of residence till her death, but she will have no right to mortgage the house. The deed then concludes by saying that Onkarmal has no interest in Parwatibai's moneys and property and Parwatibai has no interest whatever in moneys and properties owned by Onkarmal and that the said arrangement is recorded so that in future there shall be no grievance of either of the parties. The first circumstance that would strike anybody is the manner in which and the purpose for which this deed has come into existence. Since Onkarmal, the karta of the family, was not separating from his own sons, ordinarily the mother would have no share in the family property, she having become widow as early as in 1920; but apart from this aspect of the matter, the recitals that are to be found in this document sound rather unnatural. Admittedly, Issardas had died in 1920 when Shrimathi Parwatibai was about 23 years old. In the declaration of Shrimathi Parwatibai which was filed on January 22,1959, she has claimed that in the firm of Messrs. Ramlal Ganpatrai, Bombay, she has an account in her name (Bhagatram-ki-Chachi), as also in the name of Issardas Sarogi right from 1930 and that the initial deposits in these two accounts were of Rs. 20,000 and Rs. 40,000 respectively. It appears a little unnatural that if those two amounts were really her streedhan as she has purport to claim, she would keep Rs. 40,000 in the name of her husband who had died 10 years prior to the deposit in the shop of the Hindu undivided family. Besides, no books of account or other documentary evidence was furnished in support of her statement that these two amounts of s. 20,000 and Rs. 40,000 had really been deposited in the aforesaid two names in the firm of Messrs. Ramlal Ganpatrai, Bombay. The most natural course of conduct on the part of a Hindu woman would be to keep her streedhan money in her own name and not in the aforesaid manner as has been stated by her. Further, the document, if it affects the rights of parties of immovable property which it purports to do, would require registration; but admittedly, the document had not been registered. That apart the stamp paper of Rs. 10 on which the same has been written out and executed has not been purchased either in the name of Shrimathi Parwatibai or in the name of Onkarmal, wither of the two executants of the deed. The endorsement thereon suggests that it has been purchased by M/s. Radhelal Agarwal for Mr. Satish Chandra. It is true that Onkarmal has stated that Satish Chandra was his advocate at Karchi, but has not been able to explain who Radhelal Agarwal was. The fact stands out clearly that he stamp paper has been purchased in the name of someone else and not in the name of either of the two executants and this circumstance naturally leads to the inference that this stamp paper which had been purchased for some other purpose and for some other client of Mr. Satish Chandra has been used by Shrimathi Parwatibai and Onkarmal for writing out this deed of partition. Moreover, the signatures of the two executants have not been attested by any advocate or by any one. Lastly, Shrimathi Parwatibai stated in one of her statements that when she separated from her son she did not sign any document, though in her cross-examination she prevaricated and stated that Onkarmal had made her sign a document. All these circumstances which surround the deed of partition or the deed of separation, as Mr. Dastur wanted to call it, really throw considerable doubt on the genuineness of the document and it is because of these circumstances which surround this document that the taxing authorities as well as the Tribunal came to the conclusion that the said document was not a genuine document, and that Shrimathi Parwatibai was not paid the amounts of Rs. 36,930 and Rs. 73,442 and Rs. 50,000 as recited in the deed.

10. On the question as to whether the deposits which allegedly stood in the name of Shrimathi Parwatibai and the deposits which stood in the name of Issardas, the circumstance also stands out clearly that no material had been put before the taxing authorities as well as the before the Tribunal to show that Shrimathi Parwatibai had any such amounts of her which she was in a position to deposit in the firm of Messrs. Ramlal Ganpatrai. As regard the bigger sum of Rs. 73,442, actually it stood in the name of Issardasji Sarogi and not in the name of lady at all and the said amount appears to have continued to remain in that name long after Issardas had died, nd as regards the smaller amount of Rs. 36,930 though it stood in the name of the lady, styled as Bhagatram-ki-Chachi, there was no material to show that it really belonged to her oar was her streedhan amount which she had deposited. There was no material produced to show that show had either any independent source of income or any money was given to her at any time. It is true that form the balance-sheets for the year 1942-43 an for the 1946-47, which were produced for the first time before the Appellate Assistant Commissioner, an argument was sought to be built on behalf of the assessee that the fact that these amounts were maintained in the balance-sheet for the year 1942-43 and that there was no mentioned of these amounts in the balance-sheet for the year 1946-47 led to the inference that the said amounts must have been withdrawn by the lady or paid to her at any rate before 1946-47. On this aspect of the matter the Appellate Assistant Commissioner as well as the Tribunal found fault with the assessee of non-production