CHATURBHUJ AND CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE judgment of the court wads delivered by

(2.) WHETHER there was any material to warrant the finding that the sums of Rs. 16,200 and Rs. 13,700 in dispute were profits of the assessee liable to tax ?

(3.) THE question that thus follows for decision is whether these facts and circumstances found by the Tribunal can be said to be material on the basis of which the Tribunal could come to a finding that these deposits were the revenue income of the assessee liable to income-tax. It appears to us that these circumstances taken together are such that it is possible to draw an inference that these deposits did represent income of the assessee from undisclosed sources. THE facts show that when the money actually came into the accounts of the assessee firm it was brought in by the one of the partners Pooranchand Under the law : of partnership, Pooranchand was entitled to handle the funds of the partnership business and consequently he could have in his possession moneys belonging to the partnership as well as his own moneys. THE explanations given on behalf of the assessee nowhere asserted in plain language that the money which was being deposited by Pooranchand was his own money and in fact, as we have noticed above, it was not even asserted that it actually belonged to Mahesh Chandra, his minor son. THE explanation that the money was deposited out of the withdrawals also appear to have been rejected on the basis of circumstances and reasons which follow relevant considerations and on the basis of which the Tribunal was entitled to act. It is true that there was no requirement in law that Pooranchand should gave maintained a separate account of the moneys withdrawn by him in order to show that the subsequent deposits were made out of those withdrawals but, when such an explanation was tendered on behalf of the assessee, it was for the assessee to give some evidence in proof of that explanation. No attempt was made even to file an affidavit in support of the explanation which was put forward. THE withdrawals were by a partner and not a stranger to the firm. This was significant as the partner was a person who could have funds of the assessee firm in his hands as he was entitled to deal with moneys belonging to the firm in his capacity as a partner. This was, therefore, not a cast where the fact that withdrawals from the account were available for making re-deposits had to be proved by third person with whom the assessee had no connection. THE Tribunal found that the assessee : firm failed even to give any other data from which it could be inferred that there season connection between the withdrawals and the deposits. In all these circumstances it is not possible for us to hold that in this case there was no material before the Tribunal to arrive at the finding which did. It is not competent for us to examine how far the inference drawn by the Tribunal is a correct or incorrect one. THE inference has been drawn from facts which the Tribunal found and itself an inference of fact. In drawing the inference, irrelevant material was not relied upon and the inference that was drawn from the facts was a possible and a reasonable inference. In these circumstances the principles laid down by the Supreme Court in Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax, lead to the conclusion that this court cannot upset the decision of the Tribunal on this point. Learned counsel for the assessee, however, contended that there was at least no material on the basis of which the Tribunal could come to a finding that this sum of Rs. 16,200 represented profits belonging to the assessee firm when it could also have been held that this sum represented profits which may have been earned by Pooranchand, partner, in his individual capacity from some undisclosed sources of his own. In support of this proposition learned counsel referred us to a decision of the Bombay High Court in Narayandas Kedarnath v. Commissioner of Income-tax. In that case also a very similar question had arisen and, on the facts and circumstances of the case, the Bombay High Court held that the Tribunal was not justified in holding that the amounts shown as credited in the account of certain partners were income of the assessee firm. THE facts of that case were, however, different from the facts of the case before us. In that case, the Bombay High Court reiled on the circumstance that the Tribunal had found as a fact that the amounts in question had been actually brought in from Jaipur by means of drafts of the Imperial Bank of India, Jaipur, and there was no evidence at all to connect the assessee firm with any moneys at Jaipur as the assessee firm had no business at all there. In that case also, the partner had failed to prove there own sources from which they had earned those profits at Jaipur but, in spite of their failure, it was held that the profits could not be treated as the profits of the firm. THE decision in that case clearly turned on the facts of that case which were as stated above. While the moneys were brought in from Jaipur by the partners and there was no evidence to connect the assessee firm with any transactions for earning profits in Jaipur, the only solitary fact which remained was that the moneys had been deposited on the accounts of the firm by the partners. THEre were no other facts and circumstance in addition of that which could have led to the inference that the moneys belonged to the assessee firm and not to the partners themselves. In the case before us the facts and circumstances enumerated above show that the position is quite different. THE moneys had been deposited in an account in the name of a minor son of a partner. THEy have not been brought in by straightforward deposits in the name of the partner himself. THEre is no finding at all that the moneys were brought by Pooranchand, partner, or Mahesh Chandra Agrawal from any place and in fact there was not even an indication that either of them had any other sources of income. THEre was no fact on the record which might indicate that the moneys come from a place with which the assessee firm had no connection. Consequently, it cannot be said that, on the facts and circumstances which appeared in this case, the reference which was drawn by the Tribunal was not a possible or reasonable inferences and consequently, the question in so far as it relates to the sum of Rs. 16,200 must be answered against the assessee.