ROSHAN-DI-HATTI versus COMMISSIONER OF INCOME TAX

Citation: [1977] 3 S.C.R. 153 · Decided: 08-03-1977 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Appeal(s) allowed

Judgment (excerpt)

ROSHAN-DI-HATTI 
v. 
COMMISSIONER OF INCOME TAX 
March 8, 1977 
I 5 3 
[P. N. BHAGWATI, R. S. SARKARIA AND S. MURTAZA FAZAL Au, JJ.J 
Income Tax Act 1922-Sec. 34(1) (a)-Escaped income-Ueassess111ent-
Burden of '{)~oaf about source of inco1ne-Finding of facts of the Tribunal can 
be interfered under what circumstances-Conclusion without any 1naterials-
No person act1nf; judicially and properly instructed as to the relevant law\ would 
co1ne to det:?nnilrntivn-lncon1e rax Appellate Tribunal-Whether Tribunal can 
ask questions to assessee informally-Whether part of record-lncon1e Tax 
Apvel!ate Tribunal Rules 29, 30 and 31. 
The assessee,. a llindu Undivided Family, was carrying on business in gold 
nnd jewellery ni Lahore till June 1947. 
In view of the impending partition of 
Jndia, Roshan La] d,ecided to move out of Lahore and accordingly transferred 
sums of Rs. 12,094/-, Rs. 13,000/- and Rs. 6,000/- from Lahore Banks to New 
Delhi Banks. 
He left Lahore and proceeded to Mussoorie in June, 1947. 
On his way, he stopped at Amritsar for a few days and opened an account with 
the Imperial Bank of India with a view to obtaining· a locker in the 
Safe 
Deposit Vault but a locker was not ·available and hence he denosited a trunk 
\Vhich he had brought from Lahore containing gold ornaments·, jewellery and 
cash with the Imperial Bank of India. The assesSee 
came to Delhi in 
October, l 947. and rented <! house. 
In February, 1948, he succeeded 
in 
securing business premises "and started business on 30.3.1948. 
The first entry 
in the books of account on 30.3.1948 showed gold ornaments of Rs. 1,19.320/-, 
Gold Rawa Rs. 1,69,020/- Stones worth Rs. 4,000/- Bank balance ""'ith the 
Imperial Bank of India, Delhi Rs. 35,053/- Bank Balance with Hindustan 
Commercial Bank, Delhi Rs. 221/- and Cash of Rs. 2,800/. 
The assessee 
thus brought in an aggregate capital of Rs. 3,33,414/- in the 
business on 
30.3.1948. 
Jn 1957, it came to the notice of the Income Tax Officer that 
the assessee had made considerable income in his gold and jewellery business 
but had failed to pay any tax on such income and hence issued a notice to the 
assessec under s. 34(1)(a) of the Indian Income Tax Act, 1922, for bringing 
the income of the a:;sessee for the assessment year 1948-49 to tax. 
The 
assessee filed his return. 
In the course of the assessment proceedings 
the 
I.T.O. ca1led upon the assessee to explain the nature and source of the capital 
of Rs. 3.33,414/-. 
The assessee contended that he brought the gold 
Rawa, 
ornarnenfs 
and 
cash reoresenring the capital when 
he migrated from Lahore and they were 
kept in -a sealed trunk with the bank at Amritsar and thereafter brought over 
ro Delhi and deposited in the Safe De_posit Vault of Hindustan Commercial 
Barik nt Ddhi. 
When the business of the assessee was commenced, 
he 
surrendered the locker and brought the entire gold, jewellery and 
cash 
into 
the business. 
The assessee observed that till he started his business in March 
1948, 
neither the :-i.ssessee nor Roshan Lal had any other business or means of income 
fr0n1 \vhic;h the amount of Rs. 3,33,414/- could have been earned. 
The 
assessee examined some witnesses. 
The ITO also examined the brothers of 
Roshan Lal who stated that the father of Roshan Lal was a man of ordinary 
means who \Vas almost reduced to penury by about 1940 and that he 
had 
given a sum of Rs. 2000/- to his son Roshan Lal for starting gold and jewellery 
business in 1935 and he had also subsequently lent some monies 
to 
Roshan 
Lal on nominal interest. 
The Income Tax Officer rejected the explanation 
offered by the assessee and came to the conclusion that it was not possible to 
believe that the assessee had been able to accumulate capital to the extent of 
Rs. 3.33,41·f/- out of income from the business carried on. 
The Income Tax 
Officer gave credit for a sum of Rs. 20,000 /- and treated the balance of Rs. 
A 
B 
c 
D 
E 
F 
G 
H 
154 
·SUPREME COURT REPORTS 
. [1977] 3 S.C.R. 
A 
3,30,41-4/- as income of the assessee 
from undisclosed source. On appeal, 
the Appellate Assistant Commissioner allowed a further sum of Rs. 80,000/-
on the fnl!o\v1ng grounds : 
B 
c 
D 
(1) That the 
assessee 
transferred a 
sum of 
Rs. 
12.004/-, 
Rs. 13.000/- and Rs. 6.000/- from Banks as Lahore 
to the 
Bank at New Delhi. 
This shows that the assessee was not a 
man of very small means while he was at Lahore. 
(2) H.;- was having accounts in 4 different Banks and a ma

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