Case: Homi Jehangir Gheesta Vs. The Commissioner Of Income-Tax, Bombay

2. The appellants case was that M. H. Sanjana, maternal grandfather of the appellant, died on or about May 10, 1920. There was litigation between his widow Cursetbai and Bai Jerbanoo, Sanjanas daughter by his first wife, about the validity of a will left by Sanjana. Bai Jerbanoo was the appellants mother. The litigation was compromised and the appellants mother got one-third share in the estate left by Sanjana the total value of which estate was about Rs. 9,88,000. Bai Jerbanoo died in 1933, leaving her husband Jehangirji (appellants 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. 2,10,000 when she died. The appellant was a minor at the time of his mothers death. He had two uncles then, Phirozeshaw and Kaikhusroo. Phirozeshaw was the eldest member of the family. On his mothers death the appellants share of the estate was Rs. 70,000. Phirozeshaw took charge of it and made investments. He died on December 12,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. 87,500. On January 24, 1946, the appellant tendered those notes for encashment and made a declaration which was then necessary and in that declaration he saidfrom my mother who dies in 1933 when I was minor and money whereof was invested from time to time by my father and late uncle Phirozeshaw who recentlythe 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 encashed, 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. 87,500 sometime before his (i.e., Phirozeshaws) death inThis was a story different from the one later given, about the opening of the safe by Kaikhusroo after Phirozeshaws 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. 87,500 was not disclosed. He treated the amount as appellants income from some source not disclosed and assessed him accordingly.3. The appellant preferred an appeal to the Assistant Commissioner of Income-tax. At the appellate stage the statements of the appellants father and uncle were taken by the Income-tax Officer, D-II Ward, Bombay and a further statement of the appellants 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.......... Declaration dated 24-1-1946 by the assessee says that mothers 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.(ii) Assessees 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 Phirozeshaws death. In another part of the said affidavit it is said that the said executor handed over money to assessees 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 Kaikhursoo 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. 87,500. I took charge of this money and handed over the money to Home." Before the Appellate Assistant Commissioner H - Range, the same Mr. Kaikhusroo later on said :"I handed over the packets as they were. I did not count the notes 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 anTribunal then expressed its conclusion thushave, in these circumstances, no hesitation whatever in holding that the assessee has miserably failed to explain satisfactorily the source of the sum of Rs. 87,500. It is properly taxed asdismissed 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 Tribunals 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 S. 66 of the Income-tax Act, 1922.6. The appellant unsuccessfully moved the Bombay High Court by means of a petition under S. 66(2). 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.

Reasoning:
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 Aloos statements were to be taken into consideration, they were in favour of the appellant inasmuch 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 connexion with Bai Aloos 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. 2,10,000 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 relevant consideration as to why Bai Aloos 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 share of the money and the Tribunal rightly pointed out that the father took cover under mixing of investments." These were relevant considerations for judging the probability of he story. The Tribunal also rightly pointed out that the fact that Bai Allo 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,must make 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.12. It has also been argued before us that even if the explanation of the appellant as to the sum of Rs. 87,500/- 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. 87,500/- 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 hands 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.