Summarize the following court judgment. Civil Appeal Nos. 761 & 762. of 1971. (Appeals by Special Leave from the Judgment and order dated the 14 3 1969 of the Patna High Court in M.J.C. Nos. 182 and 183 of 1962). B. Sen	 T. A. Ramachandran and section P. Nayar	 for the appellant. Hardayal Hardy	 and Bishamber Lal	 for respondent. The Judgment of the Court was delivered by GOSWAMI	 J. These two appeals by special leave are directed against the common judgment of March 14	 1969	 of the Patna High Court in the matter of two references under section 66(1) of the Indian Income tax Act	 1922	 relating to assessment years 1953 54 and 1954 55 of the respondent (hereinafter to be referred to as the company) . The case has a rather chequered history as will appear from the facts narrated below: The company at the material time was a private limited company and at the end of the relevant previous years	 namely	 August 31	 1952 and August 31	 1953	 the shareholding was as follows: Number of shares on: 31 8 1952 31 8 1953. Sri Ashok Kumar Jain	 10	000 10	000 Managing Director. Sri R. Sharma Director 10 10 3. Sri N. C. Jain Director 10 10 4. Sri section P. Jain 10	000 10	000 5. RamaJain 10	000 10	000 6. Sri Alok Prakash Jain 10	000 10	000 7. Sri Rishabh Investment Ltd 5	000 5	000 8. Dalmia Jain Co. Ltd. 2	000 2	000 9. Universal Bank of India Ltd 980 980 10.Ashoka Agencies Ltd. 2	000 2	000 50	000 50	000 401 Of these shareholders Rama Jain is the wife of section P. Jain and Alok Prakash Jain and Ashok Kumar Jain are the sons of section P. Jain and Rama Jain. Ashok Kumar Jain (briefly A. K. Jain)	 the Managing Director	 attained majority on March 5	 1952	 while Alok Prakash Jain was a minor during both the accounting years. The three companies	 namely	 Rishabh Investment Ltd.	 Dalmia Jain Co. Ltd. and Universal Bank of India Ltd.	 are companies to which the provisions of action 23A of the Income tax Act	 1922 (briefly the Act) prior to its amendment by the Finance Act 1955	 applied. section P. Jain was the principal shareholder of the Universal Bank of India Ltd. holding 980 shares. Ashoka Agencies Ltd. with 2000 shares was a company to which admittedly section 23A did not apply. R. Sharma and N. C. Jain holding 10 shares each were employees	 N. C. Jain being the Secretary of section P. Jain. The Income tax officer by his orders of September 25	 1957 and October 30	 1957	 held that section 23A was attracted in the case of the company for both the years. On appeal	 the Appellate Assistant Commissioner remanded the matter back to the Income tax officer for a finding on certain additional facts. The Income tax officer in his remand report submitted certain additional facts to the Appellate Assistant Commissioner who in due course affirmed the orders of the Income tax officer. The company appealed to the Income tax Appellate Tribunal	 Bihar	 at Patna. The Tribunal allowed the appeal by its order of January 26	 1961 (7) and held that section 23A was not applicable to the company in respect of both the assessment years. At the instance of the Commissioner Income tax	 Bihar	 the following question was referred by the Tribunal to the High Court: "Whether on the facts and circumstances of the case the Tribunal was justified in holding that the provisions of section 23A of the Income tax Act were not applicable to the assessee company for the assessment years 1953 54 and 1954 55" ? The High Court by its order of December 9	 1965	 in view of two decisions of this Court	 namely	 Raghuvanshi Mills Ltd. vs Commissioner of Income tax	 Bombay	(l) decided on December 7	 1960 and Commissioner of Income tax Bombay vs Jubilee Mills Ltd.(2) Bombay	 decided on September 1	 1962	 directed the Tribunal to submit a supplementary statement of case to it: "Whether bearing in mind the principles laid down by the Supreme Court in Raghuvanshi Mills Ltd. vs Commissioner of Income tax (41 Income Tax Reports 613) and Commissioner of Income tax	 Bombay City vs Jubilee Mills Ltd. (48 Income Tax Reports 9) Shrimati Rama Jain and Sri Ashok Kumar Jain	 or either of them could be safely taken to have acted in concert with Sri section P. Jain during the years in question	 in respect of the affairs of the assessee company" ? (1) ; (2) [1963] Supp. 1 S.C.R. 83. 402 The High Court also directed that "the Tribunal may take additional evidence	 if it considers it necessary to enable it to state the supplementary case as directed above". The Tribunal thereafter	 after hearing the parties	 submitted a supplementary statement of case to the High Court on September 30	 1966. A controversy arose before the Tribunal with regard to entertainment of additional evidence which the Revenue wanted to adduce before it	 particularly in view of the direction of the High Court	 but the Tribunal did not accede to the request and additional evidence was not received. The matter then came up before the High Court resulting in the impugned order against the Revenue. Hence these two appeals by special leave. The Revenue reiterated its grievance before