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TMI Blog1976 (4) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 1 is as follows : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in holding that the assessee-company was one in which the public are substantially interested within the meaning of s. 23A of the Indian I.T. Act ? " The relevant portion of the Expl. to s. 23A(1) of the Indian I.T. Act, 1922, as it stood prior to its amendment in 1955, reads as follows : " For the purpose of this sub-section, a company shall be deemed to be a company in which the public are substantially interested if shares of the company......... carrying not less than twenty-five per cent. of the voting power have been allotted unconditionally to, or acquired unconditionally by, and are at the end of the previous year beneficially held by, the public ...... and if any such shares have in the course of such previous year been the subject of dealings in any stock exchange...... or are in fact freely transferable by the holders to other members of the public." The reason for which their Lordships of the Supreme Court could not answer question No. 1 was that the Tribunal did not make any enquiry as to whether the members of Kedia family, who are holding 4,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in the name of Durgadutt Jhunjhunwalla, who was the benamidar of the members of the Kedia family, the total number of shares held by the members of the Kedia family was 4,015 shares, and this holding was in excess of seventy-five per cent. of the total number of the shares issued by the company. In the supplementary statement of the case it has, inter alia, been stated by the Tribunal that " having regard to the normal course of human conduct, we consider that the Kedia family members have acted in concert ". Therefore, Dr. Pal has attacked this conclusion on the ground of perversity. But when we pointed out to him that no provision has been made in the I.T. Acts to challenge any conclusion reached by the Tribunal and stated in the supplementary statement of the case, Dr. Pal gave up this point in the same way as it was "rightly" given up before the Supreme Court by Mr. B. Sen, the learned counsel for the revenue, in the case of CIT v. Sahu Jain Ltd. [1976] 103 ITR 135 (SC) at page 139 of the report. Dr. Pal has requested us to record his suggestion, namely, that this lacuna in the I.T. Acts may be removed for the benefit of the Commissioner and the assessees as well if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test which is erroneous. We are, therefore, unable on the statement of the case to answer the question referred." Hence, the said contention of Dr. Pal must fail. In Sahu Jain's case [1976] 103 ITR 135 (SC) at pages 146-148 of the report, their Lordships say this : " When a company is composed mostly of family members owning a lion's share in the entire share capital of the company the onus to keep clear of the reach of s. 23A(1) will be on the shareholders by adducing some positive evidence about the absence of control by the controlling shareholders ......... When the reality is manifest some reliable evidence within the special knowledge of the assessee must be forthcoming from its side to contradict the obvious in order to be covered by the exception ......... Having regard to the intimate relationship of the shareholders, with not the least evidence of any disconcert amongst them, the ordinary expectation for individual profit in commercial undertakings, natural reluctance to forgo the same, the history of the company and its continued smooth working in a manner which is normally inconsistent with anything other than full unison amongst the shareholders in decisions about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a company in which the public were substantially interested but it was set aside by the Supreme Court with a direction on the High Court to decide it with a further direction on the High Court to call for a supplementary statement of the case, if necessary, from the Tribunal. In view of all these decisions of the Supreme Court it must be held that it is only when the revenue has brought some relevant materials on the record from which a legitimate inference can be drawn to the effect that a group of shareholders holding more than 75% of the shares of a company have acted in concert in relation to the affairs of the company, the company must disprove it by producing relevant materials and by adducing cogent evidence in its possession to the satisfaction of the Tribunal. In the premises, the rival contentions mooted before us on the onus of proof must fail and the question No. 1 must be answered, if possible, on the facts stated by the Tribunal in the statement of the case and in the supplementary statement of the case and not by the mere technicalities of the rules of relating to the onus of proof. The facts stated by the Tribunal in these two statements of the case are s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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