9911796707
TMI Blog1969 (4) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ee stated that 4 high denomination notes of Rs. 10,000 each totalling a sum of Rs. 40,000 were received from one Vijoysingh Gobindjee of Bombay, being the sale proceeds of S. S. Cossipore ; 2 high denomination notes of Rs. 10,000, aggregating to Rs. 20,000, were received from the currency office, Calcutta, and 20 high denomination notes of Rs. 1,000 each were received from one R. P. Shaw by cheque on Comilla Banking Corporation and encashed through one Sudha Sankar Singh, the assessee's son, while the assessee had one Rs. 1,000 note as cash in hand. The Income-tax Officer accepted the assessee's explanation of Rs. 40,000, received as sale proceeds of S. S. Cossipore, but, was unable lo accept the assessee's explanation regarding the balance of Rs. 41,000, which was treated as the assessee's income from undisclosed sources. The Income-tax Officer had also found that the assessee had lent a sum of Rs. 1,26,000, in the form of high denomination notes to M/s Singh Co., through his wife, Smt. Sadhana Devi. Shri Sudha Sankar Singh, the assessee's son was one of the partners of the said firm, M/s. Singh Co. The firm encashed these high denomination notes on the 19 th January, 1946. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as written on this subject. The appellant would be entitled to produce evidence on this point also before the Appellate Assistant Commissioner and we send the case back to him on this point for re-decision, on the lines indicated above. The assessee, namely, Joynarain Singh, died on the 26th October, 1954, and on 9th March, 1961, the Appellate Assistant Commissioner called upon the legal representative of the assessee to give his explanation. The Appellate Assistant Commissioner also asked for a report from the Income-tax Officer for examining the record of the Bharati Central Bank Ltd. (in liquidation). The Income-tax Officer served a notice under section 37 of the Indian Income-tax Act on the official liquidator, Bharati Central Bank Ltd. The official liquidator wrote on the 20th of September, 1961, that, apart from the true copy of the office copy of a letter dated 26th April, 1951, addressed to Sri Sudha Sankar Singh by Sri D. N. Guha Roy, the then official liquidator of the bank, there was nothing else on the record and enclosed a copy of the aforesaid letter. The said letter stated that Sri Sudha Sankar Singh encashed a cheque for Rs. 36,696, against which he was paid by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for 1946-47, the entire amount of Rs. 36,000 was required to be included in the assessment of the assessee as income from undisclosed sources. So far as the high denomination notes of Rs. 20,000 received from the currency office as alleged by the assessee, the Income-tax Officer had reported that the assessee was unable to produce any evidence before him and on a reference being made to the currency officer he was informed that no record showing the names and addresses of the persons to whom the high denomination notes were issued was maintained by that office. It was admitted on behalf of the legal representative of the assessee that he was unable to prove the numbers of the notes from the records of the currency office. The Appellate Assistant Commissioner also upheld the addition of this sum of Rs. 20,000 as the assessee's income from undisclosed sources. He, therefore, confirmed the addition of Rs. 57,000 on account of high denomination notes as the assessee's income from undisclosed sources. The matter came up in appeal for final hearing before the Tribunal. The Tribunal was unable to accept the assessee's case that he had changed one Rs. 10,000 rupee note for another but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot challenged in any other manner except with respect to certain interpolations relating to the number of the high denomination notes and the Income-tax Appellate Tribunal had accepted these books of account as genuine and had based its conclusion on the basis of the entries which appear in these books of account. The Supreme Court was of the opinion that, in these circumstances, it was not open to the Income-tax Appellate Tribunal to accept the genuineness of these books of account and accept the explanation of the assessee in part as to Rs. 1,50,000 and reject the same explanation with regard to the sum of Rs. 1,41,000. There the Income-tax Tribunal had considered the possibility of the assessee's earning a considerable sum secretly as the period was favourable for the food-grain dealers and the assessee was a food-grain dealer. Furthermore, the Tribunal relied on the fact that the places of the business of the assessee had gained sufficient notoriety for smuggling food-grains and other commodities. The Income-tax Appellate Tribunal had also based its conclusion on the above probability. In these circumstances, the Supreme Court was of the opinion that the said circumstances reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises, nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises, and if it does anything of the sort, its findings, even though on questions of fact, will be liable to be set aside by this court." These and other cases relevant on the question of high denomination notes were duly considered by the Supreme Court in the case of Sreelekha Banerjee. v. Commissioner of Income-tax. There the assessee, who was a colliery proprietor and a coal raising contractor, had encashed on January 22, 1946, high denomination notes of the value of Rs. 51,000. In his application under the Ordinance for encashment of the notes he had stated that for the purpose of conducting his business and making payment to labour which was to the tune of Rs. 30,000 to Rs. 40,000 every week, he had to keep large sums of money to meet an emergency as he did not get payment for work done every week. His explanation before the Income-tax Officer that the high denomination notes formed part of the cash balance at his head office was rejected by the Income-tax Officer on the grounds : (1) that there was a disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence against the assessee. There is prima facie evidence against the assessee which the assessee fails to rebut. At page 115 of the report, Hidayatullah J. (as His Lordship then was) observed : " The cases involving the encashment of high denomination notes are quite numerous. In some of them the explanation tendered by the tax-payer has been accepted, and, in some, it has been, rejected. The manner in which evidence brought on behalf of the taxpayer should be viewed, has, of course, depended on the facts of each case. In those cases in which the assessee proved that he had on the relevant date a large sum of money sufficient to cover the number of notes encashed, this court and the High Courts, in the absence of something which showed that the explanation was inherently improbable, accepted the explanation that the assessee held the amount or part of it in high denomination notes. In other words, in such cases, the assessee was held, Prima facie, to have discharged the burden which was upon him. Where the assessee was unable to prove that in his normal business or otherwise, he was possessed of so much cash, it was held that the assessee started under a cloud and must disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Messrs. Singh Co. In this context is the assessee's explanation that one note for rupees ten thousand got changed, improbable ? The Tribunal, in our opinion, has not properly considered this aspect of the matter bearing in mind the principles laid down by the Supreme Court. It has also to be borne in mind that the tallying was done with the number of notes encashed by M/s. Singh Co., that is not the assessee itself, even though it was closely associated with the assessee. In those circumstances, the explanation that either the assessee or M/s. Singh Co. who had cash in hand in notes might have changed one high denomination note, in our opinion, is not inherently improbable. This aspect of the matter was not appreciated, in our opinion, by the Tribunal Mr. B. L. Pal, learned advocate for the revenue, urges before us that it was necessary for the assessee to establish that he had at the time of making this loan to M/s. Singh Co. retained the money that the assessee had received as consideration for the sale of the property. In view of the fact that the assessee had received the money, as consideration for the sale of property in high denomination notes and that the bulk of w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
