500 and the dividends were then companylected by the bank.
20 lakhs.
Ananta Chandra Das was found to be a representative of Sri B. D. Dujari, Accountant of Ashoka Marketing Ltd. and one of the lieutenants of the assessee.
The Rana opened a cur rent account in Allahabad Bank in April, 1955 with a cash deposit of Rs.
The shares alleged to have been purchased by the Rana were found to be in possession of Ashoka Marketing Co., a companycern practically owned by the assessee.
The Income tax Officer visited Nepal and found that the present position and antecedents of the Rana were modest.
Ltd. to Dalmia Jain Collieries Ltd. D.J.C. Ltd. Another 10,000 shares of R. 1.
10,80,000/ on the respective dates against two promissory numberes and receipts.
On 3rd September 1958 the assessees accountant forwarded to the Income tax Officer a statement or letter by the Rana, dated 26th August 1958 companyfirming the purchase of shares by him.
He was subjected to prolonged cross examination by the Income tax Officer in November and December 1962.
During April to December, 1955 deposits were over Rs.
As the facts stood the fact that the Rana companyld number be companytacted it 22 Circus Avenue companyld number warrant an inference that the Rana was a benamidar.
22 lakhs and withdrawals Rs.
S. Desai, M. Natesan, Neel Rattan Khaitan, D. P. Mohanty and S.Gopalkrishnan, for the respondent.
The Income Tax Officers own personal enquiries showed that the Rana companyld never have been in a position to invest a sum of over Rs.
Sri Durga Prasad changed his earlier statement and said that the loans received by him were from the two companypanies companycerned.
Thereafter, in the year 1953, the two vendor companypanies are alleged to have sold these shares for a sum of Rs.
It was number the departments case that Sri S. P. Jain had advanced Rs.
10,80,000/ to Sri Durga Prasad.
Since it was number likely that the assessee companyld afford to allow these shares pass out of his companytrol to an outsider, the transaction of purchase of the shares from the vendor companypanies would have been by the assessee in the name of the Rana.
Further, it was the assessee who produced the so called affidavit of the Rana but at the same time would number produce the Rana for examination for obvious reasons.
10,80,000/ was the assessees income from undisclosed sources.
Appeals by special leave from the judgment and order dated February 29, 1968 of the Patna High Court in Tax Cases Nos.
2,80,000/ and on 28th August 1953, the same companypany sold another 10,000 ordinary shares to R. 1.
S. Nariman, Additional Solicitor General of India, S. Aiyar,R. N. Sachthey and S. P. Nayar, for the appellant.
The Inspector of the Department found that the tenant of the first floor of 22, Circus Avenue, Calcutta was some one else and that the flat had never been let out to the Rana.
The dividends in all amounted to Rs.
In appeal against the assessment, the Appellate Assistant Commissioner remanded the case to the Income tax Officer as he found that the evidence of Sri Durga Prasad had been taken without giving any opportunity to the assessee to cross examine him and that Anant Chandra Das was number examined, number was any evidence of the officers of the two vendor companypanies recorded.
Ltd. were sold on the same day to Maheshpur Collieries M. C. Ltd. He also sold 40,000 and 35,000 ordinary shares of S. K. G. Sugar Ltd. the former to D. J. C. Ltd. and the latter to M. Ltd. on the same day, viz.,
Ananta Chandra Das was found to be an employee of Ashoka Marketing Ltd. Later, the Income tax Officer succeeded in companytacting Ananta Chandra Das whose statement was also recorded.
20 lakhs.
22 lakhs and withdrawals Rs.
The letter of Mr. J. F. Wood companyfirming the transaction did number appear in the Issue No.
It also appears from the evidence adduced on behalf of the assessee that the huge amount of about Rs.
Pooku Maiya Saheba, 22, Circus Avenue, Calcutta.
The vendor companypanies and the companypanies whose shares were sold, namely, of R. 1.
During April to December, 1955 deposits were over Rs.
It was number elicited from Ananta Chandra Das that the moneys companylected by him from Allahabad Bank Ltd. against the cheques of the Rana were paid to the cashier or accountant of the Ashoka Marketing Ltd. or of any other companycern under the assessees companytrol.
3,20,000/ Again on 28th August 1953, the D. J. C. Ltd. sold 50,000 ordinary shares to R. I. Ltd., for Rs.
These cheques were said to have been sent for by Rana sitting at 11 Clive Row, Calcutta, which is the address of the assessee and also of the Sahu Jain companycerns.
On 24th February 1958 a revised return was filed including therein property income amounting to Rs.
He had given his address as Thapathali Darbar Nepal C o Smt.
Along with the cheques, letters of authorisation were also issued in his favour.
16, 17 and 18 of 1965.
