TRADERS AND TRADERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a registered firm having branches at various places, one of which is Lala Gopikrishna Gokuldas Agencies, Bombay. THE Income-tax Officer, for the assessment year 1966-67 made an addition of Rs. 1,50,000 treating the assessee as a beneficiary of the customs clearance permits issued in the name of Messrs. French India Traders. THE said French India Traders, Pondicherry, were issued customs clearance permits with c.i.f. value of Rs. 21,70,678. According to the Income-tax Officer, a syndicate was formed consisting of Madhusudan Gordhandas and Co., Naraindas Gohimal, Sohanlal Sharma and Balwant Singh Bawa and the said syndicate had paid to the said French India Traders a sum of Rs. 1,50,000 in cash in July, 1965, Rs. 7,50,000 by way of cheques issued by Babubhai and Sons, Bombay, in April and June, 1966, and Rs. 2,18,750 by way of consignment of thin-walled bearings. As regards the first item of Rs. 1,50,000, the assessee showed receipts of Rs. 20,000, dated July 21, 1965, by drafts on Bank of India and Rs. 80,000 dated July 14, 1965, by cash through Balwant Singh Bawa. THE accounts showed that the amounts were originally credited to Madhusudan Gordhandas and Co. and later transferred to the accounts of French India Traders in the assessee's books of account. As regards the balance of Rs. 50,000 the amount was alleged to have been paid by Madhusudan Gordhandas and Co., Bombay, to the assessee directly. As regards cheques, the assessee's books showed the following entries :

(2.) IT was submitted on behalf of the assessee that the Income-tax Officer was not correct in holding that the assessee was the real beneficiary of the customs clearance permits. According to the assessee, the permits were issued in the name of various parties and the officer was wrong in placing reliance on the uncorroborated testimony of G. L. Pathy in coming to the conclusion that the assessee was the beneficiary of the transactions. The Appellate Assistant Commissioner considered the matter in detail. He referred to the statement of G. L. Pathy, the power of attorney of Kailash-chand Bhaiya, an employee of the assessee-firm, the power of attorney deed executed by Pathy in favour of Kailashchand Bhaiya, certain correspondence and also statement given by the said Pathy at the time of examination by the Income-tax Officer. After exhaustively considering the matter, he came to the conclusion that the customs clearance permits of French India Traders were exploited by the assessee and the entire amount received as a result of such exploitation was utilised by the assessee for its benefit. He, therefore, held that the Income-tax Officer was justified in making the additions admitting all customs clearance permits in the hands of the assessee for both the assessment years.

(3.) WHETHER, on the facts and in the circumstances of the case, the Tribunal was justified in its finding that Shri Naidu did not play any role worthwhile especially in view of the clear finding that the customs clearance permits really belonged to him ?