MUNILAL RAMDAYAL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) MESSRS. Munilal Ramdayal is a firm registered under the Indian Partnership and Indian Income-Tax Act. It carries on business of grain procurement, rice milling, distillation of country liquor, sale of excise drugs, grocery articles and forest products, and contract business. Ramdayal Shah, Jogeshwar Shah and Raghunandan Shah are the three partners of this firm each having one-third share. For the assessment year 1952-53 (the relevant accounting year ending with 31-3-52) the firm was assessed on a total income of Rs. 1 lakh and odd, though the petitioner submitted a return showing a total income of Rs. 33,000/- and odd. It is unnecessary to give further details. In appeal before the Appellate Assistant Commissioner and the Income Tax Tribunal the original assessment was reduced.

(2.) THE facts relevant for the appreciation of the points in issue may be stated shortly. On 22-12-39 there was a partnership between Sri Ram Chandra Bhanj Deo and Ramdayal Shah whereby a rice mill known as "Prabir Chandra Rice Mill" was started at Jugurpara. THE share of Sriram Chandra Bhanj a Deo was 10 annas and that of Ramdayal Shah annas. Prabir Chandra Rice Mills was being regularly assessed under the Income Tax Act. On 25-3-1950, the share of Prafulla Chandra Bhanja Deo successor of Sriram Chandra Bhanja Deo which was fixed at 8 annas was purchased along with the entire book debts, plant machinery and land by Ramdayal Shah for Rs. 50051/- being the value of the stock in trade and for another Rs. 50,000/-towards outstanding dues of the mill. "Prabir Chandra Rice Mill" was re-named as "Munilal Rice Mill". It is to be noted that the petitioner had 6 annas interest in the Prabir Chandra Rice Mill before the purchase in the name of Ramdayal Shah. On 23-12-52, the assessment of the petitioner firm was completed under Section 23 (3) of the Income Tax Act, 1922 (hereinafter to be referred to as the old Act). THE case of the petitioner is that at the time of the assessment in 1952, Sri K.C. Mohanty the Accountant of the petitioner, appeared before the Income Tax Officer Sri A.K. Jana who enquired into the nature and source of the purchase of the mill and its good debts. Sri K.C. Mohanty explained at that time that the head office account was credited with the amount realised out of the book debts of Prabir Chandra Rice Mill and that the accounts of the parties were debited and closed. Accordingly, in the balance-sheet for the year 1950-51 closing on 29-10-51, Sri A.K. Jana made the following endorsement:

(3.) ON a scrutiny of the aforesaid features, we are unable to accept the contention urged on behalf of the petitioner that there was a full and true disclosure of all the primary facts.