Appeal No 24 of 1958
Appeal by special leave from the judgment and order dated October 4 1956 of the former Bombay High Court in ITA No 49 of 1956
RJ Kolah section N Andley J B Dadachanji Rameshwar Nath and P L Vohra for the appellant
KN Rajagopal Sastri and D Gupta for the respondent
September 22
The Judgment of the Court was delivered by SK DAS J
For the assessment year 1946 47 the appellant Homi Jehangir Gheesta was assessed to income tax on a total income of Rs 87500 under section 233 of the Indian Income tax Act 1922
The circumstances in which he was so assessed were the following
The appellant s case was that M H Sanjana maternal grand father of the appellant died on or about May 10 1920
There was litigation between his widow Cursetbai and Bai Jerbanoo Sanjana s daughter by his first wife about the validity of a will left by Sanjana
Bai Jerbanoo was the appellant s mother
The litigation was compromised and the appellant s mother got one third share in the estate left by Sanjana the total value of which estate was about Rs 988000
Bai Jerbanoo died in 1933 leaving her husband Jehangirji appellant s father her son Homi appellant and a daughter named Aloo
It was stated though there was no evidence thereof that Bai Jerbanoo left an estate worth about Rs 210000 when she died
The appellant was a minor at the time of 772 his mother s death
He had two uncles then Phirozeshaw and Kaikhusroo
Phirozeshaw was the eldest member of the family
On his mother s death the appellant s share of the estate was Rs 70000
Phirozeshaw took charge of it and made investments
He died on December 12 1945
Kaikhusroo younger brother of Phirozeshaw and one of the executors of his will took charge of the estate of Phirozeshaw
When he opened a safe belonging to Phirozeshaw he found a packet with the name of the appellant on it
That packet contained high denomination currency notes of the value of Rs 87500
On January 24 1946 the appellant tendered those notes for encashment and made a declaration which was then necessary and in the declaration he said Legacy from my mother who died in 1933 when I was minor and money whereof was invested from time to time by my father and late uncle Phirozeshaw who recently died When the appellant received a notice from the Income tax Officer to submit a return of his income for the relevant year he submitted a return showing  nil  income
When asked about the high denomination notes which he had uncashed he said in a letter dated January 7 1947 that his uncle Phirozeshaw who used to manage his estate during his minority handed over to him and his father the sum of Rs 87500 sometime before his i e Phirozeshaw s death in 1945
This was a story different from the one later given about the opening of the safe by Kaikhusroo after Phirozeshaw s death and the finding of a packet there in the name of the appellant
The appellant also filed an affidavit before the Income tax Officer on September 29 1949 which also contained contradictory statements
On a consideration of all the materials before him the Income tax Officer did not accept the case of the appellant but came to the conclusion that the true nature of the receipt of Rs 87500 was not disclosed
He treated the amount as appellant s income from some source not disclosed and assessed him accordingly
The appellant preferred an appeal to the Assistant 773 Commissioner of Income tax
At the appellate stage the statements of the appellant s father and uncle were taken by the Income tax Officer D 11 Ward Bombay and a further statement of the appellant s uncle Kaikhusroo was taken by the appellate authority
That authority came to the same conclusion as the Income tax Officer had come to
Then there was an appeal to the Income tax Appellate Tribunal which again reviewed the facts of the case
The Tribunal pointed out the following important discrepancies in the case sought to be made out by the appellant i Declaration dated 24 1 1946 by the assessee says that mother s legacy was invested  by my father and my late uncle Phirozeshaw 
His letter dated 7 1 1947 says that his uncle i e Phirozeshaw only managed his estate
The object of this variation is obviously to shield his father from inconvenient examination
The uncle had already departed for his eternal home
iiAssessee s letter dated 7 1 1947 says that the uncle Phirozeshaw handed over money  to me and my father  before his death
The affidavit dated 29 9 1949 tells another story viz the executor Kaikhusroo handed over money to the assessee after Phirozeshaw s death
In another part of the said affidavit it is said that the said executor handed over money to assessee s father
The affidavit assures us that the declaration regarding high denomination notes was made on the information given him by his father
The assessee son nowhere refers to any  packet 
Indeed the theory of  packet  was pronounced by the Executor Kaikhusroo only when he appeared before the Income tax Officer on 22 2 1952
iii In his statement dated 22 2 1952 Mr Kaikhusroo says that he  found an envelope containing Rs 87500 1 took charge of this money and handed over the money to Homi Before the Appellate Assistant Commissioner H Range the same Mr Kaikhusroo later on said  I handed over the packets as they were
I did 774 not count the Dotes or verify the contents
 Some of the answers given as to  receipts  and  inventory  by the executor Kaikhusroo show that he did not take even the reasonable precautions that an ordinary person would take not to talk of an executor
 The Tribunal then expressed its conclusion thus  We have in these circumstances no hesitation whatever in holding that the assessee has miserably failed to explain satisfactorily the source of the sum of Rs 87500
It is properly taxed as income
 It dismissed the appeal by its Order dated October 7 1955
The appellant then moved the Tribunal to refer certain questions of law to the High Court which questions according to the appellant arose out of the Tribunal s order
