9911796707
TMI Blog1967 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... a, gave Rs. 5,11,101, to his brother Brijlal Lohia, by way of gift. Out of the above sum, an amount of Rs. 5,00,000 was paid by cheque and the balance was paid in cash. Similarly, on September 30, 1943, the assessee gave Rs. 2,50,000 to his nephew, Nandkishore Lohia, son of Brijlal Lohia, by way of gift. Thereafter, Brijlal Lohia and Nand Kishore Lohia started a partnership business, some time in August 1943, under a partnership deed dated August 8, 1943, the firm name being Brijlal Nandkishore. In the said partnership, they invested the money received by them from the assessee. The firm, Brijlal Nandkishore, was granted registration under the provisions of section 26A of the Income-tax Act, 1922 because the Income-tax Officer found no reason to doubt the genuineness and the reality of the firm. This partnership used to carry on business in jute, jute baling and shipping, being the same business which the assessee used to carry on. For the assessment years 1945-46 and 1946-47, the Income-tax Officer had assessed the assessee to tax. Thereafter, proceedings under section 34 of the Indian Income-tax Act, 1922, were taken against the assessee because the Income-tax Officer, Non-compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making a gift was disproved by the circumstance that the donor had to take an overdraft of 2 lakhs of rupees to make a gift of Rs. 5 lakhs. (6) Out of the money received on gift, Brijlal Lohia and Nandkishore Lohia started carrying on the same business which was previously run by the assessee himself. (7) In the assessment year 1945-46, the income derived from the business run by the donees was not distributed amongst the two, although they professed to be partners. (8) The assessee's brother and nephew were probably benamidars for the assessee. On the aforesaid reasons, the Tribunal came to the conclusion that the business of Brijlal Nandkishore was really owned by the assessee, Kanhaiyalal Lohia, and therefore, its income was rightly included by the Income-tax Officer in the income of the assessee. Thereafter, on the prayer of the assessee, the following question was referred to the High Court, under section 66(1) of the Income-tax Act : " Whether, in the circumstances of this case, where the Income-tax Officer, District III(2), separately assessed the business run in the name of Brijlal Nandkishore as belonging to a partnership firm consisting of Brijlal and Nandkishore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember things very distinctly but I can say that the gifts to Brijlal or Nandkishore were not made in my presence as alleged. Mr. Kanailal Lohia used to tell me that his brother and nephew are idling away their time, hence I shall give them a gift and make them work by that money. The partnership deed was most probably drawn up by me. The gift was reported to have been made to Brijlal and Nandkishore before I should have taken up the drafting of the deed. Kanailal told me several times that he wanted to separate his brother and nephew. When the firm was started then Brijlalji came to me and asked me if father and son's partnership deed could be drawn up. I don't know anything else than this in the matter." The lie given by Sri Majumdar to the statement of Kanhaiyalal Lohia has affected its credibility. The order-sheet shows that Mr. B. Sen Gupta took a copy of Sri Majumdar's statement and expressed a desire to cross-examine him ; but when opportunity was given, he failed to appear. It is impossible to think, in these circumstances, that there has been any breach of the principles of natural justice ..... It was contended before us that the finding of the Tribunal was perverse, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. This he did, even though the assessee had produced before him additional materials showing why the income of the firm, Brijlal Nandkishore, should not be included in the income of the assessee. The assessee filed appeals against these assessments before the Appellate Assistant Commissioner, who dismissed the appeals with the observation that he was not at all convinced by the arguments of the assessee's representative and also because the case of the assessee had been fully considered by the Appellate Tribunal, on similar arguments for the years 1945-46 and 1946-47, and were rejected by the Tribunal. Thereupon, the assessee preferred a second appeal before the Income-tax Appellate Tribunal. The Tribunal this time went through the entire evidence, including the additional evidence produced before the Income-lax Officer, and allowed the appeal by the assessee. The grounds upon which the Tribunal passed a judgment in favour of the assessee, as appears from the summary of the judgment, in the statement of case, were : " (a) On going through the capital account and the wealth statement of the assessee, the Tribunal found that before making this gift to the said persons the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, Brijlal Nandkishore, was a separate entity. In this respect the following evidence was considered : (a) Registration of the firm, Messrs. Brijlal Nandkishore, under section 65 of the Indian Partnership Act with the Registrar of Firms, on the 23rd December, 1948; (b) Sales-tax Registration Certificates showing the two partners, namely, Brijlal Lohia and Nandkishore Lohia, as partners of the firm known as Messrs. Brijlal Nandkishore; (c) The affidavit dated 8th September, 1954, sworn by the assessee stating therein that he had given Rs. 5,11,101 and Rs. 2,50,000 to his brother, Brijlal