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TMI Blog1972 (1) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... n or about February, 1950. Ramaswami Naidu had an eight annas share in the managing agency firm, " G. Krishna and Company ". The mills applied to the Textile Commissioner for permission to start a ginning factory. In anticipation of getting the requisite permission, the mills had advanced Rs. 1.54 lakhs to cotton growers for the supply of cotton to the mills. It had also constructed , the ginning factory and purchased and installed the machinery at a cost of Rs. 1 lakh. But, the permission sought for was refused by the authorities and, therefore, the mills could not start the ginning factory. Faced with the refusal, the mills had to make some other arrangement. The alternative arrangement which was thought of by the mills has been explained in the letter dated March 9, 1957, written by Ramaswami Naidu to the Income-tax Officer thus : " The mill itself could not run the factory since permission was refused by the textile authorities. As partner in the managing agency of the mill, I too could not run the same. So I had to look to others to run this factory. Instead of leasing it out to outsiders, Sri U. G. Krishnaswami was asked to take the same on lease." However, no lease agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by adjustment in another account. U. G. Krishnaswami had obtained overdraft from the bank and Ramaswami stood as a surety for the same. It was also found that though Ramaswami Naidu had an eight annas share in the managing agency firm, he had full control of the managing agency firm as also the mills, he having purchased another six annas share owned by one G. Krishnan and others. U. G. Krishnaswami, though he purported to carry on the business, was not in a position to explain as to how he found the capital for starting his alleged business and how he spent or invested the profits which he had earned from the business for the years for which he was carrying on business. He was not also able to produce cash vouchers given to the cotton growers nor to give details and addresses of the parties with whom he is said to have carried on business. The premises of the mills were raided by the Enforcement Branch of the textile department and certain books were seized by them. Those included certain books maintained by Krishnaswami in relation to his alleged business. A comparison of the entries in the cash book produced by Krishnaswami in connection with his assessment with the book seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mi Naidu for the assessment years 1953-54 and 1954-55 as well. There were appeals both by Krishnaswami Naidu as well as Ramaswami Naidu questioning the orders of the Income-tax Officer in relation to their assessments for the years 1952-53, 1953-54 and 1954-55. The Appellate Assistant Commissioner also found that Ramaswami Naidu was in full control of the managing agency firm of the mills and that he had discharged the tax liability of Krishnaswami Naidu by making some adjustments in the mills accounts and transferring the ultimate liability of Krishnaswami Naidu to the mills to the accounts of one Kavetti Naidu. According to the Appellate Assistant Commissioner it is Ramaswami Naidu who actually carried on the business in the name of Krishnaswami Naidu, his aunt's son and reaped the profits therefrom and the financial position of U. G. Krishnaswami remained the same all through even though he is said to have earned profits in the business in question. But at the same time, there had been substantial accretion of wealth to Ramaswami Naidu during the relevant years. There were further appeals to the Appellate Tribunal and it was contended before the Tribunal by both the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Naidu was justified in law ?" Mr. Swaminathan, learned counsel for the assessees, practically reiterates the same contentions as were raised before the Tribunal and contends that the finding that U. G. Krishnaswami Naidu is only a name-lender and that in fact Ramaswami Naidu is the owner of the business in question cannot at all be sustained on the materials on record and that if at all the business could be treated as that of the mills. We are not in a position to say that the facts and circumstances as found by the Tribunal are not sufficient to reach the inference that Ramaswami Naidu should have had a proprietary interest in the business in question. In our view, the materials are sufficient to establish a close and intimate nexus between Ramaswami Naidu and the business in question. From the facts found it is seen that U. G. Krishnaswami had no experience in any business and that his name was, for the first time,brought in by Ramaswami Naidu in the circumstances stated by him in his letter dated March 9, 1957. The letters seized by the Enforcement department also clearly showed that he had a proprietary interest in the business and that U. G. Krishnaswami was only his re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urbed by the High Court on a reference unless it appears that there was no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they have come, even though the High Court could, on the evidence, have come to a conclusion entirely different from that of the Tribunal, that such findings of fact can be reviewed by the High Court only on the ground that there is no evidence to support it or that it is perverse, and that when a conclusion has been reached by the Tribunal on an appreciation of a number of facts established by the evidence, whether that is sound or not must be determined, not by considering the weight to be attached to each single fact in isolation but by assessing the cumulative effect of all the facts in their setting as a whole. In that case it was contended that the legal inference to be drawn from proved facts should be treated as one of law. In rejecting the said contention the Supreme Court held that it is only where an ultimate finding on an issue is an inference to be drawn from the facts found on the application of any principles of law, there will be a mixed question of law and fact that the inference from the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material on record to lead to the inference that it is only Ramaswami Naidu who carried on the business in question in the name of Krishnaswami Naidu and the Tribunal has not shifted the onus on the assessee requiring him to prove that he was not the owner of the business. The question of onus does not come into play at all in this case as the Tribunal had decided the case purely on the materials on record and not on the basis that the assessee has not discharged the onus of proving that the business was not his. The learned counsel for the revenue contends that, having regard to the nature of the question referred to this court in T.C. No. 66 of 1965, it is not possible for us to embark upon a reappraisal of the evidence and to arrive at a conclusion contrary to that of the Tribunal and that we have to confine ourselves to the facts as found by the Tribunal and answer the question of law in the setting and context of these facts, and refers to the decision in Commissioner of Income-tax v. Kamal Singh Rampuria . In that case their Lordships of the Supreme Court, after referring to their earlier judgment in India Cements Ltd. v. Commissioner of Income-tax and Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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