Case: Daulatram Rawatmall Vs. Commissioner of Income Tax (Central) Calcutta

The appellant carried on the business as dealers and commission agents in jute and other commodities. It also acted as procuring agents for rice and paddy for certain areas for the Government of Bengal for the procurement of which it was paid commission. It was originally assessed on March 30, 1948 for the assessment yearthe corresponding year of account being from September 27, 1944 to October 15, 1945. On February 19, 1955 the Income Tax officer issued a notice under Section 34 of the Act stating that he had reason to believe that the appellants income for the year in question had beenand the appellant was called upon to file a return of income for that year. After the return had been filed and after the Income Tax Officer had examined the books of account, etc. He made reassessment by an order, dated February 20, 1956. By the said order the Income Tax Officer, inter alia, added the sum of Rs. 10, 00, 000/to the income of the appellant as undisclosed income. This amount represented two deposits of Rs. 5, 00, 000/each in the Central Bank of India, Ltd., Jamnagar branch and which stood in the names of Raghunath Prasad Nopany alias Raghunath Prasad Agarwal and Biswanath Bhuwalka alias Bishwanath Gupta who were respectively the sons of Rawatmall Agarwal and Bajranglal Agarwal partners of the appellant firm. The appellant had obtained an overdraft facility to the extent of Rs. 10 lakhs upon the security of these two fixed deposits receipts from the Calcutta branch of the Central Bank of India. The Income Tax Officer, after investigation, was satisfied that these amounts deposited in the names of the sons of the two partners of the firm were secreted profits of the appellant firm itself. On appeal the Appellate Assistant Commissioner held that the appellant had been able to explain the source of Rs. 50, 000/only out of the fixed deposit of Rs. 5, 00, 000/in the name of Bishwanath Gupta. He thus reduced the addition made by the Income Tax Officer by Rs. 50, 000/only. The appellant filed an appeal before the Income Tax Appellate Tribunal which upheld the order of the Appellate Assistant Commissioner.3. The appellant filed a petition under Section 66(1) of the Act for stating certain questions of law arising out of the order of the Appellate Tribunal. The Tribunal referred some questions but did not refer the following question which, on the High Court being moved under Section 66(2), was directed to be referred :"Whether on the facts and in the circumstance of the case there was material before the Income Tax Appellate Tribunal to hold that the sum of Rs. 5, 00, 000/standing in the name of Raghunath Prasad Nopany and a sum of Rs. 4, 50, 000/out of the sum of Rs. 5, 00, 000/in the name of Biswanath Bhuwalka representing the fixed deposits were the concealed income of the assessee firm for the relevant previous year for the assessment for the yearHigh Court came to the conclusion that the materials on the record were not sufficient for holding that the amount of Rs. 4, 50, 000/out of the deposit in the name of Biswanath Gupta belonged to the appellant. But so far as the other deposit of Rs. 5, 00, 000/was concerned which stood in the name of Raghunath Prasad the High Court came to the contrary conclusion and the question was accordingly answered. We are concerned in the present appeal only with this part of the question referred to the High Court which has been answered against the assessee.

Reasoning: The Tribunal had drawn the first inference. It was not possible, therefore, for the High Court not to accept the conclusion of the Tribunal. About the other amount of Rs. 4, 50, 000/out of the deposit in the name of Biswanath the High Court did not find that the materials on the record were sufficient for holding that the money belonged to the appellant.6. The sole argument that has been addressed on behalf of the appellant is that there was hardly any justification for the High Court making a distinction between the two deposits, namely, the one in the name of Biswanath and the other in the name of Raghunath. The deposits were made in the same manner and in similar circumstances and the overdraft facilities were obtained by the appellant on the basis of both the fixed deposits. In the individual assessments also of both these persons their explanation had been accepted by the respectiveauthorities about the source of the funds from which they made the deposits. It has also been emphasised that Raghunath was running his own business and that his explanation had been fully accepted in his individual assessment and the income tax authorities could not sit in appeal over the decision in his assessment which was final and in which a definite finding had been given that the money belonged to him. All these matters have been fully dealt with in the judgment under appeal and we are unable to accede to the contention that no distinction could be made between the deposit which stood in the name of Biswanath and the amount which was deposited in the name of Raghunath.