1959 Supreme(SC) 29

SUPREME COURT OF INDIA
5th March, 1959.
N.H. BHAGWATI, B.P. SINHA AND J.L. KAPUR, JJ.
Omar Salay Mohamed Sait, Appellant
Versus
Commissioner of Income-tax, Madras, Respondent.
Civil Appeal No. 15 of 1958.
Advocate Appeared
Mr. A. V. Viswanatha Sastri, Senior Advocate, (Mr. M. S. K. Sastri, Advocate with him), for Appellant; M/s. K. N. Rajagopala Sastri, R. H. Dhebar and D. Gupta, Advocates, for Respondent.

Headnote:

INCOME TAX - Assessment - Addition to income - Cash credits in the books of account of the assessee - Explanation that the said credits represented the sale proceeds of gold, jewellery and sovereigns which belonged to assessee's maternal grandmother - Tribunal rejecting the explanation on the ground that the assessee's books of account were not in such a straight forward manner as could infuse confidence and that the assessee had in his possession this much money and he managed to remit it to Madurai to give it a colouring of genuine sale proceeds of gold belonging to the old lady - Held, that the finding of the Tribunal was vitiated inasmuch as it was unsupported by evidence or was unreasonable and perverse in nature having been arrived at by improper rejection of evidence available in the record of the proceedings or having been based partly on evidence and partly on conjectures, surmises and suspicions.

Fact of the Case:

The appellant is a cloth merchant dealing in cloth piece goods and yarn both on wholesale and retail basis at Madurai. The appellant and his brother Abdulla Salay Mohammed were originally carrying on the business in partnership. But the partnership was dissolved during the year 1947-48 and the appellant took over the entire business and became the sole proprietor thereof. For the assessment year 1948-49 (the accounting year being the year ending 31-3-1948) he submitted a return on 7-9-1948 in which he showed a net loss of Rs. 7,224 in his business under the head "business, profession or vocation."

Finding of the Court:

We are aware that the Income-tax Appellate Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it this Court will not interfere. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the Tribunal must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the findings reached on the evidence on record before it. The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which required to be explained by the assessee, the assessee should be given an opportunity of doing so. On no account whatever should the Tribunal base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, its findings even though on questions of fact will be liable to be set aside by this Court.

Issues: Whether the finding of the Tribunal was vitiated inasmuch as it was unsupported by evidence or was unreasonable and perverse in nature having been arrived at by improper rejection of evidence available in the record of the proceedings or having been based partly on evidence and partly on conjectures, surmises and suspicions.

Ratio Decidendi: The Tribunal appeared to be satisfied that these sums represented unaccounted for money in the hands of the appellant which he managed to remit to Madurai and accordingly treated that as sums whose nature and source had not been properly explained and that they had been correctly treated by the Income-tax Officer as income of the Appellant.

Final Decision: In the result, we set aside the order of the Appellate Tribunal in I. T. A. No. 3254 of 1951-52 dated 8-8-1955 and remand the matter back to the Income-tax Appellate Tribunal, Madras "A" Bench to reconsider the same in accordance with law, in the light of the observations made above. Both the parties i. e., the Revenue as well as the assessee will have liberty to adduce before the Appellate Tribunal such further evidence as they may be advised. Costs of this appeal will abide the result of the decision of the Appellate Tribunal reached hereafter. If the appellant succeeds before the Appellate Tribunal, he will be entitled to his costs of this appeal from the respondent; if, however, he fails, and his appeal is dismissed by the Appellate Tribunal he will pay the respondent's costs of this appeal.