R DALMIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) .This is an application under section 66(2) of the Income-Tax Act, 1922. The petitioner is R. Dalmia, the assessee. He prays for an order to be made requiring the Appellate Tribunal to state a case and refer to this court certain questions of law said to arise out of its order dated 28th March 1970 made in I.T.A. No. 19601 of 1967-68, and another order dated 13th December, 1971 rectifying paragraph 34 of the former order. Briefly, the matter has arisen as follows.

(2.) . At all material times the assessee was in control of a number of companies, in particular, Jaipur Traders Limited ('J.T) and Bharat Union Agencies (P) Limited ('B.U.A). In the course of the assessment proceedings for the assessment year 1954-55, relevant to the previous year ended 30th September 1953, the Income-Tax Officer noticed that the assessee had received a sum of Rs. 13,65,000 from B.U.A. in cash on 3rd August 1953, and had paid a sum of Rs. 13,64,250 to J. T. on 7th August 1953, also in cash. When asked to disclose the source from which this money came, the assessee said that earlier, in May 1953, he had sold 3 A-class preference shares of Bennett Coleman & Co. Ltd. (another company controlled by him) to J.T. for Rs. 14,02,019. Of this amount, a sum of Rs. 14 lacs was paid in cash by J.T. to B.U.A. on 6th May 1953 to be held by the latter to the credit of the assessee's account, and the balance of Rs. 2,019 was paid in cash directly to him on the same day. According to the assessee, he drew a sum of Rs. 13,65,000 in cash on 3rd August 1953 from B.U.A. out of the amount thus lying with that company to his credit, and utilised it to pay Rs. 13,64,250 to J.T. in cash on 7th August 1953 for the purchase of 2,14,000 ordinary shares of Dalmia Jain Aviation Limited.

(3.) . In support of this explanation the assessee produced some vouchers and correspondence in addition to his own account books. The account books of J. T. were not produced as they were said to have been destroyed and the company had gone into liquidation. Those of B.U.A. were not available as they were with the Commission of Inquiry appointed to inquire into the affairs of the companies controlled by the assessee. The Income-Tax Officer did not accept the explanation given by the assessee and treated the amount received by him as his income. There were some other items also in respect of which the assessee's explanation was not believed, but they are not relevant for the present purpose. In all, the Income-Tax Officer treated unexplained cash credits amounting to Rs. 20,50,000 as the income of the assessee and made an assessment on 26th March 1959 on that basis.