Dujari said that when he had gone to Jain assessee for office work, the latter introduced him to Rana and asked Dujari to assist Rana if the latter so desired and that some days later Rana came to him with a request for a bearer to fetch money from the bank and that Rana himself handed the cheques to A. C. Das.
On the Tribunals findings, the following questions were referred to the High Court Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in declining to companysider the documents which were already on record and which the Department wanted to adduce as evidence ?
38 lakhs.
According to the evidence of Sri Durga Prasad and the letter of Sri J. F. Wood, General Manager of the Allahabad Bank the sale proceeds were received by him on behalf of the vendor companypanies from the Rana and paid over to Sri Durga Prasad after obtaining the promissory numberes.
Ananta Chandra Das, on the other hand, specifically stated that the Rana utilised his services for getting the moneys from the Bank and the moneys were duly handed over to the Rana.
There is numberdiscussion of this persons evidence by the Accountant Member though Judicial Member thought that it was unsatisfactory.
Neither the two vendor companypanies number the Rana number Sri Durga Prasad of Tumsar had any account with the Allahabad Bank at that time and the shares were number in the Banks custody.
Since the assessee took numbersteps to produce the Rana for examination by the Income tax Officer in view of the utter uselessness of the Ranas letter and in the absence of necessary evidence and companyclusive proof about the Ranas financial capacity, the Income tax Officer treated the source of investment of Rs.
assessee Jain who introduced him to Rana and asked him to assist the Rana.
320 to 322 of 1969.
31st July, 1952.
The vendor companypanies did number have cash to, make the advances except after the sale of the shares.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
The Income Tax Officer companypleted the assessment on 30th September, 1958 on a total income of Rs.
2,60,737/ .
550/ .
38 lakhs companylected by the Allahabad Bank was rea lised by the Rana by issuing bearer cheques to the above mentioned peon of Ashoka Marketing Co., an assessees companycern.
The statement of Onkarmal Dalmia recorded on 9th December 1958 showed that the share scrips of the two companypa nies involved, which were stated to have been purchased by J. C. Ltd. and Mahespur Collieries Ltd. were found to have been in the custody of the Accountant of the Ashoka Marketing Ltd. The Principal Officer of the two companypanies Shri H. D. Bisoni, did number know about the transactions in question.
The transactions of sale by the vendor companypanies have been established according to the entries in the account books of.
Excepting for the signatures of the Rana, the other entries in the cheques were in different handwriting and the authorisation letters were all typed, in identical form.
During the calendar year 1955 the deposits were Rs.
10,80,000/ treated as the assessees income from undisclosed sources for investment, in shares in the name of Sri Kalyan Shum Shere J. B. Rana hereinafter referred to as the Rana .
Since Rana never claimed to be a tenant and the departmental enquiries did number result in a positive finding that the Rana never stayed at No.
Ananta Chandra Dass evidence failed to establish that the moneys companylected from Allahabad Bank were for the assessees benefit.
In the companyrse of one year i.e., from, April 1955 to 1956 Rana is alleged to have withdrawn large amounts by nine cheques aggregating to Rs.
Ltd. and S. K. G. Ltd. all belonged to Sahu Jain Group and under the companyplete companytrol of the assessee, who is the head of Sahu Jain Group.
It would appear from the Appellate Assistant Commissioners order that the Income tax Officer submitted two remand reports in which he made out the following salient points The assessee did number avail of the opportunity of producing the Rana.
The Judgment of the Court was delivered by JAGANMOHAN REDDY, J. These appeals are by he COmmissioner of Income Tax, Bihar and Orissa, against the judgment of the High Court of Patna in references under s. 66 2 of the Income tax Act, 1922 hereinafter called the Act which answered the questions referred to it in favour of the assessee and against the appellant.
In the year 1954 55 for which.
The Income tax Officer treated this amount as income from undisclosed sources for the following reasons From the statement of case, it would appear that on July 1,.
The assessee is an individual having income from salary, interest on securities, rents from house properties, dividends etc.
14.97 lakhs and withdrawals Rs.
80,000/ .
Rana did number claim to be a tenant of 22, Circus Avenue, Calcutta.
38 lakhs in the three years were all by bearer cheques and endorsed in favour of Ananta Chandra Das.
These cheques were bearer cheques for lakhs of rupees and encashed through one A. C. Das, peon of Ashoka Marketing Ltd. The letters of authorisation given to Das were typed in identical form bearing only the signature of Rana, the other entries having been filled up by someone else.
The source number having been explained, the Income tax Officer assessed the sum as the assessees income from undisclosed sources.
16.85 lakhs in the calendar year 1957 there was one deposit of Rs.
10,80,000/ as belonging to the assessee.
Ananta Chandra Das was ultimately located by the, Income tax Officer as an employee working in New Central Jute Mills.
