Case: Bai Velbai Vs. Commissioner of Income Tax, Bombay City

"We are of the view that learned counsel for the appellant has prima facie given good grounds for his contention that the finding of the Tribunal as to the sum of Rs. 1, 38, 000 is based on no evidence rather it is based on conjecture and surmise, and, furthermore, is vitiated by a failure to take into consideration several crucial matters bearing on the question4. We may first point out that the Tribunal has given no reasons of its own for making a distinction between the sum of Rs. 1, 00, 000 and the sum of Rs. 1, 38, 000 out of the sum of Rs. 2, 38, 000 received by the encashment of 238 high denomination currency notes. Assuming that the Tribunal adopted whatever reasons the Income-tax Officer had given in his assessment order, it prima facie appears to us that with regard to the sum of Rs. 1, 38, 000 the Income-tax Officer has not referred to any particular materials on which he made a distinction between Rs. 1, 38, 000 and Rs. 1, 00, 000. The Tribunal did indeed refer to the withdrawals which the appellant made from her fixed deposit amounts in the three banks, the withdrawals amounting to about Rs. 4, 00, 220 early in 1942. The Tribunal then pointed out that the appellant invested Rs. 2, 53, 980 in September, 1942, in municipal bonds and Rs. 70, 000 in shares in 1943. This was followed by a further investment in 1945 in the municipal debentures. This left a sum of a little over Rs. 76, 000 with the appellant. The Tribunal referred to a further investment in municipal debentures of about Rs. 20, 000. But the Tribunal did not consider the case of the appellant as regards her having the entire Rs. 76, 000 and odd nor her explanation as to the source from which the municipal debentures were acquired. What, however, the Tribunal failed to consider was the withdrawals which the appellant had made in cash from the capital accounts in her different businesses from 1936-1937 to 1945-1946. The Income-tax Officer referred to these withdrawals and disposed of them on the short ground that the capital accounts were maintained more for the purpose of inter-departmental transfer of money than for her personal needs. Learned counsel for the appellant has referred us to these capital accounts and has pointed out that though transfer entries occurred in the accounts of 1936-1937 and 1937-1938, there were other entries in the books of the years 1939-1940 to 1945-1946 which showed that the appellant had withdrawn various amounts in cash from her businesses. These withdrawals do not appear to have been considered by the Tribunal at all. If these withdrawals are added to what the appellant had withdrawn from her fixed deposit amounts in the three banks, learned counsel for the appellant contends that the total amount would come to about Rs. 6, 00, 000 or Rs. 7, 00, 000 and would satisfactorily account for the large amount of cash in her hands. The Tribunal pointed out that the appellant had to disburse legacies worth Rs. 2, 50, 000 under the will left by her husband. The Tribunal opined that these disbursements must have been spread over quite a long period. The complaint of learned counsel for the appellant is that there is no evidence that the disbursements were spread over a long period and the finding of the Tribunal was based on a mere surmise. His further contention is that if the total amount of withdrawals from the businesses and the fixed deposit accounts were taken into consideration, the appellant would still be left with a large sum of money in her handsLearned counsel for the appellant has also made a grievance of the fact that in calculating the withdrawals made by the appellant from her, businesses, the Income-tax Officer had first excluded withdrawals on account of household expenses, income-tax, etc ; but later on he said that a portion of the cash withdrawals together with the income from properties and the cash left by the appellants husband must have gone to pay the legacies, household expenses, etc. This again is said to be based on surmise rather than on any evidence on record5. We do not think that it is necessary or advisable to consider in detail the various contentions urged on behalf of the appellant. These contentions will require a detailed consideration when the questions of law which arise out of the Tribunals order will fall for decision. It is sufficient for us to say at this stage that the three questions which the appellant has raised and to which we have made a reference earlier in this judgment are questions of law which do arise out of the Tribunals order dated May 6, 1959. In coming to this conclusion we have kept in mind the observations made by this court in Omar Salay Mahomed Sait v. Commissioner of Income-tax, and Homi Jehangir Gheesta v. Commissioner of Income-tax. We have read the order of the Tribunal as a whole and we are not unmindful of the observation made in the case of Homi Jehangir Gheesta that in considering probabilities properly arising from the facts alleged or proved, the Tribunal does not indulge in conjectures, surmises or suspicions. We may perhaps add that what we have said in this judgment is meant only to show that certain questions of law arise out of the Tribunals order and the High Court was wrong in summarily rejecting the application for a reference. As to how the questions of law should be answered will be a matter for the High Court to decide when on the statement of the case filed by the Tribunal the reference is dealt with by itFor the reasons given above we allow this appeal and set aside the order of the High Court dated March 27, 1961, by which it summarily rejected the application for a reference under section 66 of the Act.

