Roshan Di Hatti vs Commissioner Of Income Tax, Delhi

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1977 Supreme(SC) 132

SUPREME COURT OF INDIA
P.N. BHAGWATI, R.S. SARKARIA AND S. MURTAZA FAZAL ALI, JJ.
Roshan Di-Hatti, Appellant
Versus
Commr. of I. T. Delhi, Respondent.
Civil Appeal No. 284 of 1972,
D/- 8-3-1977.
Advocates Appeared
M/s. A. K. Sen and V. S. Desai, Sr. Advocates, (Mr. Bishamber Lal, Advocate with them), for Appellant; Mr. G. C. Sharma, Sr. Advocate, (Mr. S. P. Nayar, Advocate with him), for Respondent.

Advocates:
A.K.SEN GUPTA, Bishambar Lal Khanna, G.C.Sharma, S.P.NAIR, V.S.DESAI

Headnote:
Indian I. T. Act, 1922 – Section, 66 (2) - Commencing business - Pay income-tax - Court answering in favour of Revenue a question which was directed to be referred by Tribunal Indian controversy between parties arises out of an assessment made on assessee as a Hindu Undivided Family for assessment corresponding accounting year being financial assessee was at material time a Hindu Undivided Family with its manager assessee was carrying on business in gold and jewellery at Chowk Surjan Singh in Lahore- In view of pending partition of India decided to move out of Lahore and accordingly he transferred a sum from account of assessee with Lahore Branch of Punjab National Bank Ltd New Delhi Branch of that bank –Held, Amritsar Branch of Imperial Bank of India these ornaments jewellery and cash were worth not more - One may also ask question that if assessee did not bring assets worth more than from Lahore where and how did it get remaining assets of value had come away from Lahore as a refugee and conditions in post-partition India were also highly unsettled and clear and undoubted evidence was that neither nor assessee had any business or other means of income in India until - In this situation it is impossible to believe that assessee could have earned such a huge amount of profit case present argument as to improbability of assessee having earned such a huge amount within a few months would not have been available to assessee- But Revenue did not dispute correctness of entry and accepted that assets worth were introduced in business and sought to include amount representing value of these assets as undisclosed income of assessee for assessment only question could therefore be whether these assets were brought by assessee from Lahore they represented concealed income earned by assessee during period impossibility of assessee having earned such a huge amount of profit within a few months immediately after migration to India in disturbed and unsettled conditions which then prevailed must therefore necessarily support inference that assessee must have brought these assets from Lahore We are therefore of view that in reaching conclusion that out of capital credited in books assessee assets of value represented undisclosed income of assessee for assessment - Tribunal acted without any material or in any event finding of fact reached by Tribunal was unreasonable or such that no person acting judicially and properly instructed as to relevant law would come to such finding- Court accordingly allow appeal set aside order of High Court and answer question referred by Tribunal in negative- Commissioner will pay costs of appeal assessee - Appeal allowed

Judgment

BHAGWATI, J.:- This is an appeal by special leave directed against the judgment of the Delhi High Court answering in favour of the Revenue a question which was directed to be referred by the Tribunal under S. 66 (2) of the Indian I. T. Act, 1922. The controversy between the parties arises out of an assessment made on the assessee as a Hindu Undivided Family for the assessment year 1948-49. The corresponding accounting year being the financial year 1947-48. The assessee was at the material time a Hindu Undivided Family with one Roshan Lal as its manager and karta. Till June 1947 the assessee was carrying on business in gold and jewellery at Chowk Surjan Singh in Lahore. In view of the pending partition of India Roshan Lal decided to move out of Lahore and accordingly he transferred a sum of Rs. 12,094/- from the account of the assessee with the Lahore Branch of the Punjab National Bank Ltd. to the New Delhi Branch of that bank in June 1947. He also transferred from the Lahore Branch of the Punjab National Bank Ltd. to the branch of that bank at New Delhi two sums of Rs. 13,000/- and Rs. 6,000/- the former in his own name and the latter in the name of his wife and obtained fixed deposit receipts for these two amounts from the New Delhi Branch of the Bank in July 1947. He left Lahore in June 1947 and proceeded to Mussoorie but on his way he stopped at Amritsar for a few days. He opened an account with the Amritsar Branch of the Imperial Bank of India by depositing a sum of Rs. 3000/- with a view to obtaining a locker in the safe deposit vault where he could deposit for safe custody a trunk which he had brought with him from Lahore containing gold ornaments, jewellery and cash. It seems that a locker was not available and hence he deposited the trunk in a sealed condition with Amritsar Branch of the Imperial Bank of India on 25th June, 1947. The sealed trunk, according to the assessee, contained gold ornaments of the value of Rs. 1,19,320/- gold rawa of the value of Rs. 1,69.020/- and stones of the value of Rs. 4,000/- Roshan Lal then went to Mussorie via Haridwar and stayed at Mussoorie until about October 1947. The case of the assessee was that during this period Roshan Lal did not carry on any business nor did he have any other means of income. In October 1947 Roshan Lal came over to Delhi and rented a house in Kinari Bazar with a view to settling down in Delhi. He started looking for suitable premises for commencing business and it was only in February 1948 that he succeeded in securing suitable premises at Dariba Kalan in Delhi. He then started gold and jewellery business in these premises in the name and style of Roshan-Di-Hati on 30th March, 1948. The business was joint family business of the assessee and the first entry made in the books of account of the assessee was dated 30th March, 1948 and it was as follows:

Gold Ornaments Rs. 1,19,320/-

Gold Rawa Rs. 1,69,020/-

Stones Rs. 4,000/-

Bank balance with the Imperial Bank of India, Delhi Rs. 35,053/-

Bank balance with Hindustan Commercial Bank,Delhi Rs. 221/-

Cash Rs. 2,800/-

The assessee thus brought in an aggregate capital of Rs. 3,33,414/- in the business on 30th March, 1948. It appears that the assessee prospered in this gold and Jewelary business of Roshan-Di-Hatti but it did not file any return of income nor paid any income tax. It came to the notice of the I.T.O. some time in the beginning of 1957 that the assessee had made considerable income in its gold and jewellery business but had failed to pay any tax on such income and hence the I.T.O. issued a notice to the assessee under S. 34 (1) (a) of the Indian I.T. Act, 1922 for bringing the income of the assessee for the assessment year 1948-49 to tax. The assessee filed its return of income and in the course of the assessment proceedings, the I.T.O. called upon the assessee to explain the nature and source of the capital of Rs. 3,33,414/- brought by it into the business on 30th March, 1948. The assessee pointed

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