1. ' HAIDER ALI PIRZADA, J.-These are income-tax references under section 66 (1) of the Income-tax Act, 1922 (hereinafter called the Act). In all of them the parties are the same. So also are the essential facts and the question to which they give rise. The only difference is that they pertain to different assessm ent years for purpose of Income-tax. We proceed to dispose of all of them by this common judgment.
2. ' The facts are simple and short. The applicant is a partnership firm carrying on business of ginning and pressing cotton with its principal place of business at Tando Adam. For the account year ending on 31st August, 1969, 31st August, 1970 and 31st August, 1971, assessable in the assessment years 1970-71, 1971-72 and 1972-73, the applicant filed its return of income on due dates.
3. ' The Income-tax Officer fixed 29th May, 1972 for examination of account books and for furnishing some details in respect of all the above three assessment years. The applicants authorised representative duly appeared and filed the details. After some discussion the Income-tax Officer adjourned the cases sine die. The Income-tax Officer after lapse of one year fixed the cases on 9th June, 1973 for proceeding in respect of the above assessment years. On that date authorised representative of the applicant attended, after examination of the accounts the Income-tax Officer recorded an order on the order sheet whereby the applicant was required to prove the genuineness of the cash credits standing in the names of 21 and 15 parties by 22nd June, 1973.
4. While in the assessm ent year 1972-73 the Income-tax Officer asked the applicant to prove the genuineness of 6 parties by producing them in person on 23rd June, 1973. On 22nd June, 1973 the authorised representative attended but asked for some extension. The Income-tax Officer on that date indicated that he wants all the parties to be produced before him for recording their statements on 23rd June, 1973. The authorised representative produced before the Income-tax Officer one out of 21, 15 and 6 parties and produced certificate from other parties admitting the fact that the amount standing to their credits in the books of the applicant was owned to them by the applicant and were later repaid to them. The applicants' explanation before the Income-tax Officer was that all the parties in whose names credit stood in the books of the applicant are known persons of their residential area and are men of substance owning agricultural lands and in a position to advance loans and deposits. In the premises, the applicant contended that the amount belonged to those parties and should not be added to the income of the applicant. The Income- tax Officer rejected the explanation of the applicant and the said sums of Rs, 1,68,000, Rs, 2,52,980 and Rs, 81,000 were added as the income of the applicant from undisclosed sources. An appeal was filed by the applicant before the Tribunal that sufficient opportunity was not given to lead evidence and in fact, there was no cash credit but the sums standing to the credit of the various parties pointed out by the Income-tax Officer represent short time deposits from the parties from whom the applicant makes purchases of Phutti. The contentions of applicant were not found favour with the learned Tribunal but the appeals failed.
5. ' On these facts the following 9 questions said to have arisen for our opinion :-
(1) Whether in the facts and circumstances of the case, the Tribunal was right in failing to give a finding whether the Income-tax Officer had afforded reasonable and adequate opportunity to the Applicants to prove the genuineness of cash credits standing in the names of the persons mentioned in the Assessm ent order ?
(2) Whether in the facts and circumstances of the case the Income-tax Officer had afforded reasonable and adequate opportunity to the Applicant to prove genuineness of the cash credits in the names of the persons mentioned in the assessment order ?
(3) Whether having regard to the fact that full addresses of the persons in whose names the credits stood were mentioned in the ledger and other documents of the Applicants, the Income-tax Officer was legally justified in requiring the Applicants to produce those persons before him instead of summoning them under section 37 of the Income-tax Act ?
(4) Whether in the facts and circumstances of the case the Income-tax Officer and the Tribunal were legally justified in holding that certificates of the persons in whose names the credits stood duly signed by them did not enable the Applicants to discharge the onus of proving the genuineness of the credits ?
(5) Whether having regard to the fact that the credit standing in the names of the persons mentioned in the Assessm ent order were subsequently repaid to them and receipts were obtained, the Income-tax Officer and the Tribunal were right in holding that the genuineness of the credits were not proved ?
(6) Whether in the facts and circumstances of the case there is any material or evidence on the record in support of the finding that the cash credits in the name of the persons mentioned in the assessm ent order were not genuine ?
(7) Whether in the facts and circumstances of the case there was any material or evidence on the record in support of the Tribunal's finding that the accounting system that the Applicant is adopting is a tricky device of inflating Phutti purchased by falsely crediting to the accounts of the various sellers of Phutti at higher prices when it was not the case of even the Income-tax Officer and whether this finding has not vitiated the order of the Tribunal ?
(8) Whether in the facts and circumstances of the case the Income-tax Officer having allowed interest paid to some of the persons in whose names the cash credits stood as a deduction, the Income-tax Officer could lawfully doubt their genuineness ?
