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1967 Supreme(SC) 138
SUPREME COURT OF INDIA
J.C. SHAH, S.M. SIKRI and V. RAMASWAMI JJ.
UDHAVDAS KEWALRAM
Versus
COMMISSIONER OF INCOME-TAX, BOMBAY CITY I.
Date of decision: 14/4/1967.
Civil Appeal No. 668 of 1966. Appeal by special leave from the judgment and order of the Bombay High Court dated June 25, 1962, in Income-tax Application No. 5 of 1961.
Advocates appeared
D.M. Harish and P. C. Bhartari, Advocates, and O. C. Mathur, Advocate, B. Dadachanji and Co., for the appellant.
T. V. Viswanatha Iyer, Senior Advocate (A. N. Kirpal, Advocate, and S. P. Nayyar, Advocate, for R. N. Sachthey, Advocate, with him), for the respondent.
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Headnote:(A) Income-tax Act - Sections 34, 66(1) and 66(2) - Reassessment - Reference to High Court - Determination of questions of fact by the Appellate Tribunal - Tribunal must act judicially by considering all material facts and evidence - An order based on a review of only a part of the evidence, ignoring the remaining evidence, cannot be regarded as conclusively determining the questions of fact - Such a judgment suffers from manifest infirmity.
(B) Burden of proof - It is for the income-tax authorities to prove that a particular receipt is taxable - While probabilities and conduct may be considered, there must be a fair and reasonably full review of the evidence.
Facts of the case:
An assessee who migrated from another country set up a money-lending business and maintained books in the name of his spouse. During reassessment, a dispute arose regarding whether certain credits represented the sale proceeds of gold ornaments. While the Appellate Assistant Commissioner accepted the documentary evidence, including vouchers for sale and melting charges, the Appellate Tribunal rejected the claim, stating there was no conclusive proof, without considering the documentary evidence. The Tribunal subsequently refused to refer questions of law to the High Court, and the High Court refused to direct the Tribunal to do so.
Findings of Court:
The Tribunal performs a judicial function and is invested with authority to determine questions of fact. It must consider all material facts and record findings in light of evidence and law. In this case, the Tribunal ignored documentary evidence that had been accepted by the lower authority, resulting in a manifest infirmity in its judgment.
Issues: Whether the Tribunal's refusal to state a case was justified given it had ignored documentary evidence, and whether the questions regarding the nature of the credits and their taxability as undisclosed income were questions of law arising from the order.
Ratio Decidendi: The Tribunal must act judicially by conducting a fair and reasonably full review of all evidence in favor of and against the assessee. A finding of fact based on a partial review of evidence is perverse and does not constitute a conclusive determination of fact, thereby giving rise to questions of law.
Result: Appeal allowed.
Legal Category Hierarchy
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taxation
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income tax
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assessment
- reassessment
- evidence and burden of proof
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assessment
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income tax
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administrative law
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tribunals
- judicial function and factual determination
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tribunals
JUDGMENT
SHAH J.-The High Court of Judicature at Bombay refused to call upon the Income-tax Appellate Tribunal to state a case and to submit questions of law arising out of the order of the Tribunal. The assessee appeals to this court with special leave.
In November, 1947, the assessee migrated from Pakistan to India and set up a money-lending business in Bombay. The assessee opened a set of books in the name of his wife Gopi Bai, and made credit entries therein totalling Rs. 7,85,712 between 1947 and 1952. In proceedings for assessment of income-tax, the Income-tax Officer accepted the claim of the assessee that out of the amount credited, Rs. 4,51,843 represented the value of assets brought by the assessee when he migrated to India and rejected his claim for the balance. The Income-tax Officer, in proceedings for reassessment commenced under section 34 of the Income-tax Act, brought to tax Rs. 79,989 in the assessment year 1948-49, Rs. 1,89,800 in the year 1949-50 and Rs. 64,880 in the year 1952-53. The Appellate Assistant Commissioner accepted the case of the assessee that the three amounts were part of the assets brought with him either in cash or as jewellery when the assessee migrated to India. The Income-tax Appellate Tribunal confirmed the order of the Appellate Assistant Commissioner in so far as it related to the assessment years 1948-49 and 1949-50. But the Tribunal held that the assessee had failed to prove the claim that Rs. 55,293, out of the amount of Rs. 64,880 assessed to tax in 1952-53, represented the value of ornaments, which the assessee claimed were sold by him after the death of his wife, Gopi Bai. The Tribunal accepted the claim of the assessee that the balance of Rs. 9,537 represented cash gifts received by Ishwari Bai. The Tribunal accordingly set aside the order of the Appellate Assistant Commissioner and directed that Rs. 55,293 be brought to tax in the assessment year 1952-53.
The assessee then applied to the Tribunal praying that a statement of the case be drawn up and the following questions arising out of the order of the Tribunal be submitted to the High Court :
"(a) Whether there was evidence before the Tribunal to hold that the credit of Rs. 55,293 in the account of the wife of the assessee did not represent the sale proceeds of her gold ornaments?
(b) If the answer to question No. 1 is in the affirmative, whether the sum of Rs. 55,293 could be held as the undisclosed income of the assessee himself ?
The Tribunal rejected the application holding that they had not accepted the case of the assessee about the sale of the ornaments of Gopi Bai.
The assessee then applied to the High Court of Bombay for an order under section 66(2) of the Indian Income-tax Act directing the Tribunal to state a case and refer the questions of law arising out of the order of the Tribunal. The High Court rejected the application.
It appears from the order of the Appellate Assistant Commissioner that the assessee had produced considerable documentary evidence in support of his case that in May, 1947, a quantity of gold jewellery was given by him to a refinery for melting and that 518 tolas of gold were sold by him on May 17, 1951. It was the case of the assessee that gold jewellery melted was out of the "outmoded ornaments" of Gopi Bai, his first wife. The Appellate Assistant Commissioner, in dealing with the claim for excluding Rs. 55,293 from the amount brought to tax on reassessment observed :
"......the appellant has filed a copy of the voucher for the sale proceeds of 518 tolas of gold sold after the refinement to Ambalal Amichand of Bombay on May 17, 1951. The sale proceeds are duly supported with vouchers as also with the melting charges paid and also with a list of the ornaments received by her from several relatives...... On the face of the overwhelming evidence produced by the appellant, I am unable to understand the Income-tax Officer s contentions that the credits did not represent the sale proceeds of gold or th
