(1) Pursuant to an order of this Court dated 30th January, 1962 the Income-tax Appellate Tribunal has submitted a statement of the case for answering the following question:--
'Whether on the facts and in the Circumstances of the present case there was any evidence or material to support in law the conclusion of the Tribunal that Rs. 35, 000 was income accruing within the taxable territory during the relevant accounting period. ' The assessee was being assessed in the status of an individual. For the as year 1947-48 the Assessment was originally made under S. 23(3) of the Indian Income-tax Act 1922 on 1st January 1949 on a total income of Rs. 23, 387. Out of this amount, income amounting to Rs. 14, 654 arose in the then British India and income of Rs, 8, 733 accrued outside British India. the source of the entire income was the share which the assessess has in various partnership firms.
(2) It appears that the Income-tax officer, B. Wasd, Ambala, received some information about the existence of a fixed Deposit Account relating to the assessee at Nahan and made an enquiry form the asessee about the same. On 15th August 1954 the assessee wrote a letter (copy Annexure 'B') saying that there was a Fixed Deposit account with the Bank of Sirmur at Nahan for Rs, 1,00,00 in the name of his minor son Mohan Singh under his guardianship. This account had been opened on 5th March, 1947. The amount was finally withdrawn at Nahan on 24th May, 1948, along with interest. He explained that this amount had been received by him at the time of the deposit from his mother who had given it to him on account of disturbed political conditions as well as her failing health. She had instructed him to distribute the aforesaid money to the wives of minor sons after their marriages when they attained majority. The asses had considered it advisable to put the money in the bank in the name of his eldest minor some. Towards May 1948 the political had settled down and the amount was withdrawn from the bank and given bank to the mother who always resided in the village Dhagera in Nahan State from where she never moved out to any other place. Later on near the time of her death in the year 1949 she mad over this amount to the wife of the assessee in trust for distribution amount the wives of the sons on their marriages after attaining majority, Since then the amount was lying with the assessee's wife in Nahan State. The Income-tax Officer recorded the statement of the assessee on 1st order on 14th February, 1956 in which the entire evidence was discussed including a pervious statement which the assessee has made to the Inspector of Income-tax at Simla. The explanation furnished by the assessee was disbelieved and the decision of the Income-tax Officer was given in the following words:--
'Thus the position is that the assessee who has his major sources of income in the taxable territories then in British India has failed to satisfactorily account for this some of Rs. 1,00,000/- which was deposited by him in the Bank of Sirmur in the name of the his minor son Mohan Singh under his own guardianship and under the lien arrangements on the Jagadhri Branch of the Bank on 22nd Phagan Samvat 2003 corresponding to 5th of March 1947 I treat this amount as his income from undisclosed sources and assess it along with his other assessed income in his lands.'
(3) The assessee filed an appeal before the Appellate Assistant Commissioner who considered the explanation of the assessee at length and also the other facts and Circumstances and agree with the view of the Income-Officer that the assessee's explanation could not be accepted as correct. While dealing with the contention of the assessee's counsel that the deposit was found to have been made in Nahan State which was outside the taxable territories in the previous year and there was noting to show that the money had gone to Nahan from the taxable territories the Appellate Assistant Commissioner observed that the Income-tax Officer has rightly remarked in his assessment order that the appellant had all along been assessed in the taxable territories. His income had also been derived from the sources existing in the taxable territories and there was no source outside the taxable territories which could have yield the amount in question to him. He further proceeded to examine another argument pressed on behalf of the assesse and repelled it by saying that even if the source of the money existed in Doraha where the assessee has a partnership business which was outside the taxable territories the money must have gone to Nahan through the taxable territories. As soon as the money was received in the taxable territories it become liable to tax, The Income-tax Appellate Tribunal is not accept the last part of the decision of the Appellate Assistant Commissioner. It proceeded to examine the matter afresh but felt quiet satisfied that the finding given by the departmental officer that the mother of the assessee could not have bad a lac of rupees in cash with her was fully justified. The Tribunal was of the view that the assessee has a hidden source of income. It was further of the view that the main source f the assessee's income was in India and even if there was any source of income outside India it could not have yielded any income outside India it could not have yielded any substantial income. the final decision was however expressed in this way:--
'Having regard to the various aspects of the case we think it would be reasonable to hold that pat of the income in question accrued to the assessee in India and that another part of income has accrued outside India. Then as we have stated that whole of the income of Rs. 1 Lakh could not have accrued in the year of account taking a liberal view of the whole question we would estimate the appellant's India income from an undisclosed source in the year of account at a sum of Rs. 35,000/- and direct that the addition made be reduced accordingly.'
