COMMISSIONER OF INCOME TAX AHMEDABAD Vs. GOKULDAS HARIVALLABHDAS

JUDGEMENT

(1.) IT is difficult to understand why the Tribunal has made this reference. It appears that the assessee was assessed to tax on an income of Rs. 15,203/-which the Department held to be income from undisclosed sources. A partnership was being carried on between two brothers Chimanlal and Manilal. Manilal died in the S. Y. 2000. In the relevant account year S. Y. 2003 which corresponds to the assessment year 1948-49, the assessee firm was constituted by two partners, Chimanlal and Rasik-lal, the son of Manilal. Upto S. Y. 2002, the firm carried on business at Nadiad only. On the 25th of October, 1946 which was the first day of the account year S. Y. 2003, the assessee opened a -branch in Bombay, and the following credits appeared in the books of account of the Bombay -Branch :<FRM>JUDGEMENT_37_TLMHH0_1959Html1.htm</FRM> the last three being the sons of Chimanlal. This entry was found by the Income-tax Officer, and when the assessee was called to explain this entry, his explanation was that his brother Chimanlal had sold ornaments of his first wife and had kept with him the sale proceeds. After his brother died, his widow continued to remain in the house but she left after about two years and after she had left, the amount was divided half and half between the branch of Manilal and Chimanlal's branch. Now, the Income-tax Officer found this explanation to be false, and thereupon proceeded to. assess this amount as income from undisclosed sources. The Income-tax Officer also instituted proceedings against the assessee under S. 28 (1) (c), and the result of these proceedings was that he imposed a penalty of Rs. 4,000/ -. Against this, an appeal -was preferred to the Appellate Assistant Commissioner, and the Appellate Assistant Commissioner confirmed the order, and from the decision of the A. A. C. an appeal was preferred to the Tribunal. Two members of the Tribunal took the view that the penalty could not be imposed upon the assessee and thereupon this reference has been made by the Tribunal. 1959 Bom. D. F. /7

(2.) NOW, the question which we are asked to answer is whether the assessee has committed an offence as described in S. 28 (l) (c) in regard to its income of the previous year S. Y. 2003 relevant for the assessment year 1948-49? Now, on the face of it, the question appears to be a question of fact. Whether the assessee has committed an offence or not, it is for the Tribunal to decide, and the majority of the Tribunal having decided that he has not committed an offence, the matter is concluded. We are not a further court of appeal to sit in judgment on the decision of the Tribunal. It is, therefore, possible to dispose of this reference on the narrow ground that no question of law arises from the order of the Tribunal, and the question as framed is a question of fact and not a question of law. But, as the matter is of some importance and has been argued at some length, we will reframe the question so as to bring out the real controversy in regard to law between the Department and the assessee, and the question that we will reframe will be as follows :

(3.) NOW, the view taken by the dissenting member of the Tribunal and which view is also pressed upon us by Mr. Joshi is that inasmuch as the explanation given by the assessee is found to be false, that fact in itself is sufficient to entitle the Income-tax Officer to come to the conclusion that the assessee has committed the offence which calls for this penalty. Now, it is true that in the assessment proceedings, it is open to the Department to take the view that if a certain receipt appears in the books of account of the assessee, and the assessee is not in a position to give an explanation in regard to that receipt, that receipt constitutes an income from undisclosed sources. But the question that we have to consider is whether it is open to the Department to come to a similar conclusion, when proceedings are taken under S. 28 (1) (c ). The] proceedings under S. 28 (1) (c) in their very nature are penal proceedings, and the elementary principles of criminal jurisprudence must apply to these proceedings, and nothing is more elementary at least in this country in criminal jurisprudence than! the principle that the burden of proving that the| accused is guilty is always upon the prosecution,] and Mr. Joshi seems to suggest, though not quite definitely, because he cannot do so, but impliedly that the principle somehow gets altered when we come to the revenue law. Now, the assessee is not charged with having given a false explanation. | This is not the gist of the offence under S. 28 (1) (c ). The gist of the offence under S. 28 (1) (c) is that the assessee concealed the particulars of his ; income or deliberately furnished inaccurate particulars of such income. Therefore, the Department must establish that the receipt of Rs. 15,203/- constitutes "income" of the assessee. There is not an iota of evidence on the record except the explanation given by the assessee, which explanation has been found to be false. Now, it does not follow that because the particular explanation given by the assessee is false, therefore necessarily the receipt of Rs. 15,203/- constitutes a taxable income of the assessee. There may be hundred and one other possibilities as to how this receipt came into the books of account of the assessee. Take one instance, which immediately strikes one's mind. The assessee may have gone to the race course and earned this sum of Rs. 15,203/- by means of a very fortunate and successful betting. . He may wish to conceal that fact and he may have given a false explanation as to how he came by this sum of Rs. 15,203/ -. Therefore it becomes obvious that when you eliminate the explanation of the assessee, which it is open to the Department to do, some thing must be left which will lead to the inference that the receipt of Rs. 15,203/- constitutes an in come. Now, if you wipe off from the slate this evidence, nothing whatever remains, and as we have just said, the very basis of the decision against the assessee is that the explanation he gave was a false one. As a matter of fact, the member of the Tribunal, who took the view in favour of the De partment, puts it in this way :