1990 (11) TMI 29 - HC - Income Tax

Summary

Issues Involved:
1. Legitimacy of the Tribunal's conclusion regarding the resolution and entries in the books of account.
2. Justification of the Tribunal's decision on the commencement date of the assessee's share dealing business.
3. Evidentiary support for the Tribunal's finding on the commencement date of the share dealing business.

Detailed Analysis:

Issue 1: Legitimacy of the Tribunal's Conclusion Regarding the Resolution and Entries in the Books of Account
The Tribunal concluded that the resolution dated June 10, 1967, and the entries in the books of account transferring shares from investment to share trading account were merely a collusive device. The Tribunal reasoned that despite the resolution, the assessee had already engaged in substantial share sales prior to this date, specifically the sale of 41,800 shares in Multimetals Ltd. on May 6, 1967. The Tribunal referred to the Supreme Court's decision in Juggilal Kamlapat v. CIT, which allows tax authorities to pierce the corporate veil in cases of collusive devices. The Tribunal found that the resolution and the entries were not conclusive evidence of the commencement date of the share dealing business.

Issue 2: Justification of the Tribunal's Decision on the Commencement Date of the Assessee's Share Dealing Business
The Tribunal held that the assessee's business of dealing in shares commenced on November 12, 1966, rather than June 10, 1967. This decision was based on the fact that the assessee had engaged in significant share transactions before June 10, 1967, and had other business activities recorded in its account books starting from November 12, 1966. The Tribunal found that the assessee's claim of starting the business on June 10, 1967, was not supported by the evidence and was inconsistent with the recorded business activities.

Issue 3: Evidentiary Support for the Tribunal's Finding on the Commencement Date of the Share Dealing Business
The Tribunal's finding that the assessee commenced its share dealing business on November 12, 1966, was supported by evidence of prior business activities and share transactions. The Tribunal noted that the assessee had suffered losses in several business dealings before June 10, 1967, and had sold shares in various companies in earlier years. The Tribunal emphasized that the assessee did not provide sufficient evidence to establish that the share dealing business commenced only on June 10, 1967. The Tribunal's inference was deemed reasonable based on the totality of circumstances, including the large-scale sale of shares in May 1967 and the lack of clear evidence from the assessee.

Conclusion:
The High Court upheld the Tribunal's conclusions, stating that the Tribunal's findings were justified in law and not unreasonable or perverse. The Tribunal had adequately considered all relevant factors and evidence, and its decision was supported by the cumulative effect of the facts. The High Court emphasized that a different view on the same facts does not constitute a perverse finding. Therefore, the first question was answered in favor of the Tribunal, and the second and third questions were answered in the affirmative and in favor of the Revenue. There was no order as to costs.