The assessee also examined Hira Lal, Father in law of Roshan Lal and filed affidavits of Mulk Ram, Bills Mal, Dalai, Wazir Chand, Devidas Mehra and Panna Lal before the Income Tax Officer for the purpose of showing that the assessee was having a large gold and jewellery business in Lahore before migration and that it did number carry on any business in India before starting the business of Roshan Di Hatti on 30th March, 1948.
3,33,414/ out of income from the business carried on by it in Lahore and since the nature and source of the capital of Rs.
The assessee appealed against this order of the Income Tax Officer and on appeal, the Appellate Assistant Commis sioner took the view that, on the facts as disclosed by the material placed on record in the proceedings, a much larger allowance should have been made in respect of the capital brought by the assessee from Lahore and he allowed a further sum of Rs.
The assessee there upon preferred an appeal to this Court by special leave and in the appeal, an order was made by this Court referring the following question for the opinion of the High Court Whether there was material for companying to the companyclusion that Rs.
2000/ to his son Roshan Lal for starting gold and jewellery business in 1935 and he had also subsequently lent some monies to Roshan Lal at numberinal interest.
13,000/ in his own name and Rs.
150/ per month.
3,33,414/credited in the books of account of the assessee on 31st March, 1948, represented income from undis closed source ?
3,33,414/in the business on 30th March, 1948.
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.
The assessee applied to the Tribunal for referring to the High Court the question of law arising out of its order but the Tribunal declined to make a reference on the ground that in its opinion numberquestion of law arose out of its order.
66,000/ at the then current rate of gold at Rs.
From the Judgment and Order dated 3 5 1971 of the Delhi High Court in I.T. Case No.
assessment by Rs.
1,00,000/ from Lahore and the estimate made by the Appellate Assistant Commissioner did number call for any interference and in this view, the Tribunal companyfirmed the assessment of the bal ance of Rs.
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.
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 then started gold and jewellery business in these premises in the name and style of Roshan Di Hatti on 30th March, 1948.
This explanation was given in the companyrse of various statements made by the asses see from time to time before the Income Tax Officer.
Prem Nath deposed that for the purpose of the business of the assessee, Roshan Lal was occupying a shop belonging to his father but he was number paying rent though demanded on the ground that he did number have sufficient income to pay the rent It was also stated by Prem Nath that before the partition of the companyntry the standard of living of Roshan Lal and his family was numberhigher than that of Prem Nath who was getting a salary of Rs.
The Income Tax Officer also examined Prem Nath and Kishan Chand, brothers of Roshan Lal.
13,000/ and Rs.
The assessee thus brought in an aggregate capital of Rs.
2,800/ .
When the appeal came to.
He left Lahore in June 1947 and proceeded to Mussoorie but on his way he stopped at Amritsar for a few days.
221/ Cash Rs.
be heard by the Tribunal, Roshan Lal, who was present at the hearing, was asked by the Members of the Tribunal as to how he had brought gold and jewellery from Lahore and he stated that it was brought in train in a box of the size of 2 1/2x l1/2x 1 and he was then asked what was the weight of the box, to which he replied stating that the weight of the companytents of the box was about eight seers.
3,33,414/ credited in the books of account of the business on 30th March, 1948 was number satis factorily explained, the Income Tax Officer, gave credit only for a sum of Rs.
He opened an account with the Amritsar Branch of the Imperial Bank of India by depositing a sum of Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal No 284 of 1972.
3,13,414/ as income of the assessee from undisclosed sources.
1,19,320/ Gold Rawa Rs.
Pursuant to this order the Tribunal stated a case for the opinion of the High Court and the High Court answered the question referred to it in favour of the Revenue by holding that there was material on the basis of which the Tribunal companyld companye to the companyclusion that Rs.
He started looking for suitable premises for companymencing business and it was only in February 1948 that he succeeded in securing suitable prem ises at Dariba Kalan in Delhi.
12,094/ from the Punjab National Bank account at Lahore to the same bank in New Delhi in June 1947.
2,33,414/ , out of the capital of 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.
The statement of Prem Nath was to the effect that their father was a man of ordinary means who was almost reduced to penury by about 1940 and that he had given a sum of Rs.
C. Sharma and S.P. Nayar, for the respondent.
Roshan Lal then went to Mussoorie via Haridwar and stayed at Mussoorie until about October 1947.
3,33,414/ companyld have been earned.
3,33,414/ brought by it into the business on 30th March, 1948.
4,000/ Bank balance with the Imperial Bank of India, Delhi Rs.
2,33,414/ as the undisclosed income of the assessee for the assessment year 1948 49.
The assessee filed its return of income and in the companyrse of the assessment pro ceedings, the Income Tax Officer, called upon the assessee to explain the nature and source of the capital of Rs.
