SUKHDAYAL RAMBILAS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is a registered firm having our partners, one of whom is one Durga Dutt Anantram. Three partners including Durga Dutt belong to the Thard family and are related to each other. The fourth partner, Rukmanand, is, however, said to be a stranger.

(2.) ON January 25, 1945, a sum of Rs. 2 lakhs was put in fixed deposit with the Indian Bank Ltd. at Bombay and the amount was later sent by mail transfer to the bank's branch at Pudukottah, then an Indian State. The fixed deposit receipt which was issued in the joint names of Shivkaran Thard and Radheshyam Thard on January 29, 1945, however, bears the date January 25, 1945. Shivkaran is Durga Dutt's son and Radheshyam is said to be the name of the son of Shivkaran. The address of the depositors was, "care of Durga Dutt Anantram, Thard Bungalow, Malad, Bombay". The fixed deposit receipt which was initially for a period of one year was renewed for another year and for a further period of three months. It matured on April 25, 1947. Shivkaran received the amount due on the receipt amounting to Rs. 2,10,227. Even though the deposit stood in the joint names of Shivkaran and Radheshyam in the bank at Pudukottah, on the security of the fixed deposit the assessee firm obtained overdraft facilities w.e.f. March 28, 1945.

(3.) THE ITO having reason to believe that the fixed deposit of Rs. 2,04,500, which was inclusive of interest on the principal sum after the initial period of one year, belonged to the assessee firm and the sum was not accounted for in the books, reopened the assessment of the assessee firm for the year 1945 46. According to the original assessment made on 30th June, 1947, the assessee firm was assessed on a total income of Rs. 44,760. it was the case of the firm that the fixed deposit belonged exclusively to Shivkaran. This story was, however, rejected by the ITO as he found that Shivkaran was a young boy of about 18 years when he claimed to have embarked upon business and there was no proof of he having made any profits in the business alleged to have been carried on at Ganga Sagar in the former State of Bikaner and then at Indore. The ITO further found that the fixed deposit was at all times under the control of the assessee and the assessee had a beneficial interest in the fixed deposit though it stood in the name of Shivkaran. The ITO, therefore, included the amount of Rs. 2 lakhs as the assessee's income from undisclosed sources in the financial year corresponding to April, 1, 1945, to March 31, 1946, as the previous year.