CHANDMULL RAJGARHIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) On the assessees application for a reference under section 66(1) of the Indian Income-tax Act, the Appellate Tribunal has forwarded a statement of the case with two questions formulated as below for consideration of this court :

(2.) The relevant year of assessment is 1954-55. For the assessment years 1929-30 to 1953-54, the assessee was assessed to income-tax as an individual on the returns filed on that basis by him. His sources of income were house property, share income from a firm, J. S. Mull & Co., salary, dividends and the income from a business of mining and dealing in mica under the name any style ;Chandmull Rajgarhia.; For the first time for the assessment year of 1954-55, he filed a revised return claiming his status to be Hindu undivided family in respect of income derived from the above sources; but the assessment being made as before as an individual, he went in appeal before the Appellate Assistant Commissioner, who held that the income from all the above-mentioned sources excepting the last belonged to the Hindu undivided family in respect of income derived from the above sources; but the assessment being made as before as an individual, he went in appeal before the Appellate Assistant Commissioner, who held that the income from all the above - mentioned sources excepting the last belonged to the Hindu undivided family consisting of Chandmull Rajgarhia and his sons. The income from the remaining sources, namely, from the business run in the name of ;Chandmull Rajgarhia; was assessable in the hands of run assessee as an individual. This finding was challenged by the assessee before the Appellate Tribunal; and being unsuccessful there, he asked for a reference to this court of the two questions stated above.

(3.) The mica business, ;Chandmull Rajgarhia;, was started from the 1st of May, 1945. In the assessment year of 1946-47, the assessee had contended that the introduction of Rs. 70,000 as capital in that business was from the savings from the income from all his other businesses. This was not accepted; and that sum of Rs. 70,000 was taken as income from an undisclosed source. That was affirmed by the appellate authorities also. Subsequently, in 1951, the assessee made a voluntary disclosure of Rs. 4,39,124 cash in his hand. On the 30th November, 1951, the Inspecting Assistant Commissioner of Northern Range, Patna, recorded an order accepting the disclosure and allowing the introduction of the cash balance in hand of the assessee to the extent of Rs. 1,86,124 into his business. The books of accounts of the business of ;Chandmull Rajgrihis; show the introduction of this money on the 4th of December, 1951; and, as observed in the orders of the Appellate Tribunal, that money represented the aggregate of saving from the joint family funds and personal earnings as set out in the assessees disclosure petition of the 30th November, 1951; and that introduced capital came top be fully used up in the business, ;Chandmull Rajgarhia.;