1965 (10) TMI 15 - SC - Income Tax

Whether there is any evidence on record to justify the finding of the Tribunal that the assessee failed to prove that they had suffered speculation losses to the tune of ₹ 1,58,080 ? Whether the loss suffered by the assessee in speculation, viz., ₹ 1,58,080, is an admissible deduction under the Indian Income-tax Act ? Held that - The Income-tax Appellate Tribunal passed its order in appeal under section 33 of the Act on July 2, 1951, and the application under section 66(1) was dismissed by the Tribunal on October 20, 1951. A petition under section 66(2) was moved in the High Court on April 15, 1952, and that petition was disposed of on December 11, 1957. This court was then approached for special leave on March 31, 1958, and the printed record which runs into no more than 81 pages was sent by the High Court to this court in 1964. The High Court, as we have already stated, called for a statement of the case in respect of one question, and we are informed at the Bar that the reference is still pending. These proceedings relate to assessment for the year 1945-46. More than twenty years have elapsed since the end of the year of account and more than fourteen years have gone by since the Tribunal disposed of the appeal. It is a matter of regret that the end of assessment proceedings is not yet in sight. It is hardly necessary to say that delays of this nature in the hearing of cases are apt to bring the administration of justice into contempt. Appeal dismissed.

Summary

Issues:
1. Claim of speculative losses by the Hindu undivided family for the assessment year 1945-46.
2. Treatment of the amount from the sale of family ornaments as income from an undisclosed source.
3. Rejection of application for reference to the High Court under section 66(1) of the Indian Income-tax Act, 1922.
4. Discrepancy between the findings of the High Court and the Tribunal regarding the speculative losses.
5. Delay in the legal proceedings and its impact on the administration of justice.

Analysis:

1. The appellant, a Hindu undivided family, claimed speculative losses of Rs. 1,58,080 for the assessment year 1945-46. The Income-tax Officer rejected this claim, treating Rs. 85,137 from the sale of family ornaments as income from an undisclosed source. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld this decision, disallowing the speculative losses but directing the deletion of the amount from the sale of ornaments.

2. The appellant sought a reference to the High Court under section 66(1) of the Income-tax Act, but the Tribunal rejected the application, stating no question of law arose from its order. Subsequently, the High Court of Allahabad was approached under section 66(2), which directed the Tribunal to state the case regarding the amount of Rs. 85,137. The High Court observed that the Tribunal's disallowance of speculative losses was based on evidence appreciation, but directed a statement of the case for the specific amount.

3. The Tribunal held that the appellant failed to prove the speculative losses, citing reasons such as the absence of broker accounts, inadequate record-keeping, and unexplained cash credits. The burden of proof lay with the appellant, and the Tribunal found the evidence insufficient to support the claim of speculative losses. The High Court's order for a statement of the case on a specific amount did not directly impact the overall finding of lack of proof for the claimed losses.

4. The judgment highlighted the significant delay in the legal proceedings, spanning over twenty years since the assessment year 1945-46. The Supreme Court expressed concern over the prolonged timeline, emphasizing the negative impact of such delays on the administration of justice. Despite the delays, the appeal was ultimately dismissed with costs.

In conclusion, the Supreme Court upheld the decisions of the lower authorities regarding the disallowance of speculative losses and the treatment of the amount from the sale of family ornaments. The Court also emphasized the importance of timely legal proceedings to maintain the integrity and efficiency of the justice system.