SAVACHAND BAID Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is an appeal from a judgment of the Income-tax Appellate Tribunal dated August 7,1953, filed with leave granted under Art, 136 of the Constitution. The Tribunal held that of the high denomination notes of the value of Rs. 2,68,000 encashed by the appellant in the relevant accounting year, notes worth Rs. 1,28,000 represented his concealed profits and were liable to be taxed. In this appeal the appellant challenges the correctness of this finding.

(2.) The appellant was assessed to income-tax for the year 1946-47 as a non-resident British subject, and out of the proceedings of this assessment the present appeal arises. The relevant accounting year was the period from November 6, 1945 to April 9, 1946. The appellant was a resident of Ratangarh in the Princely State of Bikanere outside what was British India. On November 6, 1945 he started a business in Calcutta, the accounts of the first year of which were closed on April 9, 1946. On January 19, 1946 the appellant came to Calcutta with 11 ten thousand rupees and 158 one thousand rupees currency notes which he encashed a few days later through the Punjab National Bank under the provisions of the High Denomination Notes Order promulgated earlier in the same month. In his books of account of the Calcutta business for the relevant accounting year, the appellant credited the value of the notes, namely, Rs. 2,68,000 as capital received from him. Upon the Income-tax officer asking him to explain how he came across these notes, the appellant said that the money had come to him from his father who had died in 1942. The Income-tax 0fficer took the view that the explanation of the appellant was not supported by his books of account and other documents produced by him. He thereupon held that the amount represented by the notes was income from undisclosed business activities and was therefore taxable.

(3.) The appellant then took an appeal to the Appellate Assistant Commissioner, who came to the conclusion that the books of account and other documents produced by the appellant showed that the notes formed part of the assets that devolved on the appellant upon his fathers death. He, therefore, allowed the appeal and deleted the sum of Rs. 2,68,000 from the assessment.