9911796707
TMI Blog1977 (6) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee (Messrs. Ram Lal Ganpat Rai) is a Hindu undivided family consisting of Onkarmal, the karta, his two major sons, Hanuman Parsad and Mahabir Parshad, two minor sons, Vijay Kumar and Ajay Kumar, and the adoptive mother of Onkarmal, Shrimati Parwatibai. It appears that the assessment for the year 1948-49 was originally made on July 27, 1951, while the. assessment for the. years 1949-50,and 1950-51 was made on July 28, 1951. While the Income-tax Officer was dealing with assessment proceedings of the Hindu undivided family for the assessment year l951-52 he came by certain information: regarding certain deposits which stood in the name of Shrimati Parwatibai in the books of Messrs. Kaluram Puranmal of Bombay and Messrs. Ishwardas Hanuman Parshad. He found that a sum of Rs. 50,000 stood deposited in the name of Shrimati Parwatibai on November 9, 1947, within the previous year relevant for the assessment year 1948-49 and three sums of Rs. 50,000. Rs. 40,000 and Rs. 50,000 as standing deposited in her name on April 21, 1948 October 22, 1948, and January 2, 1949, respectively, within the previous year relevant for the assessment, year 1949-50. These deposits were noticed by him in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest to various persons and on November 9, 1947, the first deposit of Rs. 50,000 was made by her with the firm of Messrs. Kaluram Puranmal of Bombay and subsequently further amounts of Rs. 50,000, Rs. 40,000 and Rs. 50,000 (aggregating to Rs. 1,40,000) were similarly deposited with that firm on April 21, 1948, October 22, 1948, and January 4, 1949, respectively. In other words, during the two previous years, relevant for the assessment years 1948-49 and 1949-50, an aggregate amount of Rs. 1,90,000 comprising of the initial receipt of Rs. 1,60,372 under date November 29, 1943, and the interest earned thereon in the meantime, came to be deposited with the firm of Messrs. Kaluram Puranmal in the name of Shrimati Parwatibai. It was further explained that the deposits made with the firm of Messrs. Kaluram Puranmal were withdrawn on February 16, 1950, and the three cash credits of Rs. 1,05,000, Rs. 60,000 and Rs. 25,000 aggregating to Rs. 1,90,000 standing in the books of Ishwardas Hanuman Parshad within the previous year relevant for the assessment year 1950-51 were from out of the withdrawals made from Messrs. Kaluram Puranmal and as regards the two sums of Rs. 40,000 and Rs. 30,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shrimati Parwatibai on the other had not been established, that the deed filed before him was not genuine and that it had further not been established that Shrimathi Parwatibai had been given the amount of Rs. 1,60,372 as stated in the alleged deed. He further noticed that all the credits in the books of Kaluram Puranmal were stated to have come from Messrs. Ramlal Ganpat Rai but the books of Ramlal Ganpat Rai were not produced though called for and the excuse for their non-production that those books were lost in communal riots at Amritsar in August, 1947, could not be accepted as it was not understood why 1943 books of Bombay head office should have been sent to Amritsar in 1947 for adjustment purposes. As regards the diverse amounts that were received by way of interest from Messrs. Kaluram Puranmal from November 9, 1947, onwards till February 16, 1950, he noticed that there were discrepancies between the evidence of Shrimathi Parwatibai and the evidence of Onkarmal and that Shrimati Parwatibai's statement clearly showed that she was completely ignorant as to how and in what manner and who had actually collected the interest on those deposits that had been kept with the firm of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that were made by the taxing authorities as representing suppressed income of the assessee from undisclosed source in the relevant years. The application for reference was rejected by the Tribunal and thereafter the assessee applied to this court for a reference under section 66(2) and, as stated earlier, at the instance of the assessee the Tribunal has referred the two questions set out at the commencement of this judgment to this court for our decision. Mr. Dastur appearing for the assessee has principally contended that the taxing authorities as well as the Appellate Tribunal have reached the conclusion that the cash credits which stood in the name of Srimathi Parwatibai in the books of Messrs. Kaluram Puranmal for the assessment years 1948-49 and 1949-50, and the two cash credits which stood in her name in the books of Messrs. Ishwardas Hanuman Parshad for the assessment year 1950-51 represented the suppressed income of the assessee from undisclosed source merely on the basis that the explanation offered by the assessee was not acceptable and that the deed of partition or the deed of separation dated November 29, 1943, was not genuine. He urged that mere rejection of the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open to the assessee to raise it before this court. In any event, he contended that there was no material on record to show that the cash credits which stood in the name of Shrimati Parwatibai in the books of Messrs. Kaluram Puranmal and Ishwardas Hanuman Parshad were traceable to the items which stood in the name of the lady in the books of the assessee for the year 1942-43 and as such the taxing authorities as well as the Tribunal were right in coming to the conclusion that the additions were required to be made to the assessee's income for the three relevant assessment years in question. From the manner in which Mr. Dastur has approached the questions that have been raised for our consideration in this reference it will appear clear that the first and foremost question which will have to be considered is whether the taxing authorities as well as the Tribunal have really reached the conclusion which they have done, merely on the basis of rejecting the explanation offered by the assessee in regard to these cash credits or whether there is any other material on record available on the basis of which the inference drawn by the taxing authorities and the Tribunal could be drawn. