1959 (8) TMI 46 - HC - Income Tax

Summary

Issues Involved:
1. Admissibility of statements not recorded on oath under section 37 of the Indian Income-tax Act.
2. Reliance on affidavits filed by depositors without their examination.
3. Authenticity of entries in the books of account in the absence of rebutting evidence.
4. Justification of adding Rs. 85,050 as undisclosed income.

Issue-wise Detailed Analysis:

1. Admissibility of Statements Not Recorded on Oath:
The first issue concerns whether the statements of Suraj Mian and Mohomad Talim, which were not recorded on oath, are admissible in evidence and could be used to hold the sum of Rs. 85,050 as the income of the assessee. Section 37 of the Indian Income-tax Act empowers the Income-tax Officer to enforce attendance and examine individuals on oath, but it does not make it obligatory. Section 13 of the Indian Oaths Act (X of 1873) clarifies that the omission to administer an oath does not invalidate the proceedings or render the evidence inadmissible. Therefore, the statements of Suraj Mian and Mohomad Talim, even though not recorded on oath, are admissible in evidence. The court answered this point in favor of the Department, affirming that the Income-tax Officer's actions were within legal bounds.

2. Reliance on Affidavits Filed by Depositors:
The second issue examines whether affidavits filed by the depositors before the Appellate Assistant Commissioner, admitting the deposits to be their own money, could be relied upon without their examination. The Appellate Assistant Commissioner rejected these affidavits, reasoning that the alleged depositors did not have sizable amounts to their credit and their financial transactions did not support the deposits. The court found no illegality or perversity in this finding, emphasizing that it is not always necessary for the Department to provide rebutting evidence. The decision to accept or reject affidavits depends on the circumstances of each case. Thus, the court upheld the Appellate Assistant Commissioner's discretion in rejecting the affidavits.

3. Authenticity of Entries in the Books of Account:
The third issue is interconnected with the first two, questioning whether the entries in the books of account showing deposits in the names of remaining depositors could be held as not genuine without rebutting evidence. The taxing officers found the assessee's accounts untrustworthy, noting that the entries for cash deposits were not made in the usual course of business and the depositors, being petty cultivators, could not have had such surplus money. The court supported the view that the Income-tax Officer and Appellate Assistant Commissioner were justified in rejecting the entries based on the circumstances and evidence available, even without additional rebutting evidence.

4. Justification of Adding Rs. 85,050 as Undisclosed Income:
The fourth issue is a summary of the earlier points, questioning the legality of adding Rs. 85,050 as income from an undisclosed source. Since the previous points were decided against the assessee, this point was also answered in favor of the Department. The court concluded that the addition of Rs. 85,050 to the total income was legally justified based on the evidence and circumstances presented.

Conclusion:
The court disposed of the reference by answering all points in favor of the Income-tax Department. The statements not recorded on oath were deemed admissible, the affidavits filed were not considered conclusive without corroborative examination, the entries in the books of account were found untrustworthy, and the addition of Rs. 85,050 as undisclosed income was upheld. The assessee was ordered to pay the costs of the reference, assessed at Rs. 100.