the High Court about the Tribunal 's refusal to entertain additional evidence without success and the matter is no longer in controversy in view of a decision of seven Judges of this Court in The Keshav Mills Co. Ltd. vs Commissioner of Income tax	 Bombay North	(1) affirming the earlier decisions of this Court in the case of the New Jehangir Vakil Mills Ltd. vs The Commissioner of Income tax	 Bombay North( ') and The Petlad Turkey Red Dye Works Co. Ltd. Petlad vs The Commissioner of Income tax	 Bombay	 Ahmedabad(3). It is now well settled that when the Tribunal has disposed of the matter and is preparing a statement of the case either under Section 66(1) or under section 66(2)	 there is no scope for any further or additional evidence and the power of the High Court under section 66(c) can be exercised only in respect of material and evidence which has already been brought on the record. It was contended on behalf of the Revenue before the High Court that the finding of the Tribunal was perverse. Mr. Sen appearing on behalf of the Revenue before us has fairly and	 in our opinion	 rightly not pressed this submission before us. Similarly on behalf of the company also it was contended before the High Court that there was no principle of law involved in drawing any inference in the cases answer to the plea of the Revenue that the finding whether section 23A was not attracted was a mixed question of law and fact. It is not possible to hold that the question referred to the High Court is not a question of law as undoubtedly on the statement of case an important question of law does arise and the composite reference was competent. The question that arises for consideration is whether on the facts and circumstances that are established before the Tribunal the company in the two assessment years can escape the reach of section 23A of the Act. (1) ; (2) ; (3) [19631 Supp. 1 S.C.R. 871. 403 Section 23A prior to its amendment in 1956 and so far as it is material read as follows: "23A (1) . Power to assess individual members of certain companies. Where the Income tax officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company up to the end of the sixth month after its accounts for that previous year are laid before the company in general meeting are less than sixty per cent	 of the assessable income of the company of that previous year	 as reduced by the amount of income tax and super tax payable by the company in respect thereof he shall	 unless he is satisfied that having regard to losses incurred by the company in earlier years or to the smallness of the profit made	 the payment of a dividend or a larger dividend than that declared would be unreasonable	 make with the previous approval of the Inspecting Assistant Commissioner an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income tax purposes and reduced by the amount of income tax and super tax payable by the company in respect thereof shall be deemed to have been distributed as dividends amongst the share holders as at the date of the general meeting aforesaid	 and thereupon the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income: * * * * Provided further that this sub section shall not apply to any company in which the public are substantially interested Explanation. For the purpose of this sub section	 a company shall be deemed to be a company in which the public are substantially interested if shares of the company . carrying not less than twenty five per cent of the voting power have been allotted unconditionally to	 or acquired unconditionally by	 and are at the end of the previous year beneficially held by the public . and if any such shares have in the course of such previous year been the subject of dealings in any stock exchange or are in fact freely transferable by the holders to other members of the public '`. In this case the company did not declare any dividend for the assessment year 1953 54. In the next assessment year 1954 55	 only a sum of Rs. 50	000/ was distributed as dividend. It is not in dispute that the company had sufficient requisite assessable income out of which sufficient or larger dividend could have been paid. There is no dispute that the payment of an adequate dividend for the first year and larger dividend for the next year would have been 404 at all unreasonable in respect of these two assessment years. The only controversy between the parties is with regard to the exclusion of the company from the application of section 33A in view of the third proviso read with the Explanation. In other words	 is the company one in which the public are substantially interested ? It could be so in terms of the Explanation if 25 per cent shares of the company or more had been allotted unconditionally to	 or acquired unconditionally by	 and are at the end of the previous year beneficially held by the public and if any such shares in the course of such previous year were in fact freely transferable by the holders to other members of the public. It was not in dispute that the shares of the company