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Udhavdas Kewalram Vs. Commissioner of Income-tax, Bombay City-i - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Reference No. 170 of 1972
Judge
Reported in[1982]8TAXMAN185(Bom)
ActsIncome Tax Act, 1961 - Sections 68
AppellantUdhavdas Kewalram
RespondentCommissioner of Income-tax, Bombay City-i
Excerpt:
.....- whether there was evidence before tribunal to hold that credit of certain amount in account of wife of assessee did not represent sale proceeds of her gold ornaments - cogent evidence consisting of vouchers and list of person who presented gifts to wife at time of marriage - no reason to discard evidence produced by assessee in respect of said amount - no material on record to show that said evidence was false - said amount belonged to assessee's wife and does not belong to assessee so as to be included in his income - question answered in affirmative. - - 11. in this case, in commenting upon the reasoning of the tribunal in its order, we can do no better than quote the observations of the supreme court in its decision [1976] 66 itr 462, setting aside the said order. the supreme..........first wife died on february 19, 1950. thereafter on july 26, 1950, he married his second wife, ishwaribai, who has now been brought on record, on his death, as the heir and legal representative.4. we are concerned in this case with assessment year 1952-53, the previous year ending on august 23, 1951, during the relevant assessment year there was in the books of account of the assessee an account in the name of his wife, ishwaribai, showing a cash credit of rs. 55,293 representing the sale proceeds of ornaments received by her as presents at the time of her marriage with the assessee.5. before the ito the said sale proceeds were supported by necessary vouchers showing the sale of the ornaments. the assessee has also filed before the ito a list showing the articles received by.....
Judgment:

Rege, J.

1. This reference by the Income-tax Appellate Tribunal is made at the instance of the Supreme Court under their judgment dated April 14, 1967, in Civil Appeal No. 668 of 1966 ( : [1967]66ITR462(SC) ), referring the following questions for our opinion:

' (1) Whether there was evidence before the Tribunal to hold that the credit of Rs. 55,293 in the account of the wife of the assessee did not represent the sale proceeds of her gold ornaments ?

(2) If the answer to question No. (1) is in the affirmative, whether the sum of Rs. 55,293 could be held as the 'undisclosed income' of the assessee himself ?'

2. Since the assessee died during the proceedings, his widow, Ishwaribai, has been brought on record with the permission of the court.

3. The assessee migrated to India from Pakistan in 1947 and was doing money-leaning business. The assessee's first wife died on February 19, 1950. Thereafter on July 26, 1950, he married his second wife, Ishwaribai, who has now been brought on record, on his death, as the heir and legal representative.

4. We are concerned in this case with assessment year 1952-53, the previous year ending on August 23, 1951, During the relevant assessment year there was in the books of account of the assessee an account in the name of his wife, Ishwaribai, showing a cash credit of Rs. 55,293 representing the sale proceeds of ornaments received by her as presents at the time of her marriage with the assessee.

5. Before the ITO the said sale proceeds were supported by necessary vouchers showing the sale of the ornaments. The assessee has also filed before the ITO a list showing the articles received by Ishwaribai at the time of her marriage with the assessee from various relatives and friends, and also a copy of the English translation of the entire in the name of Ishwaribai in the books of account of the assessee, as the books were maintained in Sindhi language. The ITO, however, did not ascertain the truth or otherwise of the list produced by the assessee by calling either the assessee or his wife or any of the person mentioned therein. However, the ITO rejected the assessee's claim and added the said amount to the income of the assessee by observing:

'It was unbelievable that the assessee could have disposed of the ornaments of Ishwaribai which he received as presents at the time of their marriage, just nine, months after the marriage. The assessee has not been able to show that there was any dire necessity for him to dispose of those ornaments. I have, therefore, reason to believe that this is the fact that the a benami account oof the assessee. This belief is further strengthened by the fact that the sale made was not of the ornaments but of gold.'

6. Making the said observations, the ITO, strangely enough, came to the conclusion that the assessee's explanation that this amount was sale proceeds of the ornaments received by him at the time of his marriage cannot be accepted.

7. In an appeal to the AAC against the said order, the assessee, apart from the evidence already produced, gave further particulars of the said amount of Rs. 55,293 by showing that on March 17, 1951, an amount of Rs. 54,000 and on March 26, 1951, a further sum of Rs. 1,293.13 was received from M/s. Ambalal Amichand toward the price of gold which was melted at the Bombay Bullion Exchange factory and sold to him. The said statement gave details of the melting of the gold ornaments and other particulars. The said statement was also supported by vouchers from the Bullion Exchange Refinery and the said Ambalal Amichand.

8. The AAC accepted the explanation of the assessee in respect of the amount, observing that the sale proceeds were admittedly supported by the sale vouchers and also by the vouchers indicating the charges for the melting of the gold, which was sufficient evidence to support the contention of the assessee. The AAC, therefore, deleted the addition of Rs. 55,293 made by the ITO.

