COMMISSIONER OF INCOME TAX Vs. KRISHNAVENI AMMAL

JUDGEMENT

(1.) AT the instance of the Department (Revenue), the following questions were referred to this court for its opinion :

(2.) ON the basis that the credit entries in the names of various multani bankers appearing in the books of the assessee did not represent genuine transactions and that there was information to the effect that such multani bankers had only indulged in hawala transactions by merely lending their names, the Income-tax Officer reopened under section 147(a) of the Income-tax Act, the assessment for the assessment year 1957-58, which was completed on July 23, 1958, on a total income of Rs. 15,472. The assessee's explanation did not find favour with the assessing officer and consequently by his order dated January 31, 1970, the assessing officer determined the total income at Rs. 3,08,999. The assessee's appeal to the Appellate Assistant Commissioner was unsuccessful because the Appellate Assistant Commissioner accepted the reasoning of the assessing officer. The assessee took the matter in appeal to the Income-tax Appellate Tribunal. The Tribunal accepted the explanation submitted by the assessee that the borrowings from multani bankers were all genuine transactions and held that the fact that the assessee had produced the charged hundis was enough to accept her explanation.

(3.) IN Homi Jehangir Gheesta v. CIT , what is laid down by the Supreme Court is that it is not in all cases that by mere rejection of the explanation of the assessee, the character of a particular receipt as income can be said to have been established; but where the circumstances of the rejection are such that the only proper inference is that the receipt must be treated as income in the hands of the assessee, there is no reason why the assessing authority should not draw such an inference and such an inference is an inference of fact and not of law. We do not see as to how this decision really helps the assessee in the present case.