RAJ MOHAN SAHA Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) IN compliance with the order of this court the following question has been referred to this court by the Income -tax Appellate Tribunal "A" Bench, Calcutta, for opinio :

(2.) THE assessee, Messrs. Raj Saha and others, is a registered firm with seven partners of whom Sri Raj Mohan Saha has the major share of 0 -7 -6 pies. The head office of the firm is at Agartala. The firm has various purchase centres and one is at 26A, Raja Rajendra Narain Street, Burrabazar, Calcutta. The assessee deals in seeds, oils, rice, dal and other miscellaneous goods. In the course of the assessment for the year 1954 -55 the Income -tax Officer got information that huge sums of money were remitted through postal insurance covers from the assessees gaddi at Agartala to its purchasing centre at Calcutta and that these remittances have not been entered in the account books produced before him. On Shri Raj Mohan Saha, the managing partner of the firm, being asked to explain the reason for such omissions, he denied having made any remittances to the purchasing centre at Calcutta. The Income -tax Officer found that there were many remittances made by Raj Mohan Saha, the managing partner, himself and several others were made by Sukhan Lal Poddar and Makhan Lal Saha, both of whom were employees at the Agartala gaddi of the assessee. The payee in every case was Shri Benode Behari Saha, the manager of the purchasing centre of the firm at Burrabazar, Calcutta. The explanation given by Sri Raj Mohan Saha was not accepted and the Income -tax Officer held that the assessee firm was carrying on certain undisclosed business having a turnover of Rs. 4 lakhs. He estimated an income from such undisclosed business at 5% on the said turnover, thus estimating the income at Rs. 20,000 for each of the two assessment years. This amount was added to the total income of the assessee. The order of the Income -tax Officer was confirmed by the Appellate Assistant Commissioner in appeal. The matter was taken to the Tribunal in second appeal and the contention of the assessee that sufficient opportunity had not been given to it by the Income -tax Officer or by the Appellate Assistant Commissioner to produce evidence in support of its explanation in the matter was accepted by the Tribunal and the matter was remanded to the Income -tax Officer for investigation and for consideration of the several points raised by the assessee firm. The investigation was made by the Income -tax Officer after remand. He examined several witnesses under section 37 of the Indian Income -tax Act. Affidavits sworn by certain persons were also produced before him. The point taken before the Income -tax Officer after the remand was that the persons, namely, Raj Mohan èSaha, Sukhan Lal Poddar and Makhan Lal Saha, who remitted the money to Shri Benode Bihari Saha, are not the persons connected with the firm of the assessee. They were different persons. The Income -tax Officer did not accept the explanation given by the managing partner and he maintained his earlier order adding Rs. 20,000 to the income of the assessee on the basis that the turnover of the undisclosed business was Rs. 4 lakhs and the assessee had made a profit of five per cent. on the said turnover. The order of the Income -tax Officer was affirmed by the Tribunal.

(3.) THE contention of the assessee is that the assessment was under section 23(3) of the Indian Income -tax Act and there is no material from which the income -tax authorities could come to the conclusion that the remittances received by Benode Bihari Saha were sent by the assessee firm from Agartala. The income -tax authorities had based their conclusions on mere surmises. It is further contended that even if there may be some basis for coming to the conclusion that some remittances were made from the assessees gaddi at Agartala to its purchase centre at Calcutta, there is nothing in evidence from which the amount of the remittances could be ascertained. Further there is no material to show that the assessee was carrying on any undisclosed business, the turnover of which was Rs. 4 lakhs. Further, there is no material from which the income -tax authorities could come to the conclusion that the assessee had made a profit of five per cent. on the said turnover. It is contended that the income -tax authorities acted on suspicion and surmises and the postal records, on which the information to the department is alleged to be based, were never shown to the assessee and thus there was violation of the principles of natural justice in the investigation by the Income -tax Officer.