(9) Whether in the facts and circumstances of the case the Tribunal was right in attributing the allowance of interest on some of the cash credits by the Income-tax Officer as indicating unsatisfactory work on the part of the Departmental Representative?"
6. ' Mr. Shaikh Gul Pir Bux, the learned counsel for the applicant pressed only questions 1, 2 and 6 and does not press the remaining questions.
7. ' Mr. Shaikh Gul Pir Bux the learned counsel has contended before us that the finding of the Income- tax Officer to the effect that the said amounts of Rs, 1,68,000, Rs, 2,62,980 and Rs, 81,000 are the suppressed income of the applicant from the undisclosed source is a finding arrived at without any evidence at all and that sufficient opportunity was not given to lead evidence. The amounts credited in the books of account of the applicants are admitted in writing by the per-sons concerned as their own money which was repaid to them and as such, the inference of law that the said sums belonged to a secret income of the applicant is based on no positive evidence.
8. According to Mr. Shaikh Gul, the initial discharge of explaining the cash credits certainly lays with the assessee, but the assessee has explained satisfactorily the said amounts by getting the explanation corroborated by the parties. This fact is further supported by the production of certificates. Further, it is urged that when the persons identity is established and it is well-known that the said persons have means to pay, the department should not have refused the applicant's explanation without any materials. Thus, the onus to explain the credits of the said sums of Rs, 1,68,000, Rs, 2,52,960 and Rs, 81,000 have been discharged by the applicant and the department should not have included the said amounts as the suppressed income of the applicant from an undisclosed source.
9. ' On the other hand Mr. Shaikh Hyder, learned counsel for the department has submitted that the learned Appellate Tribunal's order should not be interfered with by the High Court in its jurisdiction under section 66 (1) of the Act, inasmuch as the learned Tfibunal's conclusion cannot be said to be based on no evidence or that conclusion is perverse. He has asked us to hold that although applicant was given all the opportunities to the applicant and no satisfactory evidence was made available by the applicant to the Income-tax Officer. He has argued that the said sums being the income of applicant from undisclosed source has rightly been included in the applicant's income and asseseed.
10. ' Several cases were referred to us by the learned counsel for the applicant and the department and we may now discuss them. The first case relied upon by Mr. Shaikh Gul in Universal Engineering Co., Karachi (1), in the matter of: The Income-tax ,Officer noticed a cash credit entry of Rs, 15,000, dated 7th September, 1953 in an account styled as "Deposit {{FOOT NOTE}}
(1) PL D 1963 Kar. 487 {{FOOT NOTE}} ' Account" in the books of the assessee. The Income-tax Officer felt suspicious about the nature of this cash receipt and called upon the assessee to explain its source. The explanation offered was that the deposit in question represented cash received as an advance from a customer and the money was to be returned in case the transaction didnot materialise. The Income-tax Officer disbelieved the explanation and treated this amount as assessee's income from undisclosed source. An appeal was filed by the assessee before the Appellate Assistant Commissioner without any success. The Appellate Tribunal also, on second appeal, rejected the appeal. On these facts, the then Karachi High Court while dismissing application of the department observed : - "When the assessee state that the entry in question represented a deposit from a customer and the money was to be returned in case the transaction did not materialise and when an entry was shown in the accounts of a date only three weeks after the date of deposit showing that the money had been returned, there can be little doubt that an explanation was offered. This explanation was given towards the discharging of onus which initially lay upon the assessee.
11. ' And onus is not something which is stationary and it cannot be laid down that it can be discharged only by a particular kind of evidence or information."
12. ' Mr. Shaikh Gul next cited case of Munnilal Murlidhar v. Commissioner of Income-tax (I), a Division Bench of Allahabad High Court. In that case the grievance of the assessee that he was not given a reasonable opportunity and facility to produce evidence in support of its explanation. The Division Bench held that the grievance of the assessee that he was not given a reasonable opportunity and facility to produce evidence in support of its explanation is justified. It was further observed "There was in this case, a denial to the assessee of an opportunity to produce evidence in support of its case. As we have already pointed out the assessee was entitled to produce such evidence and the Income-tax Officer was bound to give the assessee reasonable opportunity to do so. In the circumstances, the finding of the Tribunal as to the nature and source of the deposit of Rs, 70,000 must be regarded as legally vitiated".
