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1970 (3) TMI 43 - HC - Income TaxFinding of fact arrived at by the tribunal may be defective in law if there is no evidence to support it or if the finding is unreasonable or perverse, but it is not open to the assessee to challenge such a finding unless he has applied for a reference of the specific question u/s 66(1).
Issues Involved:
1. Whether the Tribunal was justified in holding that the amount of Rs. 1,35,000 credited to the account of Ramsaran Pyarelal did not constitute the income of the assessee-company. Issue-Wise Detailed Analysis: 1. Justification of the Tribunal's Decision on the Amount Credited: The primary issue in this case was whether the Tribunal was justified in holding that the amount of Rs. 1,35,000 credited to the account of Ramsaran Pyarelal did not constitute the income of the assessee-company. The Tribunal's decision was based on extensive examination of the facts and evidence presented. - Facts and Background: - The assessee-company was incorporated in 1943 with a paid-up capital of Rs. 2,00,000. The accounting year in question ended on March 31, 1946. - The company had disclosed a loss in the assessment year 1944-45 and small profits in the subsequent years. - The Income-tax Officer initiated inquiries for reassessment under section 34 of the Indian Income-tax Act, 1922, focusing on a ledger account in the name of Ramsaran Pyarelal of Jaipur. - Transactions and Entries: - The assessee-company claimed that Ramsaran Pyarelal had engaged in forward transactions in gold, and payments of Rs. 1,00,000 and Rs. 35,000 were received through telegraphic transfers from Jaipur Finance Corporation. - These transactions were initially not recorded in the main books but were later included on November 30, 1945. - The transactions were squared up by March 6, 1946, with a disclosed profit of Rs. 29,742. - Income-tax Officer's Findings: - The Income-tax Officer rejected the explanation provided by the assessee-company, suspecting that the amounts represented income from undisclosed sources. - He noted the relationships and connections between the parties involved and concluded that the profits and amounts should be assessed as the income of the assessee-company. - Appellate Tribunal's Review: - The Tribunal made a remand order to further investigate and examine key individuals and the financial position of Jaipur Finance Corporation. - Upon review, the Tribunal concluded that the profits of Rs. 29,742 belonged to the assessee-company but found it difficult to include the sums of Rs. 1,00,000 and Rs. 35,000 as income of the assessee-company. - The Tribunal reasoned that there was a reasonable probability that the money might belong to one or the other of the shareholders, not the company. 2. Legal Contentions and Submissions: - Revenue's Argument: - The revenue argued that unexplained cash credits should be treated as income from undisclosed sources. - The revenue contended that the Tribunal's finding that the capital used in the account belonged to the shareholders was unsupported by evidence and thus perverse. - Assessee's Defense: - The assessee argued that the Tribunal's decision was based on a thorough examination of the facts and was a question of fact, not law. - The assessee emphasized that the Tribunal had the jurisdiction to decide whether the unexplained cash credits should be included in the assessable income. 3. Court's Analysis and Conclusion: - The court noted that the Tribunal had considered extensive evidence and had made a detailed analysis before reaching its conclusion. - The court emphasized that it is not within its jurisdiction to reappraise the evidence and arrive at findings contrary to those of the Tribunal. - The court held that the Tribunal's decision was based on factual findings, and there was no question of law that required further consideration. - The court rejected the revenue's submissions that the Tribunal's findings were perverse or without evidence. Final Judgment: The court concluded that the question raised was a question of fact and did not require an answer. The Commissioner was ordered to pay the costs. The Tribunal's decision to exclude the sum of Rs. 1,35,000 from the assessable income of the assessee-company was upheld.
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