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm, but these are cash credits appearing in the third party's books like Messrs. Kaluram Puranmal and Messrs. Ishwardas Hanuman Parshad though in the latter firm Onkarmal is the major partner. The other aspect which must be stated is that these cash credits appear in the name of Shrimati Parwatibai who, at the highest, could be regarded as a member of the Hindu undivided family and not in the name of either the karta or any of the coparceners of the Hindu undivided family. Having regard to these aspects the question that will have to be considered is whether Shrimati Parwatibai was merely a benamidar for the Hindu undivided family so far as the cash credit items are concerned, or she was merely the name lender and the moneys really belonged to the Hindu undivided family or not, as it is only if such inference is possible from the material on record that there will be no difficulty in coming to the conclusion that these cash credits were of revenue nature and represented the suppressed income of the Hindu undivided family inasmuch as such latter conclusion cannot be drawn from the mere fact that these cash credits stood in the name of a female member of the Hindu undivided family. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re there shall be no grievance of either of the parties. The first circumstance that would strike anybody is the manner in which and the purpose for which this deed has come into existence. Since Onkarmal, the karta of the family, was not separating from his own sons, ordinarily the mother would have no share in the family property, she having become a widow as early as in 1920 ; but apart from this aspect of the matter, the recitals that are to be found in this document sound rather unnatural. Admittedly, Issardas had died in 1920 when Shrimati Parwatibai was about 23 years old. In the declaration of Shrimati Parwatibai which was filed on January 22, 1959, she has claimed that in the firm of Messrs. Ramlal Ganpatrai, Bombay, she has an account in her name (Bhagatram-ki-Chachi), as also in the name of Issardas Sarogi right from 1930 and that the initial deposits in these two accounts were of Rs. 20,000 and Rs. 40,000 respectively. It appears a little unnatural that if these two amounts were really her streedhan as she has purported to claim, she would keep Rs. 40,000 in the name of her husband who had died 10 years prior to the deposit in the shop of the Hindu undivided family. Bes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegedly stood in the name of Shrimati Parwatibai and the deposits which stood in the name of Issardas, the circumstance also stands out clearly that no material had been put before the taxing authorities as well as before the Tribunal to show that Shrimati Parwatibai had any such amounts of hers which she was in a position to deposit in the firm of Messrs. Ramlal Ganpatrai. As regards the bigger sum of Rs. 73,442, actually it stood in the name of Issardasji Sarogi and not in the name of the lady at all and the said amount appears to have continued to remain in that name long after. Issardas had died, and as regards the smaller amount of Rs. 36,930 though it stood in the name of the lady, styled as Bhagatram-ki-Chachi, there was no material to show that it really belonged to her or was her streedhan amount which she bad deposited. There was no material produced to show that she had either any independent source of income or any money was given to her at any time. It is true that from the balance-sheets for the year 1942-43 and for the year 1946-47, which were produced for the first time before the Appellate Assistant Commissioner, an argument was sought to be built on behalf of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be disputed and that, therefore, even if the story that the amounts belonged to Shrimati Parwatibai were to be rejected, these would be the moneys which would belong to the Hindu undivided family and the same must be taken to have been deposited with M/s. Kaluram Puranmal in November, 1947, and as such the additions could not be made in the relevant assessment years for which the assessment proceedings were reopened, but if at all, they would be referable to earlier years. In the absence of the requisite link such an argument would not be open to the assessee. Dealing next with the material which was available for the purpose of coming to the conclusion that Shrimati Parwatibai was merely the name lent by her to the Hindu undivided family for the purpose of making the deposits in M/s. Kaluram Puranmal which was the inference