9. Against the said order of the AAC, an appeal was preferred by the Department to the Tribunal. However, the Tribunal, without even refereeing to the evidence produced by the assessee in support of his contention, but merely acting on probabilities, set aside the order of the AAC and confirmed the order of the ITO holding that the said amount was the benami income of the assessee. In doing so, the Tribunal observed as under:

'There has been a lapse of a few years after the partitioning of the country during which time the assessee has been carrying on business in India on his won. On the death of his wife, Gopibai in 1950, within a few months he married his second wife, Bai Ishwaribai, the ornaments of whom are said to have been sold again within a few months of marriage, to provide the credit of Rs. 55,293, as the ornaments were outmoded. The assessee too showed us at the hearing one such ornament. If the wife had actually unloaded all the ornaments out of the vouge, it is indeed surprising how show retained this single ornaments. This version is too unreal to be accepted. If old ornaments has been given by the parents, there must have been some sentimental value attached to them as heirlooms which the young wife would cherish fondly to pass on to her own daughters in time. If the lady wanted ornaments of the later designs, she could have, in her situation, got all of them for just the asking, without any need to sell the old jewels. Actually, it is admitted that no new ornaments has been also purchased following the sale. The version put forwards by the assessee is totally improbable and unbelievable.'

10. The assessee thereafter made an application to the Tribunal to refer the said above-mentioned questions to the court for its reference. The tribunal rejected the said application. Therefore, the assessee made an application to this court for directing the Tribunal to make such a reference, which application was also rejected by this court. Against the said rejection, the assessee preferred an appeal to the Supreme Court on special leave, being Civil Appeal No. 668 of 1966. The Supreme Court by its order dated April 14, 1967 : [1967]66ITR462(SC) , set aside the order of the High Court and the Tribunal and directed the Tribunal to refer to their court the said question. Hence this reference.

11. In this case, in commenting upon the reasoning of the Tribunal in its order, we can do no better than quote the observations of the Supreme Court in its decision [1976] 66 ITR 462, setting aside the said order. The court there observed (p. 465):

'The judgment of the Tribunal suffers from a manifest infirmity. The Tribunal has not adjudicated upon the truths of the case of the assessee in the light of the evidence adduced by the assessee in support of his case. The infirmity becomes more pronounced when regard is has to the fact that, relying upon the documentary evidence tendered by the assessee, the Appellate Assistant Commissioner has accepted the claim of the assessee relating to the sale of Gopi Bai's ornaments (Gopi Bai appears to be a mistake for Ishwaribai). The Tribunal was undoubtedly component to disagree with the view of the Appellate Assistant Commissioner. But in proceeding to do so, the Tribunal has to act Judicially, i.e., to consider all the evidence in favour of and against the assessee. An order recorded on a view of only a part of the evidence and ignoring the remaining evidence cannot be regarded as conclusively determining the question of fact raised before the Tribunal.'

12. As we have pointed out above, the assessee has in this case produced before the ITO cogent evidence consisting of vouchers and the list of the person who has presented gifts to the wife of the assessee at the time of their marriage. The ITO has not examined either the assessee or his wife or any of the person mentioned in the list to find out the truths or otherwise of the assessee's contention. Nor did he in his order consider the said evidence. However, acting on probabilities, he held that the account of Ishwaribai in the books of account of the assessee showing credit of Rs. 55,293 was a benami account of the assessee. He further found unacceptable the explanation of the assessee that the amount of sale proceeds of the ornaments received by him at the time of his marriage, although such was never the case of the assessee.

13. The Tribunal also, which was expected, in the performs of its judicial functions, to decide the appeal after carefully considering the material facts and evidence, made an order purely based on probabilities and conjecture without caring to refer to and consider the material evidence produced by the assessee. There was also no material before the Tribunal and none has been referred to in order to hold that the said evidence was unacceptable on any ground. The Supreme Court in its aforequoted observations in respect of the Tribunal said order has clearly pointed output the infirmities in the said order, and it would not be necessary for us to add anything further in that connection. Under the circumstances the said order of the Tribunal could not be sustained.

14. In this case there was no reason to discard the documentary evidence produced by the assessee in respect of the said amount, there being no material on record to show that it was false and manufactured for the purpose of this case only. If tha said documentary evidence were to be accepted, then it clearly shows that the said amount of Rs. 55,293 shown in the assessee's books of account to the credit of his wife, Ishwaribai, belonged to his said wife and did not belong to the assessee so as to be included in his income.

15. In the result, we answer the questions as under:

Questions No. (1):

There was evidence to hold that the credit of Rs. 55,293 in the account of the assessee's wife did represent the sale proceeds of the wife's ornaments.

Questions No. (2):

In view of our answer to question No. (1) as above, question No. (2) is answered in the negative and in favour of the assessee.

16. The Commissioner to pay the costs of the reference, together with the costs of appeal to the Supreme Court, as they are to be added to the costs of this reference as directed by the Supreme Court in its order in Civil Appeal No. 668 of 1966 ( : [1967]66ITR462(SC) ). Bill of costs to be drawn up accordingly.


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