TARACHAND GHANSHYAMDAS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This reference arises under Section 256(1) of the I.T. Act, 1961, for the assessment years 1950-51 and 1951-52, for which the relevant previous years were the calendar years 1949 and 1950, respectively.

(2.) The firm of M/s. Tarachand Ghansnyamdas which has now been assessed through its partners was dissolved on March 3, 1958, It was originally assessed on Rs. 4,34,024 and Rs. 5,13,457 for the assessment years 1950-51 and 1951-52, respectively. Subsequently, it came to the knowledge of the ITO that the assessee had concealed the particulars of its income at the time of original assessments. He made enquiries into the matter, secured approval of the then Central Board of Revenue (now Central Board of Direct Taxes) under Section 34(1)(a) of the Indian I.T. Act, 1922, and issued notices under the above sections for both the above years which were served on March 22, 1962. The assessee in response to the above notice submitted returns showing income of Rs. 4,34,024 for the assessment year 1950-51 and Rs. 2,12,839 for the assessment year 1951-52 being incomes on which it was originally finally assessed. In Part " D " of the return the assessee also showed amounts of Rs. 87,225 and Rs. 81, 141 with the following details: <FRM>JUDGEMENT_571_ITR139_1983Html1.htm</FRM>

(3.) In the letters attached to the returns the assessee submitted that the amounts credited in the account of Balkishenlal Jankiprasad, liquidators represented dues from customers in respect of M/s. Tarachand Ghanshyamdas before its reconstitution in 1934. It was submitted before him that all the dues from customers prior to 1934 were not taken in the new ledger, but a list of the same was kept and attempts were made to realise them. Since these debtors' accounts were not entered in the books, it was submitted, realisations from them were not entered in the books but were kept separately. It was also submitted that most of the debtors hailed from Madras side and the accummulated realisations so made were remitted by the Madras office and credited to the account of M/s. Balkishenlal Jankiprasad Madras account. On the basis of the above, it was submitted before the ITO that the amounts in question did not represent any revenue receipts and could not, therefore, be included in the total income. As regards credits in Radhakissen Balkishenlal empty barrels and tins account it was stated before the ITO that the above firm had huge stocks of barrels and tins at its branch in Narayanganj, now in Bangladesh which was controlled by M/s. Radhakissen Balkishenlal that these stocks were accumulated during many years past, that in 1948, it was feared that Pakistan Govt. would put an embargo on the free movement of money and goods to and from India and, therefore, empty barrels were despatched from Narayanganj to Delhi where they were expected to fetch better prices. In all 4,873 barrels and 26,400 tins were despatched to Delhi where they were sold and the sale proceeds thereof were later on remitted to Calcutta from Delhi. It were these amounts which, on receipt of remittances, were credited to the above account.