were in fact freely transferable by the holders to other members of the public. The controversy	 therefore	 is within a very narrow compass	 namely	 whether	 as stated earlier	 the company is one in which the public has 25 per cent or more shares allotted unconditionally to	 or acquired unconditionally by it and are at the end of the previous year beneficially held by it. It may be mentioned that section 23A(l)	 as it stood before the amendment by the Finance Act 1956	 did not authorise amalgamation of the shares held by "relatives" as if they represented a single shareholder. It will	 therefore	 be a question of fact and a matter of inference in each case whether any "relatives" forming themselves into a company acted as a group or block in concert in controlling the affairs of the company. Relationship would not	 per se	 lead to such a conclusion. The Tribunal in its order observed: "Sri A. K. Jain became major on 5 3 1952. Therefore	 as at the end of the two previous years	 his holding of 10	000 shares cannot ipso facto be amalgamated with the shareholding of Sri section P. Jain as if he was the nominee of his father The shareholding of 10	000 shares by Mrs. Rama Jain has also to be left out of account since	 as already observed	 there is no finding that Sri section P. Jain provided the consideration for the acquisition of 10	000 shares held by her. Assuming	 therefore	 that Sri section P. Jain was controlling shareholder	 the shares held by the members of the 'public ' which would include Sri A. K. Jain and Mrs. Rama Jain would be at least 22	000 shares". " G In the supplementary statement of case filed by the Tribunal enclosing various orders and other documents	 it is shown that section P. Jain was Director of the company from August 3	 1950 to September 25	 1950. He was appointed Managing Director from June 6	 1953	 subject to approval of the Government. A. K. Jain was Director of the company from August 3	 1950 even when he was a minor (his date of birth being March 5	 1934) and was appointed Deputy Managing Director from June 6	 1953	 subject to approval of the Government. R. Sharma was Director from 3 8 1950 to 405 7 9 1956. He was Secretary of R. K. Dalmia and employee of Sahu Jain Limited. H. C. Jain was Director from 25 9 1950 to 25 3 1954. He was Secretary of section P. Jain and employee of Ashoka Agencies Limited. From the above it appears that the Deputy Managing Director and the two other Directors held amongst themselves 10	000 shares and out of the balance 30	000 shares were held by the relations of the Managing Director	 namely	 by the father	 the mother and the minor brother. It also appears that section P. Jain along with Ashok Kumar Jain	 R. Sharma and N. C. Jain were the promoters and subscribed to the Memorandum of Association at the start of the company in July 1950. It also appears Ashok Kumar Jain	 Director	 was getting a remuneration of Rs. 6	000/ per month w.e.f. September 1951 in accordance with the resolution passed in an extra ordinary general meeting of the shareholders on October 1	 1951. At the meeting of the Board of Directors dated November 29	 1950	 Ashok Kumar Jain and R. Sharma	 Directors of the company	 were authorised to execute managing agency agreements with different companies. Ashok Kumar Jain was generally presiding over the meetings from November 1950. The Tribunal further observed in its statement of case that "A perusal of the minutes or the proceedings of the general meetings does not lead to any inference that Sri section P. Jain	 Smt. Rama Jain and Sri A. K. Jain were necessarily acting in concert. On the other hand	 it appears that despite his young age	 Sri A. K. Jain seems to have been taking active interest in the management of the affairs of the asses see company and the companies managed by it. Unless it is to be presumed that because of relationship	 Sri section P. Jain	 Smt. Rama Jain and Sri A. K. Jain should be regarded as acting in concert	 there is no other material on record on the basis of which such a conclusion could be supported". The Tribunal also observed: "that in spite of opportunity afforded by the Appellate Assistant Commissioner	 the Income tax officer had not brought on record materials to show that the voting rights of Mrs. Rama Jain or Sri A. K. Jain were controlled by Sri section P. G The Tribunal concluded by observing that " The revenue had failed to establish that Sri section P. Jain	 his wife and his son Sri A. K. Jain were acting in concert". Section 23A again came up for consideration before this Court in Commissioner of Income tax	 West Bengal vs East Coast Commercial 406 Co. Ltd.