Practically all these amounts were said to, have been realised by the Rana by issuing bearer cheques in favour of a peon of Ashok Marketing Co. who had been casually introduced to him.
the dividends immediately on declaration.
1,30,125 and withdrawal of Rs.
Ail these deposits were by cheques and withdrawals involving over Rs.
the Rana was a benamidar from the fact that the Rana did number get himself registered as a shareholder for nearly a year and did number promptly companylect the dividends declared.
21,15,845/ which included a. sum of Rs.
the previous year is 1st November 1952 to 31st October, 1953, the assessee filed a return on 28th February 1955 declaring a total income of Rs.
of the Bank and numberoffice companyy of the letter was forthcoming in the bank.
The statements of Sarvashree Onkamal Dalmia, H. D. Bisoni the appellant, Ananta Chandra Das and Thakur Das Dujari were enclosed.
In 1956, Rana seems to have been present at Calcutta and this fact had been companyfirmed in a letter to the Income tax Officer dated 27th July 1956 by General Baber Shamshir J. B. Rana who stated that the Rana left his home Nepal some months back for treatment in India but he did number know Ranas address.
If it was a fact that the Rana had given a bogus address, his financial standing and credit companyld be assailed.
After the receipt of the remand reports, the Appellate Assistant Commissioner was of opinion that if the cumulative picture was visualised and companysidered number in isolation but generally as a whole, great weight has to be attached to the Income tax Officers companyclusion that the investment of Rs.
assessee to state his objections, if any, and also to adduce evidence in support of his companytentions and also to produce the Rana before him.
On 13th March 1958 the assessee denied the purchase of the shares by him through the alleged benamidar.
The Tribunal declined to companysider certain documents in Annexure D 1 to D 33 of the statement of the case.
21 lakhs but the Rana did number take steps to have the same recorded as the registered shareholder and to companylect the dividends.
Ltd. declared dividends on 2nd June 1954 and S. K. Ltd. on 23rd April 1954.
The sale to Rana was made at Patna below the market rates.
The Appellate Assistant Commissioner further directed the Income tax Officer to examine the assessee and also to investigate the physical movement of the shares in question during the period companyered by the transactions and the subsequent history including their ultimate disposal.
On 28th February, 1968 the Income tax Officer informed the assessee that on the basis of information available with him, he had reason to believe that the Rana was the assessees benamidar in the transaction of purchase of the shares in question for Rs.
22, Circus Avenue, Calcutta, numberadverse inference companyld be drawn against the assessee from the failure to companytact the Rana.
brought from the bank as pointed out above by the peon C.Das of the Ashoka Marketing, Co. on nine bearer.
1952 the assessee sold 50,000 ordinary shares of Rhotas Industries Limited R. 1.
The department had companymenced its enquiries early in 1956 and at that time the Rana had substantial cash balances left in the Allahabad Bank.
Some details regarding the movement of the shares were numbered by the Income tax Officer but their subsequent history was number traced out.
10,80,000/ from the two vendor companypanies and called upon the.
10,80,000/ to one Rana as follows On 30th May 1953 the D. J. C. Ltd.sold 40,000 ordinary shares to S. K. G. Sugar Ltd. for Rs.
4,00,000/ On 30th May 1953, M. C. Ltd. sold 35,000 ordinary shares of S. K. G. Sugar Ltd. for Rs.
The companyclusions of the Accountant Member which win be referred to as that of the Tribunal so far as they are relevant for the disposal of this appeal have been stated by him as under At the relevant time in 1953, it was number in dispute that the two vendor companypanies were the actual owners of 75,000 ordinary shares of S. K. G. Ltd. and 60,000 ordinary shares of R. I. Ltd. The shares, which the companypanies purchased were pledged with the Commissioner of Income tax by the assessee and with his permission subsequently sold to the above companypanies.
It is further said that with a view to see that the peon did number misappropriate the money, Rana used to send his own driver with him.
Ltd. for Rs.
1,41,000/ .
After rejecting these documents, the Tribunal found that the purchase of shares by Rana was number a benami transaction and was legally valid.
After the, shares were sold the money was companylected and.
On the material on record the Income tax Officer came to the following companyclusions The Rana companyld number be companytacted at 22, Circus Avenue, Calcutta.
An appeal against this, order was taken to the Income tax Appellate Tribunal.
The Income tax Officer drew an adverse inference that.
That the assessee had produced at the remand stage a letter dated 15th March 1959 from the Indian Ambassador, Nepal to the affect that the Rana was a person of large means and resources and enjoyed respectable position.
10 lakhs in the shares in question.
cheques and according to A. C. Das he paid those amounts to the Ran a in the premises of the assessee Sahu Jain at, 1 1 Clive Row.
Though the Rana is shown to have purchased the shares in May and August 1953, he got them transferred to his own name only in April, 1955.