The Tribunal held that no question of law arose out of its order dated October 7 1955 and by its order dated March 8 1956 dismissed the application of the appellant for a reference under section 66 of the Income tax Act 1922
The appellant unsuccessfully moved the Bombay High Court by means of a petition under section 662
This petition was summarily dismissed by the High Court on October 4 1956
The appellant then filed a petition for special leave to appeal to this Court
By an order dated December 3 1956 this Court granted Special Leave to Appeal to this Court from the order of the Bombay High Court dated October 4 1956 but made no order at that stage on the petition for special leave to appeal from the orders of the Tribunal dated October 7 1955 and March 8 1956
The present appeal has been filed pursuant to the special leave granted by this Court
The short point for consideration is this was the High Court right in summarily rejecting the petition under section 66 2  In other words did the order of the Tribunal dated October 7 1955 on the face of it raise any question of law  On behalf of the appellant it has been argued that the principles laid down by this Court in Dhirajlal Girdharilal vs Commissioner of Income tax Bombay 1 apply because though the decision of the 1 775 Tribunal is final on a question of fact an issue of law arises if the Tribunal arrives at its decision by consider ing material which is irrelevant to the enquiry or by considering material which is partly relevant and partly irrelevant or bases its decision partly on conjectures surmises and suspicions
It is contended that on the face of it the decision of the Tribunal suffers from all the three defects mentioned above
Learned Counsel for the appellant has made a grievance of that part of the order in which the Appellate Tribunal states  We were also not told why the deceased uncle if he took charge of the minor s money did not hand it over to Bai Aloo when she became major in 1939 or even when she got married in 1944 
It is contended that this was an irrelevant consideration and Bai Aloo herself made a statement before the Income tax Officer D II Ward Bombay on February 22 1952 in which she indicated the cir cumstances how she also received a sum of Rs 85000 from her uncle Phirozeshaw before the latter s death
She further stated that she also submitted a return to the Income tax Officer but was not subjected to any assessment on the sum received
The argument of learned Counsel for the appellant is that it was not a relevant consideration as to why Phirozeshaw did not hand over the money to Bai Aloo in 1939 or in 1944 and if Bai Aloo s statements were to be taken into consideration they were in favour of the appellant in as much as no assessment was made on Bai Aloo in respect of the sum she had received
We do not consider that the circumstances referred to by the Tribunal in connection with Bai Aloo s statement were irrelevant
What the Tribunal had to consider was the correctness or otherwise of a story in which the mother was stated to have left Rs 210000 out of which the heirs got one third share each
The Tribunal had to consider each aspect of the story in order to judge of its probability and from that point of view it was a relevant consideration as to why Bai Aloo s money was not paid when she became major or when she got married
It was also a relevant consideration as to what the father of the appellant did with his 776 share of the money and the Tribunal rightly pointed out that the father took cover tinder mixing of investments 
These were relevant considerations for judging the probability of the story
The Tribunal also rightly pointed out that the fact that Bai Aloo was not assessed did not make the story any more probable
The Tribunal stated in its order that a summons was issued to the father by the Income tax Officer to appear before the latter on June 23 1950
The father failed to comply with the summons
This circumstance it is argued should not have been used against the appellant because the record showed that the summons was served on the father on June 22 1950 for attendance on the next day and the father wrote a letter stating that it was not possible for him to attend on the next day and therefore asked for another date
We do not think that this circumstance vitiates the order of the Tribunal which was based on grounds much more substantial than the failure of summons issued against him
The father was actually examined later and his statements were taken into consideration
One point made by the Tribunal was that no explanation was forthcoming as to why the uncle took charge of the share of the appellant and his sister when their father was alive and why the father allowed himself to be effaced in the matter of custody and management of the funds belonging to his children
We consider that this circumstance was also a relevant consideration and if the father was in a position to give an explanation he should have done so when he made his statement before the Income tax Officer D 11 Ward Bombay on February 81952
The Tribunal states  We were also told that the assessee was taking his education between 1943 and 1950 and as such he bad no opportunity to earn any income
In a place like Bombay and particularly in the family of a businessman a person may earn even when he learns
 These observations of the Tribunal has been very seriously commented on by learned Counsel for the appellant
Learned Counsel has stated that certificates from the school college and 777 university authorities were produced by the appellant right upto 1950 which showed that the appellant was a student till 1950 and after seeing the certificates the Tribunal should not have said  We were also told etc
 According to learned Counsel this showed that the finding of the Tribunal was coloured by prejudice
We are unable to agree