(l). This Court made a reference to the Raghuvanshi Mills ' case (supra) where it was observed: "The word 'public ' is used (in the Explanation) in contradistinction to one or more persons who act in unions and among whom the voting power constitutes a block. If such a block exists and possesses more than seventy five per cent of the voting power	 then the company cannot be said to be one in which the public are substantially interested . the test is first to find out whether there is an individual or . group which controls the voting power as a block. If there be such a block	 the shares held by it cannot be said to be 'unconditionally ' and 'beneficially ' held by members of the public". This Court further observed: " The Tribunal had to decide in the first instance whether there was a group of persons acting in concert holding a sufficient number of shares which may control the voting as a block. But the existence of a block is not decisive. If there be a group of persons holding control over voting	 the Company would still be a Company in which the public are substantially interested	 if twenty five per cent or more of the voting power has been allotted unconditionally to and beneficially held by the public and the shares were in the previous years subject of dealings in any stock exchange in the taxable territories or were in fact freely transferable by the holders to other members of the public. The two enquiries are distinct". This Court further referred to Jubilee Mills ' case (supra) and Raghuvanshi Mills ' case (supra) and observed as follows: "But in Commissioner of Income tax	 Bombay City l vs Jubilee Mills Ltd. (supra) this Court held that no direct evidence of overt act or concert between the members of the group having control over voting was necessary to prove that the Company was not one in which the public were substantially interested. It was observed in Raghuvanshi Mills ' case (supra) that 'in deciding if there is such a controlling interest	 there is no formula applicable to all cases. Relationship and position as director are not by themselves decisive. If relative act	 not freely	 but with others	 they cannot be said to belong to that body	 which is described as 'public ' in the Explanation '. In Jubilee Mills ' case (supra) this Court elaborated those observations and stated: The test is not whether they have actually acted in concert but whether circumstances are such that human experience tells us that it can safely be taken that they must (1)[1967] I S.C.R. 821. 407 be acting together. It is not necessary to state the kind of evidence that will prove such concerted actings. Each case A must necessarily be decided on its own facts". This Court finally in the above East Coast Commercial Company 's case concluded as follows: "On an analysis of the reasons recorded by the Tribunal and the High Court	 it is clear that the Tribunal held that the Kedias did not form a controlling group because there was no evidence that they actually controlled the voting	 even though they held more than seventy five per cent of the shares issued by the Company: the High Court observed that the members of the Kedia family held 4	016 shares of the Company and were in a position to control the affairs of the Company	 but there was no evidence to show that they did in fact act in concert and controlled the affairs of the Company as a block. But	 as already observed	 if the members of the Kedia family formed a block and held more than seventy five per cent of the voting power	 it was not necessary to prove that they actually exercised controlling interest. It is the holding in the aggregate of a majority of the shares issued by a person or persons acting in concert in relation to the affairs of the Company which establishes the existence of a block. It is sufficient	 if having regard to their relation etc.	 their conduct	 and their common interest	 that it may be inferred that they must be acting together; evidence of actual concerted acting is normally difficult to obtain	 and is not insisted upon". We may also observe in passing that it does not appear that the East Coast Commercial Company 's case (supra) was referred to during the hearing in	 nor was lt noticed by	 the High Court. The Tribunal in the supplementary statement observed as follows: " Unless it is to be presumed that because of relationship	 P Sri section P. Jain	 Smt. Rama Jain and Sri A. K. Jain should be regarded as acting in concert	 there is no other material on record on the basis of which such a conclusion could be supported". The High Court also observed to the same effect: " It may be that in view of the relationship of the parties as to a group consisting of the father	 two minor sons and their mother	 a possible inference was that the relationship was such that they could reasonably be taken to be acting as a group in concert. " but "the assessee could not be placed in the category of such a company accordingly because of close relationship". Keeping in the forefront the test laid down by this Court in East Coast Commercial Company 's case (supra)	 Mr. Sen on behalf of the 408 Revenue submitted for our consideration the following facts and circumstances from which	 according to counsel	 an inference can be reasonably drawn about the controlling power in a block confined to a family group holding more than 75 per cent shares: (1) 80 per cent of the share capital (40	000 out of 50	000) is held by section