of the books of account and the balance-sheet for the intervening period and since the explanation for non-production of these documents was not accepted, an adverse inference was drawn that had these books and balance-sheets been produced, they would have run counter to the story of the assessee. It is for the Appellate Assistant Commissioner and the Tribunal, who is the ultimate fact-finding authority, to decide whether the explanation for non-production of the relevant books should be accepted or should not be accepted, and on the materials that we made available to them both the Appellate Assistant Commissioner as well as the Tribunal took the view that the explanation was from satisfactory and, therefore, an adverse inference indicated above was liable to be justifiably drawn against the assessee. Apart from drawing an adverse inference for non-production of these books for the intervening period, one more inference arises and that inference relates to the absence of a link between the withdrawal of the deposits which stood in the books of M/s. Ramlal Ganpatrai, Bombay, and the deposits represented by cash credits in the books M/s. Kaluram Puranmal. The absence of these books also show that it could not positively be said don behalf of the assessee that the identity of the amounts represented by the cash credits which appear in he books of M/s. Kaluram Puranmal was traceable to the amounts that stood in the books of M/s. Ramlal Ganpatrai which was allegedly withdrawn in November,1943. This absence of the link would clearly run counter to the contention urged by Mr. Dastur before us that even if the explanation of there being a partition between M/s. Ramlal Ganpatrai and his mother and the withdrawal of the months by Shrimathi Parwatibai at the time of the alleged partition were to be rejected, the existence of the cash credits in the books of M/s. Ramlal Ganpatrai in the assessment year 1943-44 at any rate could not be disputed and that, therefore, even if the story that the amounts belonged to Shrimathi Parwatibai were to be rejected, these would be the moneys which would belong to the Hindu undivided family and the same must be taken to have been deposited with M/s. Kaluram Puranmal in November,1947, and as such the additions could not be made in the relevant assessment years for which the assessment proceedings were reopened, but if at all, they would be referable to earlier years. In the absence of the requisite link such an argument would not be open to the assessee.

11. Dealing next with the material which was available for the purpose of coming to the conclusion that Shrimathi Parwatibai was merely the name lent by her to the Hindu undivided family for the purpose of making the deposits in M/s. Kaluram Puranmal which was the inference ultimately drawn by the taxing authorities as well as the Tribunal, it will appear clear on a close scrutiny of the several statements recorded of Shrimathi Parwatibai, the two statements of M/s. Ramlal Ganpatrai together with the entries in the books of account of M/s. Kaluram Puranmal, that they clearly furnish materials not merely for the purpose of rejecting their story which they trotted out in the statements, but for coming to the conclusion that these cash credits were the suppressed income of the Hindu undivided family. In the first place, as regards the interest which was paid by the firm of M/s. Kaluram Puranmal on the deposits represented by the cash credits entries appearing in their books, for the relevant period, the entries in the books of M/s. Kaluram Puranmal clearly go to show that the various amounts of interest which were credited to the account of Shrimathi Parwatibai had been received by the following four persons on behalf of Shrimathi Parwatibai, viz, Dhanpal Bhayya, m Jaidev Bhayya, Durgadutt and Jamnadas. This documentary material clearly conflicts with the statement of Shrimathi Parwatibai which came to be recorded on February 18,1956. In her statement to recorded on that day Shrimathi Parwatibai stated that she did not know any of these persons except Jamnadas, an employee of M/s. Ishwardas Hanuman Parshad. She further stated that she had never sent these persons to M/s. Kaluram Puranmal to receive her money nor had she received any moneys through these persons. It would thus appear clear that her aforesaid statement is clearly contradicted by the entries in the account books of M/s. Kaluram Puranmal. It is nobody's case that interest amounts were not paid out by M/s. Kaluram Puranmal to anybody. In fact, the entire sin the books of M/s. Kaluram Puranmal show that interest amounts had been paid and were sent out by that firm through the aforesaid four person. If according to the statement of Shrimathi Parwatibai she did not receive any interest amounts from these persons, surely these must have been received by Onkarmal as the karta of Hindu undivided family from these persons. In fact, one of the person named who carried such interest from M/s. Kaluram Puranmal to the payee was an employee of Ishwardas Hanuman Parshad, the firm in which Onkarmal happens to be a major partner. Apart from this aspect touching the payment of interest from time to time which the firm of M/s. Kaluram Puranmal has paid, there is yet one more glaring discrepancy which arises between the statements of the mother and the son on the one hand, and the entry which appears in the books of M/s. Kaluram Puranmal as regards the withdrawal of the entire amount of Rs. 1,90,000 which is said to have been effected on February 