BIKANER TRADING CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference has been attended with circumstances extremely unsatisfactory, both so far as the Tribunal is concerned and so far as the assessee who obtained the reference is concerned. The assessee is an unregistered firm, resident and ordinarily resident in India. The assessment years in question are 1947-48 and 1948-49. In the first of the two assessment years, the assessee showed a net dividend income of Rs. 69,275 and in the second of the two years it showed a dividend income of Rs. 74,042. As to the shares upon which the said dividend amounts had been received, the assessee-company could establish the ownership of only a few which accounted for a net dividend of Rs. 117-3-0 out of the sum of Rs. 69,275 for the asst. yr. 1947-48 and a few more which accounted for a dividend income of Rs. 140- 10-0 out of the sum of Rs. 74,042 for the asst. yr. 1948-49. The ITO refused to gross up the rest of the dividend income on the ground that as the assessee had not proved itself to have been the holder of the shares concerned at the time the dividend was declared, it was not entitled to the benefit of s. 18(5) of the Act. That decision of the ITO was upheld by the AAC and on further appeal by the Tribunal. Before the Tribunal it appears to have been contended that the shares in respect of which the ITO had refused to give the assessee any credit did in fact belong to the assessee and were being held as security by the Hongkong and Shanghai Banking Corporation against some overdraft allowed to the assessee. THIS contention was sought to be proved by reference to a certificate said to have been issued by the bank on 17th Jan., 1949, and a subsequent letter written by the bank on 29th Dec., 1949. The certificate was said to have been produced before the ITO and the letter before the AAC. The Tribunal said in the course of its appellate order that no trace of either the certificate or the letter could be found on the records and it is quite obvious that it did not accept the assessee's case that any such material had been produced before the officers concerned. In the end the Tribunal recorded its finding in the following words :