LAWS(MAD)-1962-8-15

B ABDUL QADIR Vs. COMMISSIONER OF INCOME TAX

Decided On August 20, 1962
B. ABDUL QADIR Appellant
V/S
COMMISSIONER OF INCOME TAX, MADRAS Respondents

JUDGEMENT

(1.) THE year of assessment in question is 1947-48, the account year relevant thereto ending with the 31st of March, 1947. During the years preceding, the assessee has been carrying on a particular canteen business. THE business came to an end in April, 1946, during the "previous year". THE outstandings relating to this canteen business were being realised during the year of account and in November, 1946, the assessee started a new business in the name and style of "British and Eastern Engineering Company". Till the end of the accounting year, that is, March 31, 1947, this company was mainly concerned in setting itself up. No actual business was done, expenses only being incurred in connection with entering into negotiations for import of machinery and tools from abroad. Up to the end of the accounting year, there was a loss of Rs. 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.

(2.) A total of Rs. 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 been executed in favour of these creditors, the documents themselves were not produced.

(3.) SOME letters were produced before the appellate authority purporting to be reminders from the creditors in support of the assessee's version of borrowals. The Appellate Assistant Commissioner found that even at that stage there was no reconciliation possible between the names of the lenders as they appeared in the accounts, the amounts, etc., with like details appearing in the wealth statement. Though more than five years had passed since the date of the borrowals, no renewed document or correspondence supporting the borrowals were made available. For these reasons, the appeal was dismissed, the addition being confirmed