16, 1950. In his statement recorded on February 21, 1956, when Onkarmal was questioned whether he had at any time deposited or withdrawn any money from M/s. Kaluram Puranmal on behalf of his mother, Onkarmal categorically stated thus : 'Never At no time did I act as intermediary for my mother' Similarly, in her statement recorded on February 18,1956, when Parwatibai was questioned as to how actually the cash was received by her when she used to withdraw any amount from M/s. Kaluram Puranmal, she stated that sometimes the cash was given to her through some of the employees of Kaluram Puranmal and sometimes through some of her men; that she used to sent a man by name Moolji who is an employee of M/s. Ishwardas Hanuman Parshad; but she categorically asserted thus : 'I had never seen Onkarmal to M/s. Kaluram Puranmal either to deposit any money or to withdraw any money. I have never signed for any amount including interest received from M/s. Kaluram Puranmal.' It is true that she prevaricated in her declaration which was filed much later on January 22,1959, presumably under legal advice, and stated that sometimes on her instructions Shri Onkarmal and Shri Hanuman Parshad had withdrawn the amount on her behalf. It is difficult to give any credence to the prevaricated statement made by her as late as on January 22,1959. Therefore, in her earlier statement which was recorded on February 18, 1956, she categorically asserted that she has never sent Shri Onkarmal to M/s. Kaluram Puranmal either for depositing money or to withdraw any money, and to similar effect a categorical assertions of these two persons, the entry which is found in the books of M/s. Kaluram Puranmal clearly shows that a sum of Rs. 1,90,000 which was debited to the account of Shrimathi Parwatibai on February 16,1950, has been received in cash by Onkarmal under his signature. It will thus appear clear that it is not a case of mere colossal ignorance on the part of Shrimathi Parwatibai how interest was dealt with M/s. Kaluram Puranmal or how the principal amount of Rs. 1,90,000 was received back, but both the mother and the son have indulged in making false assertions in that behalf that Onkarmal had nothing whatever to do with either the deposit of the money or its withdrawal. The ignorance displayed by Shrimathi Parwatibai about the manner in which her cash credits were dealt with while they lay with the firm of M/s. Kaluram Puranmal, both in the matter of payment of interest as well a the matter of return of the principal amount and the categorical false assertions made by both the mother and the son and the entries in the books of Kaluram clearly afford sufficient material to draw an inference that Shrimathi Parwatibai was merely the name-lender whose name had been utilised by her son, Onkarmal, for making the deposit of moneys which belonged to the Hindu undivided family. It may be stated that it is nowhere suggested on behalf of Onkarmal, the karta of the Hindu undivided family, that he had any personal income or personal property of his which was separately assessed. In our view, this material does not merely rest at the stage of mere rejection of the explanation offered by the assessee, but goes much further and affords sufficient material to enable any reasonable body of persons to come to the conclusion that the name of Parwatibai was merely a name which she had lent and was utilised by her son, Onkarmal, for depositing cash amounts with M/s. Kaluram Puranmal-moneys which belonged to him as the karta of the Hindu undivided family. Once the conclusion is drawn that the name of Parwatibai was merely a benami for Onkarmal as the karta of the Hindu undivided family, the cash credits standing in the books of account of a third party like M/s. Kaluram Puranmal must be taken to be standing in the name of Hindu undivided family or the karta of the Hindu undivided family and the presumption would be that such cash credits represented the revenue or the income of the Hindu undivided family. It is also the assessee's case that these very moneys after they were withdrawn form Messrs. Kaluram Puranmal were deposited in the firm of Messrs. Ishwardas Hanuman Parshad. In this view of the matter it seems to us quite clear that there was ample material on record for the taxing authorities as well a the Tribunal to come to the conclusion that the amounts represented by the cash credits which stood in the books of Messrs. Kaluram Puranmal as well as in the books of M/s. Ishwardas Hanuman Parshad not merely belonged to the Hindu undivided family, but were also the amounts of revenue or income nature and since prima facie these cash credits which represented the deposits of the Hindu undivided family appeared in the books of Messrs. Kaluram Puranmal during the years relevant for the assessment years 1948-49 and 1950-51 and in the books M/s. Ishwardas Hanuman Prashad within the year relevant for the assessment year 1950-51, the additions were justifiably made in the assessments for these years. As we have already pointed out above there being no material on record from which these cash credits could be traced to the initial amount which stood in the books of account M/s. Ramlal Ganpatrai in 1942-43, there would be no question of treating these cash credits which appear in the books of M/s. Kaluram Puranmal and Ishwardas Hanuman Prashad as being referable to the earlier years an not to the three assessment years in question. No such aspect was pressed into service on behalf of the assessee before the Tribunal.

