RAGHUNATH SINGH Vs. COMMISSIONER OF INCOME-TAX SIMLA

JUDGEMENT

(1.) PURSUANT to an order of this Court dated 30th January, 1962 the Income-tax Appellate Tribunal has submitted a statement of the case for answering the following question:-" whether on the facts and in the Circumstances of the present case there was any evidence or material to support in law the conclusion of the Tribunal that Rs. 35, 000 was income accruing within the taxable territory during the relevant accounting period. " The assessee was being assessed in the status of an individual. For the as year 1947-48 the Assessment was originally made under S. 23 (3) of the Indian Income-tax Act 1922 on 1st January 1949 on a total income of Rs. 23, 387. Out of this amount, income amounting to Rs. 14, 654 arose in the then British India and income of Rs, 8, 733 accrued outside British India. the source of the entire income was the share which the assessess has in various partnership firms.

(2.) IT appears that the Income-tax officer, B. Wasd, Ambala, received some information about the existence of a fixed Deposit Account relating to the assessee at Nahan and made an enquiry form the asessee about the same. On 15th August 1954 the assessee wrote a letter (copy Annexure 'b') saying that there was a Fixed Deposit account with the Bank of Sirmur at Nahan for Rs, 1,00,00 in the name of his minor son Mohan Singh under his guardianship. This account had been opened on 5th March, 1947. The amount was finally withdrawn at Nahan on 24th May, 1948, along with interest. He explained that this amount had been received by him at the time of the deposit from his mother who had given it to him on account of disturbed political conditions as well as her failing health. She had instructed him to distribute the aforesaid money to the wives of minor sons after their marriages when they attained majority. The asses had considered it advisable to put the money in the bank in the name of his eldest minor some. Towards May 1948 the political had settled down and the amount was withdrawn from the bank and given bank to the mother who always resided in the village Dhagera in Nahan State from where she never moved out to any other place. Later on near the time of her death in the year 1949 she mad over this amount to the wife of the assessee in trust for distribution amount the wives of the sons on their marriages after attaining majority, Since then the amount was lying with the assessee's wife in Nahan State. The Income-tax Officer recorded the statement of the assessee on 1st order on 14th February, 1956 in which the entire evidence was discussed including a pervious statement which the assessee has made to the Inspector of Income-tax at Simla. The explanation furnished by the assessee was disbelieved and the decision of the Income-tax Officer was given in the following words:-

(3.) THE assessee filed an appeal before the Appellate Assistant Commissioner who considered the explanation of the assessee at length and also the other facts and Circumstances and agree with the view of the Income-Officer that the assessee's explanation could not be accepted as correct. While dealing with the contention of the assessee's counsel that the deposit was found to have been made in Nahan State which was outside the taxable territories in the previous year and there was noting to show that the money had gone to Nahan from the taxable territories the Appellate Assistant Commissioner observed that the Income-tax Officer has rightly remarked in his assessment order that the appellant had all along been assessed in the taxable territories. His income had also been derived from the sources existing in the taxable territories and there was no source outside the taxable territories which could have yield the amount in question to him. He further proceeded to examine another argument pressed on behalf of the assesse and repelled it by saying that even if the source of the money existed in Doraha where the assessee has a partnership business which was outside the taxable territories the money must have gone to Nahan through the taxable territories. As soon as the money was received in the taxable territories it become liable to tax, The Income-tax Appellate Tribunal is not accept the last part of the decision of the Appellate Assistant Commissioner. It proceeded to examine the matter afresh but felt quiet satisfied that the finding given by the departmental officer that the mother of the assessee could not have bad a lac of rupees in cash with her was fully justified. The Tribunal was of the view that the assessee has a hidden source of income. It was further of the view that the main source f the assessee's income was in India and even if there was any source of income outside India it could not have yielded any income outside India it could not have yielded any substantial income. the final decision was however expressed in this way:-