Case: Commissioner of Income Tax (Central) Calcutta Vs. Daulat Ram Rawatmull

present case is concerned, we cannot be oblivious of the fact that Biswanath offered security for the overdraft facility to a firm of which his father was a partner. In the circumstances, the, fact that Biswanath received no consideration for offering the fixed deposit receipt a s security for the overdraft facility would not result in any inference against the respondent.Although the proceedings under section 34 of the Act in the present case were started in 1955, after the lapse of about nine years since the time Biswanath had offered the fixed deposit receipt as security for the overdraft facility to the respondent firm, no material was brought on the record to show that the aforesaid sum of Rs. 5, 00, 000 in the name of Biswanath went to the coffers of the respondent firm or was adjusted towards its liability as was done in respect of the amount of Rs. 5, 00, 000 which had been deposited in the name of Raghunath Prasad. Had the sum of Rs. 5, 00, 000 deposited in the name of Biswanath been ultimately utilised by the respondent firm, the income tax authorities must have brought material on record about that.12. The onus to prove that the apparent is not the real is on the party who claims it to be so. As it was the department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name of Biswanath, the burden lay on the department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of Biswanath. A simple way of discharging the onus and resolving the controversy was to trace the source and origin of the amount and find out its ultimate destination. So far as the source is concerned, there is no material on the record to show that the amount came from the coffers of the respondent firm or that it was tendered in Burrabazar Calcutta branch of the Central Bank on November 15, 1944 on behalf of the respondent. As regards the destination of the amount, it has already been mentioned that there is nothing to show that it went to the coffers of the respondent. On the contrary, there is positive evidence that the amount was received by Biswanath on January 22, 1946. It would thus follow that both as regards the source as well as the destination of the amount. the material on the record gives no support to the. claim of the department.Learned Additional Solicitor General has urged that the close proximity of time between the transfer of the amount of Rs. 5, 00, 000 from Calcutta for the issue of fixed deposit receipt in the name of Biswanath at Jamnagar and the opening of overdraft account of respondent firm in Calcutta with the said fixed deposit receipt constituting security f or the overdraft account would show that the said amount in fact belonged to the respondent. We find it difficult to accede to this submission because the benefit received by the respondent by the use of the said receipt as a collateral security for overdraft facility was only of a temporary nature. The receipt remained in the name of Biswanath and it was he who got the amount of the receipt on January 22, 1946.13. Reference was also made by the Additional Solicitor General to the order of the Appellate Assistant Commissioner. It is stated that the said order is much more elaborate and the Tribunal has made note of this fact. In this respect we find that the order of the Appellate Assistant Commissioner is vitiated by two factual inaccuracies. According to the said order, the amount of the fixed deposit receipt in the name of Biswanath was received in Calcutta on November 25, 1946 and was transferred to the credit of the respondent firm against the overdraft with the Bank. This observation was incorrect because there is ample material on record to show that the amount of the fixed deposit receipt was received, as mentioned earlier, on January 22, 1946 by Biswanath himself. He also, it would app ear, got the interest due on the said amount.14. The other factual inaccuracy which crept into the order of the, Appellate Assistant Commissioner was his assumption that the shares of the two groups of Nopanys and Bhuwalkas were equal. It was observed by the Appellate Assistant Commissioner:"The appellant firm itself consists of two groups of partners Nopany and Bhuwalka. Each group had equal shares. Raghunath Prasad belongs to the Nopany group and Biswanath to the Bhuwalka group. The amount offered for fixed deposits therefore corresponds to the profit sharing proportion of each group. This mass of evidence and circumstances could not be upset merely because the fixed deposits stood in two particular names."15. The above factual assumption regarding the equality of shares- of the two groups was incorrect because it is the common case of the parties that the share of Bhuwalka group was 10 annas in a rupee and that of Nopany was 6 annas in a rupee.16. The Appellate Assistant Commissioner also took into account the fact that the office of the Central Bank in Burrabazar Calcutta is in the same building in which there are the business premises of the respondent firm. This was, in our opinion, a wholly extraneous and irrelevant circumstance for determining the ownership of Rs. 5, 00, 000 which had been deposited in fixed deposit in the name of Biswanath. There should, in our opinion, be some direct nexus between the conclusion of fact arrived at by the authority concerned and the primary facts upon which that conclusion is based. The use of extraneous and irrelevant material in arriving at that conclusion would vitiate the conclusion of fact because it is difficult to predicate as to what extent the extraneous and irrelevant material has influenced the authority in Arriving at the conclusion of fact.17

