COMMISSIONER OF INCOME TAX CENTRAL Vs. MATHURADAS GOVARDHANDAS

JUDGEMENT

(1.) This reference relates to the assessment year 1959-60. The relevant previous year is 2015 Dewali. The assessee is a firm consisting of two partners, Sri Ghanshyamdas Binani, having a ten annas share and his wife, Smt. Padma Binani, having a six annas share. The assessee was the managing agent of Metal Distributors Ltd. and was also carrying on business as insurance and clearing agent. The assessee also held investments in shares and securities. While examining the accounts the ITO noticed credits in the names of M/s. Kasturchand Baijnath and Gangadas Kothari for the sums of Rs. 50,000 and Rs. 1,00,000, respectively, both dated January 10, 1958.

(2.) The assessee was required to prove the credits. A letter was filed from Kasturchand Baijnath confirming the loan. Gangadas Kothari was reported to be dead. Of course some purjas showing receipt and repayment were produced.

(3.) Summons were issued to Kasturchand Baijnath for production of books of accounts, but there was no compliance. On 10th January, 1958, the opening balance of Rs. 1,00,000 in this account was repaid in cash but interest of Rs. 889.57 was paid by cheque and on that very day the sum of Rs. 50,000 was again shown in the account as a receipt of loan in cash. It was claimed by the assessee that the creditor was assessed in the same district, but according to the ITO this file had been struck off in 1953 or 1954 and further the file was that of a firm and not of the creditor. In spite of repeated spot enquiries it was stated that the creditor failed to produce their accounts though they had confirmed that they had advanced Rs. 50,000. This advance of Rs. 50,000 having not been proved satisfactorily it was brought to tax in the assessment as undisclosed business income.