P. Jain	 his wife and two sons	 one of whom was a minor throughout the period of the two accounting years and the other son	 A. K. Jain	 for a portion of the period upto March 1952. The remaining 20 per cent of the shares was held by the companies which were under the control by section P. Jain and out of which 20 shares were held by two employees under the control of section P. Jain. (2) A. K. Jain was appointed as Director in the company in August 1950 when he was a minor	 aged 16 years	 and he became the Managing Director on 1 2 1954 at a salary of Rs. 6	000/ per month. According to counsel this could not have been possible if he was not the son of the controlling shareholder	 section P. Jain. (3) section P. Jain who was a Director resigned making room for his Private Secretary N. C. Jain for appointment as Director. (4) During the assessment year 1953 54 the assessee company claimed Rs. 2	02	500/ as loss in a transaction in hessian through Messrs Kabra & Co. in settlement of August 18	 1952	 and the same amount was shown as profit in hessian through the same broker by Smt. Rama Jain wife of section P. Jain in the settlement. (5) section P. Jain	 A.K. Jain	 R. Sharma and N. C. Jain were the promoters of the company and were the signatories to the Memorandum of Association. Mr. Hardy	 the learned counsel for the respondent	 on the other hand	 replied to the submissions as follows: (1) Rama Jain and A. K. Jain are independent assessees. The minutes of the Board 's meetings clearly show A. K. Jain as a competent Director taking independent decisions. Mere relationship	 therefore	 would not lead to the conclusion that these two shareholders acted with section P. Jain in concert. He	 however	 admits that section P. Jain may be said to control the voting power of the minor son	 Alok Prakash Jain	 as his natural guardian. According to Mr. Hardy if Rama Jain and A. K. Jain are holding 20	000 shares out of 50	000	 they cannot be held to be acting in concert with section P. Jain and section 23A will not be attracted. (2) With regard tn the second submission of Mr. Sen	 Mr. Hardy submits that there is sufficient evidence 409 in the record	 which is even referred to in the further A statement of the case	 that A. K. Jain was an in dependent shareholder and was not under the control of section P. Jain or any other Director or shareholder. He further submits that there is no evidence whatsoever that the money for purchasing the shares of A. K. Jain or even of Rama Jain was advanced by S P Jain. (3) With regard to the third submission of Mr. Sen	 Mr. Hardy had to admit that N. C. Jain was Director from 1950 to 1954 and section P. Jain was Director from August 3	 1950 to September 25	 1950 and section P. Jain became Managing Director of the company on June 6	 1953	 subject to the approval of the Government on a remuneration of Rs. 8	000/ per month and A. K. Jain was appointed as Deputy Managing Director on a remuneration of Rs. 6	000/ per month subject to the approval of the Central Government (vide minutes of Board 's meeting of June 6	 1953). According to Mr. Hardy	 appointment of Directors or even Managing Director is a regular matter of the company and no particular significance should be attached to these appointments. (4) With regard to the fourth. submission Mr. Hardy submits that such transactions are common with brokers and even the purchaser is not known in most of the cases. Hence no undue importance should be attach ed to the hessain transaction so as to influence the conclusion. It is also pointed out that there was no controversy about the genuineness of the hessian transaction. We are of the view that the genuineness of the aforesaid transaction is	 however	 irrelevant for the purpose of considering its effect in acting in concert by the shareholders. (5) With regard to the fifth submission Mr. Hardy submits that it is true that section P. Jain	 A. K. Jain R. Sharma and N. C. Jain were the promoters of The company but admittedly two of them	 namely	 R. Sharma and N. C. Jain were outsiders. That they were employees would not affect their character as shareholders of the company or even as Directors. It is clear that this company was a family concern with only 20 shares out of 50	000 shares allotted to two outsiders who again happened to be paid employees. The presence of these two outsiders is of the least significance in the matter of management of the affairs of the company. It is true that most of the meetings of the Board of Directors were presided over by A. K. Jain with either of the two employees or one of them attending the same. It must	 how ever	 be noted that A. K. Jain became a Director even when he was a minor aged 16 years. He would not ordinarily be able to play the role he is supposed to have done in the Board 's meetings unless section P. 410 Jain was confident that the Board was carrying out his mandates with regard to the affairs of the company. It is also true that A. K. Jain and the other Directors were authorised to sign agreements on behalf of the