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The onus to prove that the apparent is not the real is on the party who claims it to be so. As it was the department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name of Biswanath, the burden lay on the department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of Biswanath. A simple way of discharging the onus and resolving the controversy was to trace the source and origin of the amount and find out its ultimate destination. So far as the source is concerned, there is no material on the record to show that the amount came from the coffers of the respondent firm or that it was tendered in Burrabazar Calcutta branch of the Central Bank on November 15, 1944 on behalf of the respondent. As regards the destination of the amount, it has already been mentioned that there is nothing to show that it went to the coffers of the respondent. On the contrary, there is positive evidence that the amount was received by Biswanath on January 22, 1946. It would thus follow that both as regards the source as well as the destination of the amount. the material on the record gives no support to the. claim of the department.Learned Additional Solicitor General has urged that the close proximity of time between the transfer of the amount of Rs. 5, 00, 000 from Calcutta for the issue of fixed deposit receipt in the name of Biswanath at Jamnagar and the opening of overdraft account of respondent firm in Calcutta with the said fixed deposit receipt constituting security f or the overdraft account would show that the said amount in fact belonged to the respondent. We find it difficult to accede to this submission because the benefit received by the respondent by the use of the said receipt as a collateral security for overdraft facility was only of a temporary nature. The receipt remained in the name of Biswanath and it was he who got the amount of the receipt on January 22,was also made by the Additional Solicitor General to the order of the Appellate Assistant Commissioner. It is stated that the said order is much more elaborate and the Tribunal has made note of this fact. In this respect we find that the order of the Appellate Assistant Commissioner is vitiated by two factual inaccuracies. According to the said order, the amount of the fixed deposit receipt in the name of Biswanath was received in Calcutta on November 25, 1946 and was transferred to the credit of the respondent firm against the overdraft with the Bank. This observation was incorrect because there is ample material on record to show that the amount of the fixed deposit receipt was received, as mentioned earlier, on January 22, 1946 by Biswanath himself. He also, it would app ear, got the interest due on the saidother factual inaccuracy which crept into the order of the, Appellate Assistant Commissioner was his assumption that the shares of the two groups of Nopanys and Bhuwalkas were equal. It was observed by the Appellate Assistant Commissioner:"The appellant firm itself consists of two groups of partners Nopany and Bhuwalka. Each group had equal shares. Raghunath Prasad belongs to the Nopany group and Biswanath to the Bhuwalka group. The amount offered for fixed deposits therefore corresponds to the profit sharing proportion of each group. This mass of evidence and circumstances could not be upset merely because the fixed deposits stood in two particularabove factual assumption regarding the equality of shares- of the two groups was incorrect because it is the common case of the parties that the share of Bhuwalka group was 10 annas in a rupee and that of Nopany was 6 annas in aAppellate Assistant Commissioner also took into account the fact that the office of the Central Bank in Burrabazar Calcutta is in the same building in which there are the business premises of the respondent firm. This was, in our opinion, a wholly extraneous and irrelevant circumstance for determining the ownership of Rs. 5, 00, 000 which had been deposited in fixed deposit in the name of Biswanath. There should, in our opinion, be some direct nexus between the conclusion of fact arrived at by the authority concerned and the primary facts upon which that conclusion is based. The use of extraneous and irrelevant material in arriving at that conclusion would vitiate the conclusion of fact because it is difficult to predicate as to what extent the extraneous and irrelevant material has influenced the authority in Arriving at the conclusion of fact.