CHUNILAL MURARKA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The assessee is a resident and an ordinary resident within the taxable territories. The assessment year involved in this reference is 1949-50, for which the corresponding accounting year is the calendar year 1948. The assessee's business in Calcutta consisted of money-lending. During the assessment proceedings the Income-tax Officer found that the assessee had a number of fixed deposits in Hind Bank Ltd. at Jaipur, which was then in a Part B State. The assessee claimed that the interest due on such fixed deposits was not brought into the taxable territories during the accounting year. The assessee expressed his inability to bring any evidence to show the movement of these fixed deposits from year to year. The Income-tax Officer, after giving opportunity to the assessee, was of the opinion that, in the circumstances, the assessee has failed to establish that the interest was left behind in the native State itself. He, therefore, treated the amount of interest due on the fixed deposits as having been brought into the taxable territories during the accounting year and included the amount of such interest amounting to Rs. 52,000 in the assessee's total income.

(2.) There was an appeal before the Appellate Assistant Commissioner and the Appellate Assistant Commissioner confirmed the order of the Income-tax Officer.

(3.) There was a further appeal before the Tribunal and it was contended before the Tribunal on behalf of the assessee that the onus lay on the income-tax department to prove that the amount of interest earned in the Part B State was brought into the taxable territories and, since the department had failed to discharge the onus, the amount, according to the assessee, could not be taxed under the Indian Income-tax Act, 1922. The Tribunal found that the assessee resides in India, that these fixed deposits were kept in the Part B State, and that the assessee had failed to explain in spite of opportunity being given to him as to where and how the interest on these fixed deposits were utilised. The Tribunal also pointed out that the Income-tax Officer in his order has found that the assessee took certain overdrafts in Calcutta on the security of those very fixed deposits in the Part B State. In those circumstances, the Tribunal came to the conclusion that the income-tax department was justified in holding that interest received by the assessee in fixed deposits in the Part B State had been brought into the taxable territories. The Tribunal, therefore, dismissed the appeal of the assessee.