(4) No serious attempt has been made by the learned counsel for the assesee before us to support the explanation which the assesse had furnished with regard to the source of the amount of Rs. 1,00,000/- which was found in deposit in the Sirmur Bank at Nahan in the name of the minor some of the assessee. Indeed all the facts which has been set out in substance are tell-tale and no Tri or Court could accept the explanation which had been furnished by the assessee. What has however been strenuously contended is that there was no material before the Tribunal on which it could not have accrued in the year of account asking a liberal view of the whole question we would estimate the appellants India income from an undisclosed source in the year of account at a sum of Rs. 35,000/- had accrued as income within the taxable territories during the relevant accounting period. It is pointed out that the deposit was in Nahan which was outside the taxable territories and it was also withdrawn in Nahan and the money was never brought out of Nahan and the money was never brought out of Nahan and that the Tribunal while impliedly finding that out of Rs, 1,00,000/- Rs. 65,000/- could not have accrued as income during the year of account acted on pure surmises and conjectures in holding that Rs. 35,000/- had accrued as income within the taxable territories during the relevant period. On this point the learned counsel for the assessee has relied mainly on the decisions of the Supreme Court in Mehta Parikh and Court v. Commr. of Income-tax : 37ITR288(SC) . The first case arose out of encashment by the appellants before heir Lordships of high denomination notes of Rs. 1,000/- each of the face value of Rs, 61,000/-. Certain evidence and affidavits were produced before the departmental authorities to the effect that the substantial amount out of Rs. 61,000/- has been paid in Rs. 1,000/- notes during the relevant period. The Income-tax Officer and the Appellate Assistant Commissioner did not accept the position taken up by the assess. The Tribunal on appeal accepted the assesee's explanation as to Rs. 31,000/- but rejected it as to Rs, 30,000/-. The High Court held that there was material before the Tribunal to hold that the sum of Rs. 30,000/- represented undisclosed profits. The Supreme Court expressed the view that the decision of the Tribunal that it was impossible for the asses to have had 61 notes on 12th January 1946 and the rejection of 30 such notes was based on pure surmises. It was found that the assessee had furnished a reasonable explanation for the possession of the hid denomination notes of the face value of Rs, 61,000/- and there was no justification for having accepted it in part of discarded it in relation to a sum of Rs. 30,000/-.
In the second case 291 high denomination notes of the value of Rs, 2,91,000/- had been encashed. the explanation given by the assesee had been rejected by the departmental authorities on the ground that those were the days of emergency and the assesee as a grain dealer, could have secretly made money by smuggling grain and that he had once been prosecuted though acquitted. Other factors were also taken into consideration for rejecting his explanation. The Tribunal accepted the explanations given by the assessee with regard to Rs. 1,50,00/- and rejected it with regard to Rs. 1,41,000/-. No reasons had been given for distinguishing the good part of explanation from the bad. The Supreme Court pointed out that the main question about Rs. 1,41,000/- was whether there was any material to justify a different conclusion in respect of that amount. After considering the evidence which had been produced it was held that the assessee had offered a reasonable explanation as to the source of 291 high denomination notes of Rs. 1,000/- each and the case of the assessee was accepted in to. These cases can be of no assistance to the assessee in the present case. The explanation given by the assessee with regard to the source of the amount of Rs. 1,00,000/- was rejected in toot and what the Tribunal has done is to have taken a liberal view in the matter of the income which might have accrued to assessee within the taxable territories during the relevant period and which formed a part of amount of Rs. 1,00,000/-.
(5) In A Govindarajulu Mudaliar v. Commr. of Income-tax : 34ITR807(SC) Venkatrama Aiyar j delivering the judgment of the Court has observed that there is ample authorities for the proposition that where the assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year the income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature. In Kale Khan Mohammad Hanif v. Commr. of Income-tax : 50ITR1(SC) their Lordships again reiterated that it is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes 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 Income-tax Act. In the absence of such proof the Income-tax Officer is entitled to treat it as taxable income. There can thus be no manner of doubt that the source of the receipt of Rs, 1,00,000/-. He furnished an explanation but that was rightly rejected.
It was therefore open to the Income-tax authorities to treat that amount or a part of it as income. It had certainly to be decided as to whether the whole or part of it was received within the taxable territories during the accounting period. The learned counsel for the assessee says that there was not material on which that finding could be based.. It has been maintained by Mr. Awasthy who appears for the Commissioner of Income-tax that according to the well settled rule laid down by the Supreme Court to which reference has been made it was open to the Income-tax authorities to those that the entire amount of Rs. 1,00,000/- was income since the explanation furnished by the assessee in respect of the source of the amount was not accepted but the Tribunal took into consideration the fact that the assesee was into considerations that fact that the assessee was carrying on business in British India as well as outside British India from which it was legitimate to infer that he had undisclosed sources in both he infer that he had undisclosed sources in both the territories during the relevant period. The Tribunal however felt that the whole of this amount could not have accrued as income to the assesee in the taxable territories in the year of account. Consequently on a consideration of all the facts including the figures of income from admitted and disclosed sources the Tri formed the view that an amount of Rs. 35,000/- had accrued as income during the relevant period from the undisclosed sources in British India.
(6) Mr. Awasthy's contentions are not without force. It must be remembered that the assesee who alone know how he came into possession of the amount of Rs. 1,00,000/- gave no explanation worth the name and in these Circumstances it cannot possibly be said that the Tribunal had any other alternative but to come to the conclusion at which it arrived which certainly appears to be on the liberal side so far as the asses is concerned.
(7) In the result the question is answered in the affirmative. Keeping in view all the Circumstances parties are left to bear their own costs.
Inder Dev Dua, J.
(8) I agree.
(9) Answered in affirmative.