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

Explanation:
1[ds]3. Prima facie, the question whether the amount of Rs. 1, 38, 000 came out of the savings or withdrawals made by the appellant from her several businesses or was income from undisclosed sources, would be a question of fact to be determined on a consideration of the facts and circumstances proved or admitted in the case. As this court observed in Sree Meenakshi Mills v. Commissioner ofa finding of fact does not alter its character as one of fact merely because it is itself an inference from other basic facts ; but a finding on a question of fact is open to attack under section 66 as erroneous in law when there is no evidence to support it or if it is perverse or has been reached without due consideration of the several matters relevant for such a determinationLearned counsel for the appellant has argued that the present case comes under the second category aforesaid and the High Court was wrong in summarily rejecting the application for a reference. We do not think that the assessment order in all its particulars can be said to come under the rule of "no evidence in support of the finding." Neither does learned counsel for the appellant so contend.We may first point out that the Tribunal has given no reasons of its own for making a distinction between the sum of Rs. 1, 00, 000 and the sum of Rs. 1, 38, 000 out of the sum of Rs. 2, 38, 000 received by the encashment of 238 high denomination currency notes. Assuming that the Tribunal adopted whatever reasons theOfficer had given in his assessment order, it prima facie appears to us that with regard to the sum of Rs. 1, 38, 000 theOfficer has not referred to any particular materials on which he made a distinction between Rs. 1, 38, 000 and Rs. 1, 00, 000. The Tribunal did indeed refer to the withdrawals which the appellant made from her fixed deposit amounts in the three banks, the withdrawals amounting to about Rs. 4, 00, 220 early in 1942. The Tribunal then pointed out that the appellant invested Rs. 2, 53, 980 in September, 1942, in municipal bonds and Rs. 70, 000 in shares in 1943. This was followed by a further investment in 1945 in the municipal debentures. This left a sum of a little over Rs. 76, 000 with the appellant. The Tribunal referred to a further investment in municipal debentures of about Rs. 20, 000. But the Tribunal did not consider the case of the appellant as regards her having the entire Rs. 76, 000 and odd nor her explanation as to the source from which the municipal debentures were acquired. What, however, the Tribunal failed to consider was the withdrawals which the appellant had made in cash from the capital accounts in her different businesses from6. TheOfficer referred to these withdrawals and disposed of them on the short ground that the capital accounts were maintained more for the purpose oftransfer of money than for her personalcounsel for the appellant has referred us to these capital accounts and has pointed out that though transfer entries occurred in the accounts of8, there were other entries in the books of the years46 which showed that the appellant had withdrawn various amounts in cash from herbusinesses. These withdrawals do not appear to have been considered by the Tribunal at all. If these withdrawals are added to what the appellant had withdrawn from her fixed deposit amounts in the three banks, learned counsel for the appellant contends that the total amount would come to about Rs. 6, 00, 000 or Rs. 7, 00, 000 and would satisfactorily account for the large amount of cash in her hands. The Tribunal pointed out that the appellant had to disburse legacies worth Rs. 2, 50, 000 under the will left by her husband. The Tribunal opined that these disbursements must have been spread over quite a long period. The complaint of learned counsel for the appellant is that there is no evidence that the disbursements were spread over a long period and the finding of the Tribunal was based on a mere surmise. Hisfurther contention is that if the total amount of withdrawals from the businesses and the fixed deposit accounts were taken into consideration, the appellant would still be left with a large sum of money in her handsLearned counsel for the appellant has also made a grievance of the fact that in calculating the withdrawals made by the appellant from her, businesses, ther had first excluded withdrawals on account of household expenses,c ; but later on he said that a portion of the cash withdrawals together with the income from properties and the cash left by the appellants husband must have gone to pay the legacies, household expenses, etc.This again is said to be based on surmise rather than on any evidence on record5. We do not think that it is necessary or advisable to consider in detail the various contentions urged on behalf of the appellant. These contentions will require a detailed consideration when the questions of law which arise out of the Tribunals order will fall for decision. It is sufficient for us to say at this stage that the three questions which the appellant has raised and to which we have made a reference earlier in this judgment are questions of law which do arise out of the Tribunals order dated May 6, 1959. In coming to this conclusion we have kept in mind the observations made by this court in Omar Salay Mahomed Sait v. Commissioner ofand Homi Jehangir Gheesta v. Commissioner ofWe have read the order of the Tribunal as a whole and we are not unmindful of the observation made in the case of Homi Jehangir Gheesta that in considering probabilities properly arising from the facts alleged or proved, the Tribunal does not indulge in conjectures, surmises or suspicions. We may perhaps add that what we have said in this judgment is meant only to show that certain questions of law arise out of the Tribunals order and the High Court was wrong in summarily rejecting the application for a reference. As to how the questions of law should be answered will be a matter for the High Court to decide when on the statement of the case filed by the Tribunal the reference is dealt with by itFor the reasons given above we allow this appeal and set aside the order of the High Court dated March 27, 1961, by which it summarily rejected the application for a reference under section 66 of the Act.