company	 but this is not of great significance since this was in pursuance of a decision of the Board 's meeting which could not have been passed but for the concurrence of section P. Jain. There is no evidence whatsoever to show that Rama Jain	 wife of section P. Jain	 was at all independently acting. When a company is composed mostly of family members owning lion 's share in the entire share capital of the company the onus to keep clear of the reach of section 23A(l) will be on the shareholders by adducing some positive evidence about the absence of control by the controlling shareholders. So far as Rama Jain is concerned it is not possible to hold that section P. Jain would not be able to control his wife 's voting power along with that of his minor son	 Alok Prakash Jain. It is true that mere relationship or being a Director is not decisive. As a matter of fact no single factor can be decisive but having regard to the totality of the circumstances revealed in the case and the conduct of the transactions of the company taken with the relationship which	 in the circumstances of the case is not a negligible element	 we are clearly of the opinion that it is a case in which it cannot be said that the 'public ' is substantially interested in 25 per cent or more shares of the company. Even if we allow A. K. Jain to be a member of the 'public '	 he only holds 10	000 shares and taken with 2	000 shares of Ashoka Agencies Ltd.	 the total shareholding comes only to 12	000 shares	 that is to say	 500 less than the minimum shareholding requisite to earn the benefit of the third proviso to section 23A read with the Explanation. Further	 between August 1]	 1951 and May 1	 1952	 A. K. Jails and two employee Directors	 the latter having a modicum of 10 shares each	 apparently took all decisions for the company in the Board 's meetings. This is not ordinarily possible but for collaboration with the major shareholders. This is a case where more is meant than meets the eye. We are unable to hold in this case	 in absence of any reliable evidence to the contrary	 that the voting power of the three Directors was free and uninhibited and not within the orbit of control of the other major shareholders	 section P.` Jain and Rama Jain acting in concert. It is a clear case of all the shareholders acting in concert and in unions and the two employee Directors were merely dummies. There is not the slightest inkling of 'public ' being interested	 far less substantially interested	 in this company. There was no one who could come within the term 'public ' outside the ring of the shareholders acting in concert for their own ends with a common purpose. There is no evidence whatsoever in this case that the shareholders did not cohere together in the matter of transaction of the company 's affairs. When the reality is manifest some reliable evidence within the special knowledge of the assessee must be forthcoming from its side to contradict the obvious in order to be covered by the exception. This has not happened in this case. 411 Unless the two employees were nominees of the major shareholders it is ordinarily absurd to suppose that they could aspire to be and become Directors of the company. The Appellate Assistant Commissioner in his order	 which is annexed with the statement of the case	 mentions that "In fact Shri section P. Jain as a controlling shareholder had brought himself in as a Director of the company right from the inception of the company and was the first Director of the company from 3 8 SO to 25 9 50. From September 'SO to March '54	 however	 he temporarily gave up the directorship by putting in an employee as a nominee director	 Sri N. C. Jain	 for the intervening period so that there may be no hitch in the appellant company being appointed as Managing Agent of certain other companies under his control on which also Sri section P. Jain was a Director	 such as the Rohtas Industries Ltd.	 Bharat Collieries Ltd.	 section K. G. Sugar Ltd.	 Dehri Rohtas Light Railway Co. Ltd. and New Central Jute Mills Ltd. As soon as this objective was achieved	 Sri section P. Jain staged a come back as a Director of the appellant company on 25 3 54 when the nominee director Sri N. C. Jain re signed his directorship to make room for his master Sri section p Jain". The factual position	 not the opinion	 revealed in the above extract is more than eloquent with regard to the core of the company. Having regard to the intimate relationship of the shareholders	 with not the least evidence of any disconcert amongst them	 the ordinary expectation for individual profit in commercial undertakings	 natural reluctance to forego the same	 the history of the company and its continued smooth working in a manner which is normally inconsistent with anything other than full unison amongst the shareholders in decisions about the conduct of company 's affairs in common inter est of all	 this was a company of one paramount mind operating with out the least doubt. The Board 's meetings are evidence of a well organised	 well knit