Case: Sovachand Baid Vs. Commissioner of Income Tax

2. The appellant was assessed tofor the yearent British subject, and out of the proceedings of this assessment the present appeal arises. The relevant accounting year was the period from November 6, 1945 to April 9, 1946. The appellant was a resident of Ratangarh in the Princely State of Bikanere outside what was British India. On November 6, 1945 he started a business in Calcutta, the accounts of the first year of which were closed on April 9, 1946. On January 19, 1946 the appellant came to Calcutta with 11 ten thousand rupees and 158 one thousand rupees currency notes which he encashed a few days later through the Punjab National Bank under the provisions of the High Denomination Notes Order promulgated earlier in the same month. In his books of account of the Calcutta business for the relevant accounting year, the appellant credited the value of the notes, namely, Rs. 2,68,000 as capital received from him. Upon theofficer asking him to explain how he came across these notes, the appellant said that the money had come to him from his father who had died in 1942. The Incometax 0fficer took the view that the explanation of the appellant was not supported by his books of account and other documents produced by him. He thereupon held that the amount represented by the notes was income from undisclosed business activities and was therefore taxable.3. The appellant then took an appeal to the Appellate Assistant Commissioner, who came to the conclusion that the books of account and other documents produced by the appellant showed that the notes formed part of the assets that devolved on the appellant upon his fathers death. He, therefore, allowed the appeal and deleted the sum of Rs. 2,68,000 from the assessment.4. The Commissioner ofthen appealed from this decision to the Appellate Tribunal. The Tribunal for reasons to which we shall presently refer, allowed the appeal in part but held that in the circumstances disclosed a sum of Rs. 1,28,000 had to be taken as income and the balance of Rs. 1,40,000 was properly regarded as capital. The Tribunal, therefore, modified, the assessment order by including in it a sum of Rs. 1,28,000 as undisclosed income.

Court's reasoning:
The learned counsel for the appellant as not been able to show that the Tribunals remarks on the Ratangarh books of account were wrong on the facts. He directed his attention largely in establishing that the reasons given by the Appellate Assistant Commissioner for accepting the Ratangarh books as genuine, were correct and preferable.That clearly is a matter into which we cannot go for we cannot appraise the evidence afresh. We are unable to say that the reasons given by the Tribunal for the view that the books are not genuine are unfounded or that there was no evidence to support the view that the Tribunal took. In our view, it is possible to find that the Ratangarh books were not genuine for the reasons mentioned by the Tribunal. We do not propose to consider what view we would have arrived at on the materials available as to the genuineness of the books, for that would be entirely irrelevant. It is enough to say that the view taken by the Tribunal is a reasonably possible view on the evidence adduced and that it cannot be said that that view is not supported by the evidence or was unreasonable.g come to the conclusion that the books of account of Ratangarh could not be accepted, the Tribunal went on to observe that from 1926 to 1945 the only source of income of the appellant and his father was interest earned on moneys deposited in bank. It came to that conclusion apparently because the books of account produced did not disclose any other source of income. The Tribunal also found that about 1945 the appellant had in his bank a sum of about Rs. 8 lacs to Rs. 10 lacs and that being so, in view of the only source of income mentioned earlier, it was impossible to believe that he had another seven lacs of rupees in notes in December, 1945 as alleged by him. The Tribunal then held that in these circumstances, the appellants uninvested cash was likely to be between Rs. 1,50,000 and Rs. 2,00,000 out of which a sum of Rs. 1,40,000 at the most could have been in high denomination notes. In this view of the matter the Tribunal held that out of the high denomination notes of the total value of Rs. 2,68,000 encashed by the appellant in January, 1946, notes worth Rs. 1,40, 000 could have been his capital assets and the balance of Rs. 1,28,000 must have been his undisclosed income. The Tribunal therefore directed that the appellant muston the sum of Rs. 1, 28,000. The learned counsel for the appellant criticised this part of the Tribunals judgment as based on mere speculation.We cannot help feeling that this criticism may be partly justified but we do not appreciate how it assists the appellant. It does not, in our view, in any way affect the Tribunals finding on the question as to whether the appellant had proved that the notes had devolved on him on his fathers death. The Tribunal in this part of the judgment was really making a concession to the appellant and gave a benefit to him to which he was strictly not entitled in view of the Tribunals findings on the evidence led by the appellant. We are unable to hold that the Tribunals judgment is liable to be set aside because it held that the whole of Rs. 2, 68,000 was not taxable.13.Lastly, the learned counsel argued that even assuming that the notes formed part of his income, the appellant could not be taxed in respect of them without a finding that they represented income which had arisen or accrued in British India as he had been assessed as a person not residing in British India and that finding had not been made.We are unable to allow this contention to be raised, for it had never been mentioned at any earlier stage of the proceedings. The learned counsel drew our attention to a portion of the judgment of the Appellate Assistant Commissioner to show that the point had been raised earlier. We do not agree that there is anything in the judgment of the Appellate Assistant Commissioner to show that the point had been taken earlier. The portion referred to dealt with the remittances to British India of interest earned in Bikanere and not with the notes with which we are concerned. As the question had clearly never been raised by the appellant at any earlier stage we would not be justified in allowing him to .raise it now.