12. Mr. Dastur refer us to quite a few authorities on the question which he raised before us, but, in our view, having regard to the aforesaid discussion, we do not think it necessary to refer to all those authorities to which our attention was invited. Strong reliance was placed by him upon the decision of the Allahabad High Court in Ram Kishan Das Munnu Lal v. Commissioner of Income-tax : [1961]41ITR452(All) , of the purpose of contending that mere rejection of the explanation offered by the assessee in respect of cash credit items would not lead to the necessary inference that the deposits represented by cash credit entries represented the income of the assessee from undisclosed source and also for the proposition that if the cash credits stood in the name of any member of the Hindu undivided family, no inference could be drawn that the amounts represented by the cash credits belonged to the Hindu undivided family merely on the basis of relationship of that member with the karta of the Hindu undivided family. In that case, three person, B,K.and R were some of the members of a joint Hindu family. In the account books of a firm in which B was a partner in his individual capacity, certain cash deposits were credited in the names of K, R and B's mother. Those amounts were not treated as the income of the firm but the family was called upon to explain the deposits and show cause why the amounts should not be treated as its income. The explanation given was not believed and the aggregate of the amounts was treated as the income of the family and was assessed accordingly. On a reference to the High Court, the Allahabad High Court took the view that on the face the assessee family could not be said to have received the amounts in question at all. The court observed that it was possible for the income-tax authorities to find that the deposits did not belong to the persons in whose names they were credited in the accounts of the firm but really belonged to the assessee, but such a finding could be arrived at on some material only; that such a finding could not be recorded merely as an inference from the fact that the assessee family could not explain how the persons in whose names the deposits appeared came to have those amounts. Mere relationship of those person to the assessee family was no reason for assuming that the deposits belonged to the family and not to those persons, and the onus lay on the department to establish as a fact that the person in whose names the deposits were made were not really the owners of the moneys but that the moneys belonged to the assessee family, and the fact that the explanation given by the family was rejected did not justify an inference that the deposits belonged not to the persons in whose names they appeared but to the family which had not received them and there was no material on which a finding that the amounts belonged to the family could be sustained. After considering a number of decisions of other courts, the Allahabad High Court has indicated its ratio in that case as above. In our view, thee could be no quarrel with the principle or the ratio that has been laid down. The question, as we have said above, would be a question of fact in each case and the question would be whether there are materials on record form which the requisite reference could be drawn. Having regard to the facts and materials which obtain on the record in the instant case before us, we have shown above that the requisite inference could be and had been rightly drawn by the taxing authorities and the Tribunal that the deposits represented by the cash credits appearing in the books of Messrs. Kaluram Puranmal and Ishwardas Hanuman Prashad standing in the names of Shrimathi Parwatibai belonged to the Hindu undivided family. The decision, therefore, is of no avail to the assessee. No the question as to how the material on record is to be appreciated for the purpose of drawing the requisite inference, it would be useful to refer to the decision of the Supreme Court in the case of Commissioner of Income-tax v. Daulat Ram Rawatmull : [1973]87ITR349(SC) and one of the principles enunciate by the Supreme Court in that case is to the effect that when a conclusion has been reached on an appreciation of a number of facts, whether that is sound or not must be determined, not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all facts in their setting as a whole. As we have pointed out in our discussion it is not as if this is a case where the requisite inference has been drawn by the taxing authorities and the Tribunal merely by rejecting the explanation given by the assessee about the cash credits appearing in the books of M/s. Kaluram Puranmal and Ishwardas Hanuman Prashad. But the other material on record clearly shows that the circumstances emerging therefrom led to the requisite inference that the amounts represented by the cash credits in the books of these two firms belonged to the Hindu undivided family and that it was a case where Shrimathi Parwatibai had merely lent her name while depositing the amounts belonging to the Hindu undivided family with the aforesaid two firms.

13. Having regard to the above discussion both the questions referred to us are answered in the affirmative and against the assessee. The assessee will pay he costs of the reference to the revenue.

14. Mr. Dastur for the assessee requested us that a direction to he taxing authorities may be issued by us as, according to him, the income from these cash credits deposits had been taxed doubly, once in the hands of the Hindu undivided family and again in the hands of Shrimathi Parwatibai for some years, and that having regard to the decision which has been reached by this court in the reference, such double taxation would not be proper. Mr. dastur has categorically stated before us that his client, the assessee, is accepting the decision of this court in the above reference and would not prefer any appeal to the higher court against the same. In view of this statement made we feel that the taxing authorities should consider the aspect of double taxation of the income as pointed out by Mr. Dastur and, if necessary, proper adjustments may be made.


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