close unity of views in all affairs and which in ordinary course of human conduct would not have been at all possible but for a single or concerted action in the company 's management by a controlling group. When all the above conditions are present in a company	 the onus would be on the assessee to satisfy by some reliable evidence that what appears on the surface is that which is real. That is not to say that the Revenue has no burden to bring the case within the mischief of section 23A. Application of law cannot be bereft of commonsense. The object of section 23A being to prevent avoidance of super tax by the share holders by piling up the profits of the company in its own hands	 the facts and circumstances revealed in this case clearly bring the company within the reach of that section. We are unable to accede to the submission of Mr. Hardy in this case that because A. K. Jain and Rama Jain were independent assessees and A. K. Jain was pre siding in the Board 's meetings and as such was taking independent 412 decisions and was also doing extra work for the company in Calcutta on salary basis	 they should be held to be members of the 'public ' who were substantially interested in the company with the requisite shareholding for the purpose of the Explanation read with the third proviso. The High Court was therefore	 not right in answering the question in favour of the assessee and against the Revenue. We	 therefore	 answer the original question in the negative and the revised question in the affirmative both in favour of the Revenue. The appeals are allowed but we leave the parties to pay and bear their respective costs. P.H.P. Appeals allowed.

Sahu Jain was a private limited company during the assessment years l952 53 and 1953 54. All the shareholders of the company are the family member J of Mr. section P. Jain except two employees who held 20 out of 50	000 shares and excepting the three Companies which were also sister concerns. Under section 23A of the Income Tax Act	 1922	 prior to its amendment in the year 1955	 where the Income Tax officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any Company are less than 60 per cent of the assessable income of the company as reduced by the Income Tax and Super Tax payable by the company in respect there of	 he shall unless he is satisfied that having regard to the loss incurred by the company in earlier years or to the smallness of the profit made	 the payment of a dividend or a larger dividend than declared would be unreasonable	 make an order in writing that the undistributed portion of the income of the company of that previous year as computed for income tax purposes and reduced by the amount of income tax and supertax payable by the company in respect thereof shall be deemed to have been distributed as dividends amongst the shareholders. The proviso to the said section provides that the provisions of the section would not apply to any company in which the public are substantially interested if shares of the company carrying not less than 25 per cent of the voting power have been allotted unconditionally to or acquired unconditionally by the public or beneficially held by public. The Income Tax officer held that the provisions of section 23A were attracted in the case of the company for both the years. The Appellate Assistant Commissioner confirmed the order of the Income Tax officer. The Tribunal held that section 23A was not applicable to the company in respect of both the assessment years. The Tribunal held that unless. it is presumed that because of relationship Shri section P. Jain	 Smt. Rama Jain and Shri A. K. Jain should be regarded as acting in concert there is no other material on record on the basis of which such a conclusion could be supported. On a reference made by the Tribunal	 The High Court answered the question in favour of the assessee and against the Revenue. In an appeal by special leave the appellant contended: 1. 80 per cent of the share capital was held by section P. Jain and his wife and two sons. One of whom was a minor throughout the period and another for a portion of the period and that the remaining shares were held by tho company which were under the control of section P. Jain and that only 20 share out of 50	000 shares were held by two employees under the control of section P Jain. A. K. Jain was appointed as a Director when he was a minor and he became a Managing Director on a salary of Rs. 6	000/ per month when he was 20 years old. 3. section P. Jain who was a Director resigned making room for his Private Secretary for appointment as Director. The Company showed a loss of Rs. 2 lacs and odd in a transaction in hessian and the same was shown as profit by Smt. Rama Jain wife of section P. Jain. section P. Jain	 A. K. Jain. R. Sharma and N. C. Jain were the promoters of the company ant were signatories to the Memorandum of Association. 