COMMISSIONER OF INCOME TAX Vs. T.C. SABOO

JUDGEMENT

(1.) In this reference under Sec. 66(2) of the Indian Income -tax Act. 1922 at the instance of the revenue, the Tribunal has referred the following two questions for the opinion of this Court for the assessment year 1952 -53:

(2.) If the answer to Question No. 1 is in the affirmative, then whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of Rs. 1,13,573 received by the assessee represented the repayments of the deposits made by the assessee with the Birla Group Officers prior to 1 -4 -1949 and was, therefore, not to be treated as the undisclosed income of the assessee ?

(3.) Thereafter, the revenue came up in appeal before the Tribunal and urged that the receipt of the amount in the year of account was not in dispute and the question was whether there were deposits by the assessee as alleged in the earlier years and the receipt was by way of repayment. It was stressed that the books of account of the fund prior to 1 -4 -1949 were not produced and. therefore, it could not be said that the deposits were in the earlier period and the balance sheet figures as on 1 -4 -1949 could not be verified so as to say that the amounts were brought forward amounts. It was argued that there was no written constitution of the fund and the AAC was in error in proceeding on the basis that the fund was genuine. On behalf of the assessee, it was argued that the receipt of the amounts by means of cheques from the Birla Group Officers' Fund was admitted and this was the proximate and immediate source of the receipt and the money had come from the bank account maintained by the fund. It was stressed that the matter was being inquired into after a lapse of more than 12 years and the fund had been started during the time of the second world war and the war itself ended in 1945 and in those circumstances the receipts, etc., in regard to the deposits had not been preserved. It was argued that under the Companies Act, 1956, books of account had to be preserved for 8 years and in the circumstances of the case, the books not being preserved for the years prior to April 1949 and their non -production after 1961 could not be taken as an adverse circumstance against the assessee. It was strongly urged that the assessee was a whole time employee of Birla Jute Mills since 1930 in Calcutta and was receiving substantial salary besides income from dividends, etc., and before the ITO several dates of hearing had been fixed and the assessee stated that he could establish his resources to make the deposits but the ITO did not pursue this aspect ultimately mentioning in his order that this aspect was redundant. It was argued that after a lapse of more than 10 years the assessee could not be placed on the rack and called upon to explain not merely the origin and source of his capital contribution but the origin of origin and source of source as well. A copy of the assessment order in regard to one Pannalal Kausik for 1952 -53 who had also similarly received back from the fund amounts deposited by him and in which the plea had been accepted by the ITO and also a copy of a letter of D.P. Mandelia, Secretary of the Birla Group Officers' Fund dated 30 -8 -1961 to the ITO, Gwalior, had been filed on behalf of the assessee. It was argued that the appreciation of facts of circumstances in the case by the AAC was sound and there was no ground to interfere with his order.