The burden of proof lies on the appellant to rebut the presumption that remittances were made out of profits.

Judgement

A. K. SARKAR, J. : This is an appeal by the assessee against the order of the Appellate Tribunal dated May 8, 1953, whereby that Tribunal confirmed the Appellate Assistant Commissioner s order of July 23, 1951 and the only question is whether the appellant is liable under S. 4 (1)(b)(iii) of the Income-tax Act to pay tax on Rs. 1,20,000 remitted by him from Srinagar in Kashmir to British India in the relevant accounting year as his profit accumulated outside British India and brought by him into British India.

2. This appeal arises out of the proceedings for the assessment of the appellant s income for the year 1945-46. The appellant had been carrying on a business in cloth in Srinagar for a long time. In 1943-44 he started a similar business in Amritsar. It appears that in the relevant previous year, that is, between March 25, 1944 and April 12, 1945, the appellant had remitted from Srinagar to British India an aggregate sum of Rs. 5,00,850 for the purchase of goods there of which Rs. 3,00,000 were found by the Income-tax Officer, Amritsar, who was in charge of the assessment, to have been his income in Kashmir accrued prior to such year and after March 31, 1940. The Income-tax Officer had therefore directed him to pay tax on the said sum of Rs. 3;00,000.

3. The appellant preferred an appeal from this order to the Appellate Assistant Commissioner who held that the amount remitted out of the income in Srinagar was Rs. 1,20,000 and not Rs. 3,00,000 as found by the Income-tax Officer, and that the appellant was liable to pay tax on this sum.

4. The appellant then took the matter in appeal to the Appellate Tribunal. It appears to have been contended by the appellant before the Tribunal that the moneys had been remitted from Srinagar out of the working funds there and not out of past accumulated income. The Tribunal came to the conclusion that no sufficient opportunity had been given to the appellant to establish that the profits sought to taxed were not mixed up in the working funds in Srinagar. In that view of the matter the Tribunal remanded the case to the Income-tax Officer for a proper enquiry and report as to whether, and if so, to what extent, the moneys sent to British India and utilised there in the purchase of goods included preceding years profits available for remittance to British India.

5. When the matter thus came back to the Income-tax Officer for the enquiry, it was admitted by the appellant that the profits in Srinagar were mixed up with the working funds there and it was not possible for him to work out from his accounts to what extent the moneys sent to British India were the profits of the proceeding years and to what extent they were the working funds of the current year. In view of this admission, the only materials available on which the further enquiry could be made by the Income-tax Officer were those which had been produced at the time of the first assessment and that officer having considered these materials, reported that the Appellate Assistant Commissioner s view that the profits transmitted to British India amounted to Rs. 1,20,000 was justified.

6. The Tribunal then took up the case again on the basis of this report. It held that having admitted that the profits in Srinagar were mixed up with the working funds, the appellant had failed to show that the remittances to British India had not been out of the profits and that therefore the burden which lay on the appellant of rebutting the presumption that remittances were made out of profits had not been discharged. It appears from the judgment of the Tribunal that at the hearing before it after the report of the Income-tax Officer had been received, the appellant for the first time sought to argue that there were no remittances to British India at all. The matter was then put in this way : The remittances had been made on account of price of goods purchased by the appellant in British India. These remittances had been made by telegraphic money