Lohia, and nephew, Nandkishore Lohia, absolutely and that he had no concern, right, title or interest whatsoever in the aforesaid gifted money or in any business carried on by his said brother and nephew; (d) Entries in the account books of the firm, Messrs. Brijlal Nandkishore, showing that the profits and losses of the business had been distributed between the two partners in accordance with their shares each year starting from the first accounting year of the said business; (e) Copies of the personal accounts of Brijlal Lohia and Nandkishore Lohia in the books of the partnership to show tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade. No question about the invalidity of the gifts, by reason of the incapacity of the parties or want of legal formalities, was agitated before us nor was it argued that the judgment of the Supreme Court between the parties operated as res judicata and that this court must hold, on the basis of the Supreme Court judgment, that the gift was an unreal gift Now, it is well-settled by several judgments of the Supreme Court that where a Tribunal comes to a finding on consideration of evidence, that finding is binding upon this court, although, on those pieces of evidence, this court might not come to the same conclusion. We need refer, in this context, to the judgment of the Supreme Court in Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax , in which it was observed : " On these facts, the Tribunal came to the conclusion that the contentions of the department had been fully established, namely, that the intermediaries were dummies brought into existence by the appellant for concealing its profits, that the sales standing in their names were sham and fictitious and that the profits ostensibly earned by them on those transactions were, in fact, earned by the appellant, and shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined unproved inasmuch as of the persons who would have spoken whether the gifts had been made, none was produced by the assessee before the Income-tax Officer and the one who came forward, Mr. A. L. Majumdar, did not support the assessee inasmuch as he said ' I don't remember things very distinctly but I can say that the gifts to Brijlal or Nandkishore were not made in my presence as alleged.' " In our opinion, there is considerable force in the submission made by Mr. Choudhuri. We are also of the opinion that the Tribunal did not shut their eyes to the evidence of Amritlal Majumdar and were conscious of the fact that the revenue was very much depending upon that evidence to show that the story of the gift by the assessee to his brother and nephew should be condemned as a mere story. But, as the Tribunal observed, the other pieces of evidence now produced were weighty enough to dislodge the weight of evidence of Amritlal---this appears from the following finding of the Tribunal, which we set out below : " The question then remains as to whether upon the evidence which is now before us we could come to the conclusion that the gifts were valid and that the business, Brijlal Nandki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in their presence. Further, there was produced an affidavit by the assessee affirming that he had made a gift of Rs.7,61,000 to his brother and his nephew and that he had no concern with the business, Brijlal Nandkishore, started with that money. Also, the assessee caused production of the personal accounts of Brijlal Lohia to show that the amount gifted by him was introduced in the partnership business. Lastly, the assessee also caused production of the business accounts of the firm, Brijlal Nandkishore, showing that the profits and losses of the business of Brijlal Nandkishore were distributed amongst the two partners, in accordance with the provisions of the partnership deed. The additional facts now produced are important facts, the absence of which, on the previous occasion, went against the version of the assessee and the presence of which in the instant occasion added support to the version of the assessee. Another important fact was introduced on the present occasion. On the previous occasion, the assessee could not prove the total value of his wealth. Somehow or other, the revenue authorities proceeded on the assumption that the total assets of the assessee could be va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner that we must hold that the gift was a sham gift and the business was a benami business of the assessee himself. In our reading of the judgment of the Supreme Court, this contention of Mr. Pal cannot be upheld. We have hereinbefore set out a long extract from the said judgment. if we analyse the judgment, we find that the Supreme Court firstly overruled the argument of the assessee that the rules of natural justice were violated because no opportunity was given to the assessee to cross-examine Mr. A. L. Majumdar. The Supreme Court found that such an opportunity had in fact been given but was not availed of on behalf of the assessee and, therefore, the criticism that the rules of natural justice were violated had little substance in it. Thereafter, the Supreme Court considered the evidence that had been at that time produced before the Tribunal, and came to the conclusion that on those pieces of evidence the finding by the Tribunal was not perverse and the total effect of the evidence made the transaction suspicious. In the background of that conclusion, their Lordships observed that there existed no such, circumstances which merited interference by the Supreme Court in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