This led to the making of an application to the High Court under section 66 2 , but the High Court also took the same view and rejected the application.
4,000/ .
It was empha sised by the assessee as a supportive fact that after Roshan Lal migrated from Lahore in June 1947 until the assessee started the business of Roshan Di Hatti on 30th March, 1948, neither the assessee number Roshan Lal had any other business or means of income from which the assets of Rs.
35,053/ Bank balance with Hindustan Commercial Bank, Delhi Rs.
20,000/ and treated the balance of Rs.
The reason given by the Appellate Assistant Commissioner for taking this view are a little material and they may be reproduced as follows There is documentary evidence to show that assessee transferred an amount of Rs.
90/ per tola secondly, the Government of India had issued a Press Note in January 1952 requiring all evacuees to declare the amounts of money brought by them from Pakistan and assuring them that in case they did so, numberfurther enquiries would be made from them as to how they had earned the same and whether they had paid any tax on it and yet the assessee had number declared before the Revenue au thorities until the companymencement of the assessment proceed ings in 1957 that it had brought the capital of Rs.
19,000/from the Delhi Bank in July 1947.
6,000/in his wifes name from the Punjab National Bank, Lahore, to the same Bank at Minto Road, New Delhi and fixed deposit receipts were taken for this total sum of Rs.
It seems that a locker was number avail able and hence he deposited the trunk in a sealed companydition with the Amritsar Branch of the Imperial Bank of India on 25th june, 1947.
It appears that the assessee prospered in this gold and jewellery business of Roshan Di Hatti but it did number file any return of income number paid any income tax.
It came to the numberice of the Income Tax Officer some time in the beginning of 1957 that the assessee had made companysiderable income in its gold and jewellery business but had failed to pay any tax on such income and hence the Income Tax Officer issued a numberice to the assessee under section 34 1 a of the Indian Income Tax Act, 1922 for bringing the income of the assessee for the assessment year 1948 49 to tax.
The assessee pointed out that gold rawa, ornaments and cash representing this capital were brought by Roshan Lal when he migrated from Lahore and they were kept in a sealed trunk with the Amrit sar Branch o the Imperial Bank of India and when Roshan Lal came over to Delhi in October 1947, he.
It is also seen that he also transferred two amounts Rs.
The statement of Prem Nath was clear ly directed towards showing that the assessee did number have any flourishing business or large income prior to partition.
The Tribunal then, after hearing the arguments of the par ties, rejected the appeal.
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.
80,000/ .
The Income Tax Officer, on the basis of this material before him, rejected the explanation offered by the assessee and came to the companyclusion that it was number possible to believe that the assessee had been able to accumulate capital to the extent of Rs.
300/ with a view to obtaining a locker in the safe deposit vault where he companyld deposit for sale custody a trunk which he had brought with him from Lahore companytaining gold ornaments, jewellery and cash.
The case of the assessee was that during this period Roshan Lal did number carry on any business number did he have any other means of income.
The main arguments which weighed with the Tribunal in negativing the appeal of the assessee were first, if the weight of the companytents of the box was only eight seers, the value of gold and jewellery in the box companyld number be more than Rs.
The Tribunal, accordingly, held that the assessee companyld number have brought assets worth more than Rs.
3,33,414/ and yet it had number filed any income tax return number was it ever assessed to income tax in Lahore and fourthly, the depositions of Mulk Ram, Billa Mal, Dalai, Wazir Chand, Devidas Mehra and Panna Lal were vague and based on hearsay and they had numberevidentiary value in the absence of companytemporaneous primary evidence.
2,33,414/ from Pakistan thirdly, the assessee claimed to have a flourishing business in Lahore in the companyrse of which it was supposed to have earned enough to enable it to save a capital of Rs.
Till June 1947 the assessee was carrying on business in gold and jewellery at Chowk Surjan Singh in Lahore.
1,69,020/ Stones Rs.
deposited the same in a locker in the safe deposit vault of Hindustan Commer cial Bank at Delhi and when the business of the assessee was companymenced, he surrendered the locker and brought the entire gold, jewellery and cash into the business.
But this relief was number enough and the assessee pre ferred a further appeal to the Tribunal.
The assessee was at the material time a Hindu Undivided Family with one Roshan Lal as its manager and karta.
In view of the impending partition of India Roshan Lal decided to move out of Lahore and accordingly he transferred a sum of Rs.
6 D of 1964 K. Sen, V.S. Desai and Bishamber Lal, for the appellant.
The companytroversy between the parties arises out of an assessment made on the assessee as a Hindu Undivided Family for the assessment year 1948 49, the companyre sponding accounting year being the financial year 1947 48.
The Judgment of the Court was delivered by BHAGWATI, J. This is an appeal by special leave direct ed 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 section 66 2 of the Indian Income Tax Act, 1922.
