The judgments of the court was delivered by
SRINIVISAN J. - The question that stand referred to us is :
'Whether there was no material for the Tribunal to hold that Rs. 50,000 was the income of the assessee assessable to tax under the provisions of the Income-tax Act in the assessment year 1947-48 ?'
The assessee is a partner in the firm of Messrs. Gulamally & Co., doing business as hardward merchants in Madras. At the time of the original assessment, the assessee did not disclose in his returns that he had made any investments or that he had any source of income other than his share in the above firm. Later, on however, information reached the Income-tax Officer that, during the financial year 1946-47, the assessee had made three fixed deposits of Rs. 50,000 each in the Bank of India at Palanpur. Originally, the entire sum of Rs. 1,50,000 was brought in for assessment in proceedings under section 34 of the Act, but, ultimately, the Tribunal directed the exclusion of two sums of Rs. 50,000 but sustained the adittion of only one sum of Rs. 50,000 which stood as fixed deposit in the name of the assessee and his son. It is not in dispute that this sum belongs to the assessee. In explanation of this deposit, the assessee stated that he had been withdrawing large sums from the partnership account and that on the eve of the date of the deposit he had a sum of Rs. 30,000 and odd which represented the saving out of the drawings. The remaining sum of Rs. 20,000 was stated to have been realised by the sale of some jewellery in August, 1946. With these two sums, the deposit, of Rs. 50,000 was made on January 30, 1947. This explanation was not accepted by the Income-tax Officer. The assessee purported to claim that the possession of the cash balance of Rs. 30,800 had been shown in his wealth statement filed in October, 1944. With regard to the sale of jewellery, the Income-tax Officer found that there had been considerable delay in the furnishing specific details, that the evidence of the person to whom the jewellery is said to have been sold was not satisfactory and that the raising of this amount in the manner claimed could not be credited. In conclusion the Income-tax Officer said that the assessee had no source of income at any place outside the taxable territory and that the origin of the unexplained deposited has necessarily to be traced to the taxable territory where in his business activities were being conducted. He accordingly included this sum. The conclusion was accepted as valid by the Appellate Assistant Commissioner on appeal. On a further appeal to the Tribunal the Tribunal was also not satisfied that savings which had accumulated in the hands of the assessee even by 1944, could have been utilized for making the deposit in 1947. Nor was it prepared to accept the evidence of the person who claimed to have purchased the jewels. It observed that though the money had been banked in the Native state, the business of the assessee was all in British Indian and, that though the department had not proved positively that the assessee had any other particular source of income, it stood to reason that the bulk of the money should have been made in India. It confined the inclusions of this sum of Rs. 50,000 in the assessable income.
As application under section 66(1) of the Act failing, the assessee moved this court under section 66(2) of the Act, and the question set out earlier was directed to be referred.
Mr. S. Narayanaswami, learned course for the petitioner is not able to deny that the finding in so far as the acceptance or rejection of the explanation of the assessee by the Tribunal is concerned, he cannot canvass them here, as they are essentially question of fact. He confines his argument to the conclusion reached by the Tribunal that the amount in question must have been derived form sources in the taxable territory. It is urged by him that it is for the department to establish in these circumstances that the sum was derived from the taxable territories that there is no evidence which would justify any such conclusion that it is only a conjecture which had been made by the Tribunal and that therefore the order of the Tribunal cannot stand. This is the short question that has been raised before us for our determination.
It is not in dispute that even the assessee did not d claim that he had any course of income outside the taxable territory. Even his explanation was to the effect that the major part of this sum represented saving from the amounts which he had drawn from the partnership account. That there could have been such savings or any such savings could have been utilised for making this investments has been found against by the Tribunal and that finding is admittedly final. The question then is whether it is for the department to prove positively that any sum not accounted for by the assessee in the regular manner did really proceed from the taxable territory and from any particular source of income from that territory. It seems to us that this claim of the learned course that the onus is upon the department to provide positive proof in this regard is not correct. when the circumstances surrounding the making of the deposit leaves no alternative source other than the source in the taxable territory and even that source can be pinpointed as the business of the assessee, the Tribunal was not indulging in any conjecture but found support for its conclusions in undeniable facts and circumstances. There would only two alternatives open : (1) that this amount represented concealed income arising out of the partnership or other business in the taxable territory, or (2) that it was derived from sources entirely outside the taxable territory. That the petitioner had no business of any description or any source capable of yielding income outside the taxable territory was in fact conceded at every stage. It according left only the other alternative, and when it is seen that the petitioner did have a source of income in the taxable territory, it is logical to infer that this income should have arisen out of the business in the taxable territory. We are therefore, unable to agree with the learned counsel that the reasoning adopted by the Tribunal was speculative that is to say, that there was no evidence on foot of which the Tribunal could reach the conclusion it did. It follows that the question has to be answered against the assessee. The assessee will pay the costs of the department. Counsels fee of Rs. 250.