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TMI Blog1962 (8) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... ting year, there was a loss of ₹ 9,532 which has been accepted by the department. In the account books of this business, however, certain credit entries purporting to be borrowals in cash appeared under date January 6, 1947. A total of ₹ 29,000 was so recorded, the creditors being the father of the assessee and his cousins. There were no documents to establish the genuineness of those borrowals and it is common ground that these creditors had migrated to Pakistan at the time of the partition of India. These amounts were subsequently transferred to the capital account of the assessee and his brother on March 31, 1948. The department called upon the assessee to explain these borrowals. The assessee's explanation was that these borrowals were actually on dates prior to January 6, 1947, and that the amounts were introduced into the books as and when occasion arose for the purpose of the new business which involved remittances of large amounts in respect of orders placed abroad. It was also claimed by the assessee that these amounts were displayed in the wealth statement submitted by him as part of the liabilities. Though it was stated that certain promissory notes had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal no doubt realised the force of this contention, but took the view that even if the assessee had such sums in his hands, they were off-set by the liabilities of ₹ 63,000 and odd which were shown in the wealth statement. In the view of the Tribunal, out of the large additions made to the income in the prior assessment years, nothing could have been left in the hands of the assessee which would have rendered probable the conclusion that this sum of ₹ 59,000, though entered in the names of the relations of the assessee, really represented part of the income realised in the preceding years. The application of the assessee for a reference having been dismissed, this court directed the Tribunal to state a case and refer the following question for the decision of this court : "Whether, on the facts and in the circumstances of the case, there is material to sustain the finding of the Tribunal that the amount of ₹ 59,000 was income of the assessee from undisclosed source ?" We have set out most of the relevant data. We must now refer to the incidents of assessment of the preceding years, as part of the arguments both before the Tribunal and before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the orders of the departmental officers and the Tribunal do we find any suggestion that the accounts of the businesses were unreliable except in so far as these entries are concerned; that is to say, barring these entries, the department does not deny that these businesses yielded no income, and was prepared to accept the claim that the result of the business during the year of account was a loss. The learned Advocate-General refers to Mehta Parikh & Co. v. Commissioner of Income-tax [1956] 30 ITR 181; [1956] SCR 626 in support of his contention that against that background, the view taken by the Tribunal as well as the department was based merely on surmise. In that case, the assessee encashed 61 high denomination notes of ₹ 1,000 each in the year of account. During the course of the proceedings before the departmental officers, affidavits were produced to show that the assessee received 43 such notes during the relevant period. The Appellate Assistant Commissioner did not accept this explanation. The Tribunal however accepted the explanation as to 31 of the notes and rejected it as to ₹ 30,000. The High Court holding that the finding was one of fact and was not arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer to make. Even though the department and the Tribunal have not stated in express terms that this receipt represents the undisclosed income of the account year relevant to the assessment year, it is clear from the circumstance that these amounts were brought into account only on 6th January, 1947, they have really held that it relates to the account year in question. It is unnecessary to examine the further decisions cited. As inference of this kind would be fully justified, and as pointed out, the inference must take into account all the circumstances relevant thereto. The most important circumstance in this case to which due weight has not been attached by the Tribunal is that in the preceding years the assessee had been found to have concealed profits. It was urged before the Tribunal that these additions made to the income of the assessee in the preceding years and upon which income he has been assessed, cannot but lead to the conclusion that he had that amount at his disposal. The Tribunal conceded that it should be so, but thought that even on that basis the liabilities set out in the wealth statement must have accounted for that extra income. We are not satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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