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Nathu Ram Premchand Vs. Commissioner of Income-tax, U. P. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 79 of 1960
Reported in[1963]49ITR561(All)
AppellantNathu Ram Premchand
RespondentCommissioner of Income-tax, U. P.
Excerpt:
.....:10. (1) where a person to whom a summons has been issued either to attend, to give evidence or to produce a document fails to attend or to produce the document in compliance with such summons, the court shall, if the certificate of the serving officer has not been verified by affidavit, and may, if it has been so verified, examine the serving officer on oath, or cause him to be so examined by another court, touching the service or non-service of the summons. (2) where the court sees reason to believe that such evidence or production is material, and that such person has, without lawful excuse, failed to attend or to produce the document in compliance with such summons or has intentionally avoided service, it may issue a proclamation requiring him to attend to give evidence or to produce..........of premchand, who is the son of nathu ram, the karta of the hindu undivided family. the income-tax officer treated this sum of rs. 10,000 as income from other sources on the alleged ground that neither banarasidas had been produced before him nor had the assessee offered an explanation with regard to this matter. the appeal of the assessee before the appellate assistant commissioner challenging the inclusion of this sum of rs. 10,000 was dismissed; so was his second appeal to the tribunal. the assessee then made an application under section 66(1) of the income-tax act of 1922, inter alia, on the ground that no summons were issued for the appearance of banarasidas, in the manner prescribed by order xvi of the civil procedure code and that the statement of banarasidas was.....
Judgment:

JAGADISH SAHAI J. - This is the statement of case referring a question of law to this court in pursuance of an order passed by this court on 3rd August, 1959, under the provisions of section 66(2) of the Income-tax Act. That question of law is as follows :

'Whether, on the facts and circumstances of the case, the sum of Rs. 10,000 credited to the account of Banarasidas was income of the assessee liable to assessment under the Income-tax Act ?'

The facts, as they emerge from the statement of the case, are as follows : The assessee is a Hindu undivided family and carries on sarrafa business, purchases and sale of gold and silver bullion, purchase and sale of silver ornaments in the name and style of Nathu Ram Premchand.

For the accounting year ending November 11, 1947, the relevant assessment year being 1948-49, the assessee submitted a return showing an income of Rs. 4,824 in the sarrafa business, and Rs. 1,030 as income from truck business. In the books of accounts there was a credit entry of Rs. 10,000 in the name of one Banarasidas, the brother-in-law of Premchand, who is the son of Nathu Ram, the karta of the Hindu undivided family. The Income-tax Officer treated this sum of Rs. 10,000 as income from other sources on the alleged ground that neither Banarasidas had been produced before him nor had the assessee offered an explanation with regard to this matter. The appeal of the assessee before the Appellate Assistant Commissioner challenging the inclusion of this sum of Rs. 10,000 was dismissed; so was his second appeal to the Tribunal. The assessee then made an application under section 66(1) of the Income-tax Act of 1922, inter alia, on the ground that no summons were issued for the appearance of Banarasidas, in the manner prescribed by Order XVI of the Civil Procedure Code and that the statement of Banarasidas was recorded behind the back of the assessee who had no opportunity of testing his veracity by cross-examining him, and, in any case, the material brought on the record by the statement of Banarasidas was never put to the assessee who did not know till long after the conclusion of the proceedings before the Income-tax Officer that Banarasidas had been examined. As already mentioned above, this court thought that a question of law did arise and, consequently, directed the Tribunal to frame an appropriate question and submit it along with the statement of the case. This Tribunal, in the appeal filed before it under section 33 of the Income-tax Act of 1922 (hereinafter referred to as the Act), while dealing with the objection of the assessee with regard to the inclusion of this sum of Rs. 10,000 observed as follows :

'The grounds relate to the addition of Rs. 10,000 credited to the name of Banarasidas, brother-in-law of Premchand, s/o Nathuram, the head of the family, as income of the assessee from undisclosed sources. In spite of the assessee having taken dasti summons for production of Banarasidas, he was not produced. In the absence of any proof the department had but to assess the assessee on this item. We, therefore, refuse to interfere on this ground.'

It appears that Banarasidas was examined not in the assessment proceedings giving rise to this reference but in those relating to the assessment of Banarasidas. Section 37(1) of the Act confers on the Income-tax Officer, the Appellate Assistant Commissioner, the Commissioner and the Appellate Tribunal the powers vested in a court under the Code of Civil Procedure when trying a suit in respect of the following matters, viz. :

'(a) Enforcing the attendance of any person including any officer of a banking company and examining him on oath.'

The provisions of Order XVI of the Civil Procedure Code deal with the examination and attendance of witnesses. Rule 1 of Order XVI provides that by making an application any party to a suit may summon in court a witness whose attendance is required either to give evidence or to produce documents. In the present case the assessee was given dasti summons for the production of Banarasidas but his case was that Banarasidas refused to accept the same. In a situation like this, the provisions of Order XVI, rule 10, are attracted, which read as follows :

'10. (1) Where a person to whom a summons has been issued either to attend, to give evidence or to produce a document fails to attend or to produce the document in compliance with such summons, the court shall, if the certificate of the serving officer has not been verified by affidavit, and may, if it has been so verified, examine the serving officer on oath, or cause him to be so examined by another court, touching the service or non-service of the summons.

(2) Where the court sees reason to believe that such evidence or production is material, and that such person has, without lawful excuse, failed to attend or to produce the document in compliance with such summons or has intentionally avoided service, it may issue a proclamation requiring him to attend to give evidence or to produce the document at a time and place to be named to give evidence or to produce the document at a time and place to be named therein; and a copy of such proclamation shall be affixed on the outer door or other conspicuous part of the house in which he ordinarily resides.

(3) In lieu of or at the time of issuing such proclamation, or at any time afterwards, the court may, in its discretion, issue a warrant, either with or without bail, for the arrest of such person, and may make an order for the attachment of his property to such amount as it thinks fit, not exceeding the amount of the costs of attachment and of any fine which may be imposed under rule 12 :

Provided that no Court of Small Causes shall make an order for the attachment of immovable property.'

Admittedly, no such steps as are provided for by this statutory provision for the appearance of the witnesses were taken by the Income-tax Officer for the appearance of Banarasidas.

We are of the opinion that under these circumstances neither the Income-tax Officer nor the Income-tax Appellate Commissioner nor the Tribunal were justified in fastening the blame at the door of the assessee and disbelieving his version that the amount of Rs. 10,000 entered in his account books was the deposit made by Banarasidas on the ground that the former has failed to produce the latter. The assessee took all the steps that lay in his power to secure the presence of Banarasidas before the Income-tax Officer. In theses circumstances it appears to us that the Tribunal wrongly took into consideration the circumstances that Banarasidas had not been produced. On the material on the record there is noting to refute the allegation of the appellant that this sum of Rs. 10,000 is the deposit of Banarasidas with the assessee firm. The Tribunal had before it no legal material on which it could come to a contrary conclusion.

Consequently, we are of opinion that the question of law referred to us by the Tribunal should be answered in favour of the assessee and against the department with costs. We assess the fee of the learned counsel at Rs. 200.

Question answered accordingly.


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