ultimately drawn by the taxing authorities as well as the Tribunal, it will appear clear on a close scrutiny of the several statements recorded of Shrimati Parwatibai, the two statements of Onkarmal together with the entries in the books of account of M/s. Kaluram Puranmal, that they clearly furnish materials not merely for the purpose of rejecting their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1950. In his statement recorded on February 21, 1956, when Onkarmal was questioned whether he had at any time deposited or withdrawn any money from M/s. Kaluram Puranmal on behalf of his mother, Onkarmal categorically stated thus : " Never. At no time did I act as intermediary for my mother." Similarly, in her statement recorded on February 18, 1956, when Parwatibai was questioned as to how actually the cash was received by her when she used to withdraw any amount from M/s. Kaluram Puranmal, she stated that sometimes the cash was given to her through some of the employees of Kaluram Puranmal and sometimes through some of her men ; that she used to send a man by name Moolji who is an employee of M/s. Ishwardas Hanuman Parshad ; but she categorically asserted thus : " I had never sent Onkarmal to M/s. Kaluram Puranmal either to deposit any money or to withdraw any money. I have never signed for any amount including interest received from M/s. Kaluram Puranmal." It is true that she prevaricated in her declaration which was filed much later on January 22, 1959, presumably under legal advice, and stated that sometimes on her instructions Shri Onkarmal and Shri Hanuman Parshad had withd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moneys which belonged to him as the karta of the Hindu undivided family. Once the conclusion is drawn that the name of Parwatibai was merely a benami for Onkarmal as the karta of the Hindu undivided family, the cash credits standing in the books of account of a third party like M/s. Kaluram Puranmal must be taken to be standing in the name of the Hindu undivided family or the karta of the Hindu undivided family and the presumption would be that such cash credits represented the revenue or the income of the Hindu undivided family. It is also the assessee's case that these very moneys after they were withdrawn from Messrs. Kaluram Puranmal were deposited in the firm of Messrs. Ishwardas Hanuman Parshad. In this view of the matter it seems to us quite clear that there was ample material on record for the taxing authorities as well as the Tribunal to come to the conclusion that the amounts represented by the cash credits which stood in the books of Messrs. Kaluram Puranmal as well as in the books of M/s. Ishwardas Hanuman Prashad not merely belonged to the Hindu undivided family, but were also the amounts of revenue or income nature and since prima facie these cash credits which repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amounts was treated as the income of the family and was assessed accordingly. On a reference to the High Court, the Allahabad High Court took the view that on the facts the assessee family could not be said to have received the amounts in question at all. The court observed that it was possible for the income-tax authorities to find that the deposits did not belong to the persons in whose names they were credited in the accounts of the firm but really belonged to the assessee, but such a finding could Le arrived at on some material only; that such a finding could not be recorded merely as an inference from the fact that the assessee family could not explain how the persons in whose names the deposits appeared came to have those amounts. Mere relationship of those persons to the assessee family was no reason for assuming that the deposits belonged to the family and not to those persons, and the onus lay on the department to establish as a fact that the persons in whose names the deposits were made were not really the owners of the moneys but that the moneys belonged to the assessee family, and the fact that the explanation given by the family was rejected did not justify an infer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atibai had merely lent her name while depositing the amounts belonging to the Hindu undivided family with the aforesaid two firms. Having regard to the above discussion both the questions referred to us are answered in the affirmative and against the assessee. The assessee will pay the costs of the reference to the revenue. Mr. Dastur for the assessee requested us that a direction to the taxing authorities may be issued by us as, according to him, the income from these cash credit deposits has been taxed doubly, once in the hands of the Hindu undivided family and again in the hands of Shrimati Parwatibai for some years, and that having regard to the decision which has been reached by this court in the reference, such double taxation would not be proper. Mr. Dastur has categorically stated before us that his client, the assessee, is accepting the decision of this court in the above reference and would not prefer any appeal to the higher court against the same. In view of this statement made we feel that the taxing authorities should consider the aspect of double taxation of the income as pointed out by Mr. Dastur and, if necessary, proper adjustments may be made. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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