1962 (8) TMI 103 - HC - Income Tax

Summary

Issues Involved:

1. Whether the sum of Rs. 2,50,000 credited to Rampratap Agarwal's account in the previous year relevant to the assessment year 1944-45 belonged to the assessee.
2. Whether the sum of Rs. 2,520 credited as interest in the previous year relevant to the assessment year 1945-46 belonged to the assessee.
3. Whether the sums of Rs. 1,00,000 and Rs. 40,000 credited in the previous year relevant to the assessment year 1949-50, along with Rs. 6,558 credited as interest, belonged to the assessee.

Detailed Analysis:

1. Assessment Year 1944-45:

The primary issue was whether the sum of Rs. 2,50,000 credited to Rampratap Agarwal's account on October 10, 1942, belonged to the assessee. The Income Tax Officer (ITO) treated this amount as the assessee's income from an undisclosed source, rejecting the assessee's explanation that Rampratap Agarwal was a benami for Messrs. Surajmal Nagarmal. The Tribunal upheld the ITO's decision. However, the High Court found that the assessee had sufficiently discharged its burden by providing evidence that the account was treated as belonging to Messrs. Surajmal Nagarmal by the Income Tax Investigation Commission and the ITO assessing Messrs. Surajmal Nagarmal. The court concluded that the amount did not belong to the assessee and did not constitute its undisclosed income.

2. Assessment Year 1945-46:

The issue for this year was whether the sum of Rs. 2,520 credited as interest in the previous year relevant to the assessment year 1945-46 belonged to the assessee. The ITO disallowed this interest, treating it as part of the concealed income of the assessee. The Appellate Assistant Commissioner (AAC) and the Tribunal upheld this view. The High Court, however, reiterated its stance from the previous year's assessment, emphasizing that the account was considered as belonging to Messrs. Surajmal Nagarmal. Therefore, the interest credited did not belong to the assessee and should not be treated as its undisclosed income.

3. Assessment Year 1949-50:

For this year, the sums of Rs. 1,00,000 and Rs. 40,000 credited on March 16, 1948, and July 19, 1948, respectively, along with Rs. 6,558 credited as interest, were under scrutiny. The ITO treated these amounts as the assessee's income from an undisclosed source. The Tribunal upheld this view. The High Court found that the assessee had adequately demonstrated that these amounts were part of the account treated as belonging to Messrs. Surajmal Nagarmal by the Investigation Commission and the ITO assessing Messrs. Surajmal Nagarmal. The court noted that minor discrepancies in dates did not undermine the assessee's explanation. Consequently, the amounts did not belong to the assessee and did not constitute its undisclosed income.

Conclusion:

For each of the three years under consideration, the High Court answered the first question in the negative, determining that the amounts in question did not belong to the assessee and did not constitute its undisclosed income. As a result, the second question for each year did not arise for consideration. The assessee was awarded costs from the department.