399 The respondent contended: 1. Smt. Rama Jain and A. K. Jain were independent assessees. A. K. Jain was taking independent decisions as a competent Director. Mere relationship would not lead to the conclusion that the said two shareholders acted in concert with section P. Jain. A. K. Jain was an independent shareholder and was not under the control of section P. Jain or any other Director or shareholder. N. C. Jain was Director from 1950 to 1954 and section P. Jain became Managing Director subject to the approval of the Government. A. K Jain was appointed as Deputy Managing Director on a remuneration of Rs. 6	000/ per month subject to the approval of the Central Government. The transactions like one of hessian are common transactions and no undue importance can be attached to it. Merely because some persons are promoters or employees of a Company that would not affect their character as shareholders of the Company. Allowing the appeals by special leave	 ^ HELD: 1. The controversy is whether the company is one in which the public has 25 per cent or more shares. [404C] 2. This Court held in the case of Commissioner of Income Tax West Bengal vs East Coast Commercial Co. Ltd.	 that the word 'public ' is used in the explanation to section 23A in contra distinction to one or more persons who act in unison and amongst whom the voting power constitute s a block. This Court also held that the Tribunal had to decide in the first instance wreathe there was a group of persons acting in concert holding a sufficient number of shares which may control the voting as a block. But the existence of block is not decisive. The company would still be a company in which public are substantially interested if 25 per cent or more of the voting power has been allotted unconditionally to and beneficially held by the public. This Court also held that the relationship and position as Director are not by themselves decisive. But if the relatives act not freely but with others they cannot be said to belong to the public. The test is not whether they have actually acted in concert but whether the circumstances are such that human experience tells us that it can safely be taken that they must be acting together. [406A	 C D	 H	 407A] 3. It is clear that this company was a family concern with only 20 shares out of 50	000 shares allotted to the two outsiders who again happened to be paid employees. The presence of these two outsiders is of the least significance in the matter of management of the affairs of the company. A. K. Jain became a Director even when he was a. minor. He would not ordinarily be able to play the role he is supposed to have done in the Board meetings unless section P. Jain was confident that the Board was carrying out its mandates with regard to the affairs of the Company. The fact that A. K. Jain and others were authorised to sign agreements on behalf of the Company is not of great significance. There is no evidence whatsoever to show that Rama Jain wife of section P. Jain was at all independently acting. [409G	 H	 410] 4. When a company is composed mostly of family member owning lion 's share in the entire share capital of the company the onus to keep clear of the reach of section 23A will be on the shareholders by adducing some positive evidence about the absence of control by the controlling shareholders. [410 B] 5. No single factor can be decisive but having regard to the totality of the circumstances revealed in the case and the conduct of the transactions of the company taken with the relationship which in the circumstances of this case is not a negligible element this Court is dearly of the opinion that it is a case in which it cannot be said that the public is substantially interested in 25 per cent or more shares of the company. [410D E] 6. Even if A. K. Jain is said to be a member of the public	 his shares together with the shares of Ashoka Agencies Limited is 500 less than the r minimum shareholding requisite to earn the benefit of the third proviso to section 23A read with the explanation. [410 E] 400 7. Between August 11	 1951 and May 1	 1952	 A. K. Jain and 2 employee Directors apparently took all decisions for the company in the Board 's meetings. This is not ordinarily possible but for collaboration with the major shareholders. This is a case where more is meant than meets the eye. [410E F] 8. It is A clear case of all the shareholders acting in concert and in unison and the two employee Directors were merely dummies. There is not the slightest inkling of the public being interested far less substantially interested in this company. [410G] 9. The intimate relationship of the shareholders	 with not the least evidence of disconcert amongst them	 the ordinary expectation for individual profit in commercial undertaking	 the history of the company and its continued smooth working is inconsistent with anything but full unison amongst the shareholders. The Board 's meetings are evidence of well organised	 well knit	 close unity of vie vs in all affairs which in ordinary course of human conduct would not have been at all possible but for a single or concerted action in the company management by a controlling group. [410D F]