Even if it be taken that the appellant satisfactorily proved that he was a student till 1950 we do Dot think that it makes any real difference as to the main question at issue which was whether the appellant received the sum of Rs 70000 from the estate of his mother later increased by investments to Rs 87500 in 1945
The Tribunal rightly pointed out that no evidence was given of the value of the estate left by the mother though there was some evidence of what the mother received from the estate of her father Sanjana nor was there any evidence of the investments said to have been made which led to an addition to the original sum of Rs 70000
It has been argued that it was a mere surmise on the part of the Tribunal to say that in a place like Bombay a person may earn when be learns
Even if the Tribunal is wrong in this respect we do not think that it is a matter of any consequence
We must read the order of the Tribunal as a whole to determine whether every material fact for and against the assessee has been considered fairly and with the due care whether the evidence pro and con has been considered in reaching the final conclusion  and whether the conclusion reached by the Tribunal has been coloured by irrelevant considerations or matters of prejudice
Learned Counsel for the appellant has taken us through the entire order of the Tribunal as also the relevant materials on which it is based
Having examined the order of the Tribunal and those materials we are unable to agree with learned Counsel for the appellant that the order of the Tribunal is vitiated by any of the defects adverted to in Dhirajlal Girdharilal vs Commissioner of Income tax Bombay 1 or Omar Salay Mohamed Sait vs Commissioner of Income tax Madras2
We must make 1 2 778 it clear that we do not think that those decisions require that the order of the Tribunal must be examined sentence by sentence through a microscope as it were so as to discover a minor lapse here or an incautious opinion there to be used as a peg on which to hang an issue of law
In view of the arguments advanced before us it is perhaps necessary to add that in considering probabilities properly arising from the facts alleged or proved the Tribunal does not indulge in conjectures surmises or suspicions
It has also been argued before us that even if the explanation of the appellant as to the sum of Rs 87500 is not accepted the Department did not prove by any direct evidence that the amount was income in the hands of the appellant
We do not think that in a case like the one before us the Department was required to prove by direct evidence that the sum of Rs 87500 was income in the hands of the appellant
Indeed we agree that it is not in all cases that by mere rejection of the explanation of the assessee the character of a particular receipt as income can be said to have been established but where the circumstances of the rejection are such that the only proper inference is that the receipt must be treated as income in the bands of the assessee there is no reason why the assessing authorities should not draw such an inference
Such an inference is an inference of fact and not of law
For the reasons given above we are of the view that no question of law arose from the order of the Tribunal and we see no grounds for interference with the judgment and order of the Bombay High Court dated October 4 1956
The appeal accordingly fails and is dismissed with costs
Appeal dismissed


Summary:
On December 15 1947 the Ruler of the erstwhile State of Sonepur the appellant executed a merger agreement whereby the Government of India acquired full sovereign rights over the territory of the State but ownership and full enjoyment of private properties belonging to the appellant and the personal rights privileges dignities etc enjoyed by him immediately before August 15 1947 were guaranteed to him under articles 4 and 5
On July 27 1949 the Governor General of India issued an order providing that the merged Orissa States including the State of Sonepur shall be administered in all respects as if they formed part of the Province of Orissa
The Orissa Agricultural Income tax Act 1947 had in the meantime been enacted by the Legislature of the Province of Orissa and by virtue of an Ordinance promulgated by the Governor of Orissa on December 30 1949 the Act became applicable to the merged Orissa States
Section 21 of the Act defined a  person  as inclusive of a Ruler of an Indian State but by the Adaptation of Laws Order 195o reference to Rulers of Indian States was deleted as from January 26 195o
The appellant contended that he was not liable to be assessed to tax on agricultural income under the provisions of the Act because 1 as a Ruler of the State of Sonepur he was before merger of his State immune from liability to taxation in respect of his private property and that his immunity from taxation was Guaranteed by articles 4 and 5 of the agreement of merger and 2 that by virtue of the amendment of section 2 cl
1 of the Act he was not a person within the meaning of the Act and therefore he was not liable to pay agricultural income tax
Held i that the amendment in the definition of person in section 2 Cl
i of the Act was made not with the object of excluding the Rulers of former Indian States from liability to pay tax but only to delete a clause which in view of political changes which had taken place since the Act was enacted had no practical significance
The appellant could not claim exemption from taxation on the ground that he was not a  person  in the absence of an express exemption clause in the Act
780 2that the privileges guaranteed by articles 4 and 5 of the agreement of merger were only personal privileges of the appellant as an ex Ruler and that these privileges did not extend to his private property
Vishweshwar Rao vs The State of Madhya Pradesh  followed
3that the claim made by the appellant of immunity from taxation relying upon the agreement of merger was not justiciable