ANIL KUMAR SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This reference arises out of assessment for the assessment year 1946-47, for which the corresponding accounting year was 1945-46, financial year ending on 31st of March, 1946. The assessee originally was one Joynarain Singh, since deceased, who had been assessed in the status of an individual for the aforesaid year under Section 23(3)/34 of the Indian Income-tax Act, 1922. In response to a notice under Section 34 of the said Act, the assessee had filed a return showing total income of Rs. 6,460. The Income-tax Officer further found that during the accounting year the assessee had encashed 21 high denomination notes of Rs. 1,000 each and 6 high denomination notes of Rs. 10,000 each on 24th January, 1946, through the Allahabad Bank Ltd. When the assessee was asked to explain the source of these notes the assessee stated that 4 high denomination notes of Rs. 10,000 each totalling a sum of Rs. 40,000 were received from one Vijoysingh Gobindjee of Bombay, being the, sale proceeds of S. S. Cossipore; 2 high denomination notes of Rs. 10,000, aggregating to Rs. 20,000, were received from the currency office, Calcutta, and 20 high denomination notes of Rs. 1,000 each were received from one R. P. Shaw by cheque on Comilla Banking Corporation and encashed, through one Sudha Sankar Singh, the assessee's son, while the assessee had one Rs. 1,000 note as cash in hand. The Income-tax Officer accepted the assessee's explanation of Rs. 40,000, received as sale proceeds of S. S. Cossipore, but was unable to accept the assessee's explanation regarding the balance of Rs. 41,000, which was treated as the assessee's income from undisclosed sources. The Income-tax Officer had also found that the assessee had lent a sum of Rs. 1,26,000, in the form of high denomination notes to M/s. Singh & Co., through his wife, Smt. Sadhana Devi. Shri Sudha Sankar Singh, the assessee's son was one of the partners of the said firm, M/s. Singh & Co, The firm encashed these high denomination notes on the 19th January, 1946. The assessee's explanation was that these high denomination notes were part of the sale proceeds of his property at No. 3, Rustomjee Parsee Road, Calcutta, to M/s. Indian Research Institute Ltd. for Rs. 1,53,000. The Income-tax Officer examined the deed of conveyance executed by the assessee in favour of the purchaser, the Indian Research Institute, wherein it was recorded that the consideration money was received in the form of Reserve Bank of India high denomination notes to the extent of Rs. 1,53,000. The numbers of these notes were mentioned in the deed of conveyance. The Income-tax Officer found that the said high denomination notes were encashed by M/s. Singh & Co. Out of the total loan money of Rs 1,26,000, they tallied with the notes mentioned in the deed of conveyance only to the extent of Rs. 1,10,000, and the Income-tax Officer, accepted the source of the loan to the extent of Rs. 1,10,000. He did not accept the assessee's explanation as to the balance of Rs. 16,000, which he also treated as the assessee's income from undisclosed sources. The total addition from the encashment of the high denomination notes as income from undisclosed sources as per order of the Income-tax Officer amounted to Rs. 57,000, comprising the two sums of Rs. 41,000 and Rs. 16,000, mentioned hereinbefore.

(2.) The assessee preferred an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner confirmed the order of the Income-tax Officer.

(3.) There was a further appeal by the assessee to the Income-tax Appellate Tribunal. The Tribunal in Income-tax Appeal No. 3538 of 1952-53, considered a letter produced before it by the assessee written by the official liquidator of Bharati Central Bank Ltd., stating that the assessee's son had withdrawn Rs. 36,696 in high denomination notes and the assessee's case before the Tribunal was that the number of high denomination notes mentioned in the letter of the official liquidator should be compared with the number of the notes encashed by Mm and, to the extent to which these numbers tallied, the source of high denomination notes should be considered as proved.