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TMI Blog1940 (12) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... contract, and (c) cycle stand contract at the Industrial Exhibition which was being held at Lucknow in the year for which the assessment was made, that is 1937-38, and (5) a rice mill at Rupaidih in the Bahraich District. In accordance with the procedure prescribed by the Income-tax Act notice was given to the assessee under section 22(4) of the Act to produce the head office account relating to all these businesses that being not among the various books of account which the assessee had produced in response to a first notice under the same section. In response to this notice the assessee denied the existence of any such account and made the reply that the deposits shown in the personal account which found place in the accounts of each of the different businesses came from his private chest of which no accounts were kept. He also denied keeping any accounts relating to his expenditure on the construction of the house property. The Income-tax Officer in view of this non-production and having regard also to the omission from any accounts of an item of ₹ 1,418 made to one Girdhari Lal Sarraf and an item of ₹ 160 received from Sri Ram Hari Ram of Cawnpore and the nonprod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion stated earlier and has further stated as he is required to do, his own opinion which is that the Assistant Commissioner's finding that a Head Office set of accounts was in existence was supported by ample materials and fully justified. We have listened to a very lengthy argument upon this reference. On behalf of the assessee an attempt is really made to take the matter back to the stage of the proceedings under Section 23, it being contended that the Income-tax Officer had no evidence before him on which he could hold that the head office account and other accounts asked for by him by means of notice did exist and therefore it was his duty to have made the assessment under Section 23(3) thereby permitting the assessee to file a regular appeal against the assessment and so permitting the appellate officer to examine the whole case upon the merits. That procedure is clearly not open to us upon this reference, which raises only a point of law in connection with the proceedings under Section 27. Coming to these proceedings learned Counsel for the assessee puts forward the contention that there must be positive, and not merely circumstantial evidence upon which it can be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion which has been given to us. The main line of argument put before us for the applicant is that the circumstances on which reliance was placed by the Assistant Commissioner do not amount to evidence at all, and that it was the duty of the Income-tax Department to have led evidence of some kind to prove the existence of these accounts. It is said that if they were not prepared to do so, the assessment should have been made under Section 23(3) an argument which is not strictly relevant to the present reference. As regards the circumstantial evidence the argument appears to be that the circumstances relied upon are of too vague a nature and lead to nothing more than a suspicion that there is a set of head office accounts maintained by the firm. Learned Counsel has referred us in the course of his argument to two cases only. In Kamal Kumar Datt v. Nandalal Dubey [1929] A.I.R. 1929 Cal. 37, it was held that the proper effect of a proved fact is a question of law and the question whether a tenancy is permanent or precarious is a legal inference from facts and not itself a question of fact. We do not doubt that the question which has been referred to us is not a simple question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt, a decision which was approved by their Lordships of the Privy Council in a subsequent case, Commissioner of Income-tax, United and Central Provinces v. Badridas Ramrai Shop, Akola, Owner Laxminarain Badridas Shrawaji. [1937] 5 I.T.R. 170; A.I.R. 1937 P.C. 133 The case in question is In re: Abdul Bari Chowdhury v. Commissioner of Income-tax, Burma [1931] 9 Rang. 281; 5 I.T.C. 352. In that case it was held that the question whether an assessment made by the Income-tax Officer under Section 23(4) of the Income-tax Act is valid or not is not a question of law that arises or can arise out of an order of the Assistant Income-tax Commissioner passed under Section 31, and consequently such a question cannot be made the ground for an order by the High Court under Section 66(3) requiring the Commissioner to state a case. In the course of this judgment reference was made to a passage in the judgment of E.M. Chettyar's Case [1930] 7 Rang. 635; 4 I.T.C. 111, where it was said: It has however been held that the question whether there was any evidence on which an Assistant Commissioner or a Commissioner could come to a finding of fact is a question of law. Further on, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n who must have special knowledge of this question of head office accounts, which might otherwise be described as accounts relating to the capital at home, was Kanhaiya Lal, as mentioned in para. 17 of the application. Kanhaiya Lal could and should have been produced in the witnessbox and have submitted himself to cross-examination so that the Income-tax Officer might be satisfied of the truth of his statement. If he did not choose to do so, then the dicta of the learned Chief Justice in Abdul Bari's case [1931] 9 Rang. 281; 5 I.T.C. 352 would be applicable. Assuming, however, for the purposes of the present reference that no question of onus or of the application of this particular dictum to the present case arises, then we may go back to answer on the merits the point of law which has been referred to us by the learned Income-tax Commissioner. Before doing so we should, however, preface the few remarks we have to make by emphasising that the question for our consideration is not the sufficiency of the evidence or materials or the presence or the absence of positive evidence but merely the question whether there was or was not any evidence, positive or circumstantial, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssrs. Paras Dass Munna Lal v. Commissioner of Income-tax, Punjab, North West Frontier and Delhi Provinces [1937] 5 I.T.R. 523; A.I.R. 1938 Lah. 209, in which it was held that the word 'evidence' as used in sub-section (2) of Section 23, Income-tax Act, is not confined to direct evidence but it is comprehensive enough to cover circumstantial evidence. We are in full agreement with the view that particularly in cases where the giving of positive evidence by a Department about facts which are in the special knowledge of the opposite party is almost out of question, materials which come within the description of circumstantial evidence or general probabilities such as are to be regarded under the provisions of Section 114 of the Indian Evidence Act are evidence or materials upon which the Court can come to a finding just as properly as it could upon positive evidence. When the present case is looked at from this point of view it is clearly impossible to hold that there were not really any materials upon which the Assistant Commissioner could find that a head office set of accounts was in existence. We have it stated that the assessee's firm conducts a number of separat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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