13. The next case, Sreelekha Banerjee and others v. Commissioner of Income-tax, Bihar and Orissa (2) is a decision which was decided by the Supreme Court of India in favour of the department, which happened to be a case of encashment of high denomination notes. The assessee encashed high denomination notes of the value of Rs, 51,000. The Income-tax Officer found a discrepancy of nearly Rs, 50,000 in the statements filed by the assessee. He accordingly, treated the high denomination notes as profits, from some undisclosed source and assessed them as assessable income. The assessee appealed to the Appellate Assistant Commissioner and further to the Tribunal. Both the authorities upheld the order of the Income-tax Officer. The assessee demanded a case which was refused, but the High Court directed a statement of the case on the question. The High Court decided the question against the assessee. {{FOOT NOTE}}
(1) (1973) 27 Taxation 209 (2) (1963) 49 I T R 112 {{FOOT NOTE}} "It seems to us that the correct approach to questions of this kind in this. If there is an entry in the account books of the assessee which shows the receipt of a sum on conversion of high denomination notes tendered for conversion by the assessee himself, it is necessary for the assessee to establish, if asked, what the source of that money is and to prove that it does not bear the nature of income. The department is not at this stage required to prove anything. It can ask the assessee to bring any books of account or other documents or evidence pertinent to the explanation if one is furnished, and examine the evidence and the explanation. If the explanation shows that the receipt was not of an income nature, the department cannot act unreasonably and reject that explanation to hold that it was income. If, however, the explanation is unconvincing and one which deserves to be rejected, the department can reject it and draw the inference that the amount represents income either from the sources already disclosed by the assessee or from some undisclosed source. The department does not then proceed on no evidence, because the fact that there was receipt of money is itself evidence against the assessee. There is thus, prima facie, evidence against the assessee, which he fails to rebut, and being unrebutted, that evidence can be used against him by holding that it was a receipt of an income nature."
14. ' The next case, Orient Trading Co. Ltd., v. Commissioner of Income-tax (Central) Calcutta (1) is a decision which was decided by the Bombay High Court in favour of the assessee. In the course of assessm ent proceedings, the Income-tax Officer found that a sum of Rs, 2,50,000 was credited in the books of accounts of the assessee standing in the name of one Rampartab Agarwal. The Income-tax Officer called upon the assessee to establish the identity of the said Rampartab and the source of the said sum of Rs, 2.5 lacs. The Income-tax Officer was told that the said Rampartab was a Benami of Messrs Suraymal Nagarmal and the said amount was accounted for in the settlement that Surajmal reach with the Central Government through the Income-tax investigation Commission. No evidence was, however, led before him on either of these two allegations. The Income-tax Officer, therefore, completed the assessment including the said amount in the total income as income from undisclosed sources. The assessee appealed to the Appellate Assistant Commissioner and further to the Tribunal. Both the authorities upheld the order of the Income-tax Officer. On a reference, the Bombay High Court held :- "It seems to us that where the entry stands in the name of the assessee's wife or children, or in the name of any other near relation, or an employee of the assessee, the burden will lie on the assessee, though the entry is not in his own name, to explain satisfactorily the nature and source of that entry. Where the entry stands not in the name of any such person having a close relation or connection with the assessee, but in the name of an independent party, the burdoned will still lie upon him to establish the identity of the said party, and to satisfy the Income-tax Officer that the entry is real and not fictitious. When, however, {{FOOT NOTE}}
(1) (1963) 49 I T R 723 {{FOOT NOTE}} in a case where the entry stands in the name of the third party, the assessee satisfied the Income- tax Officer as to the identity of the third party and also supplies such other evidence which will show, prima facie, that the entry is not fictitious, the initial burden which lies on him can be said to have been discharged by him. It will not, thereafter, be for the assessee to explain further how or in what circumstances the third party obtained money and how or why he came to make a deposit of the same with the assessee. The burden will then shift on the department to show why the assessee's case cannot be accepted and why it must be held that the entry, though purporting to be in the name of a third party, still represents the income of the assessee from a suppressed source."
15. ' Mr. Shaikh cited next case C. I. T. (Central) Calcutta v. Daulat Ram Rawatmul (1) a decision was decided by the Supreme Court of India. The Income-tax Officer originally assessed on the basis of an income of Rs, 4,71,552. The Income-tax Officer issued notice under section 34 of the Act stating that he had reason to believe that the assessee had been under assessed. The assessee filed return. The Income-tax Officer made re-assessment. It was found by the Income-tax Officer that the assessee had obtained overdraft to the extent of Rs, 10,00,000 from the Central Bank of India Ltd., upon the security of two fixed receipts of Rs, 500,000 each. One of them was in the name of Raghunath and the other was in the name of Biswanath. The amount of Rs, 10,00,000 was added to the total income of the assessee. On appeal the Appellate Assistant Commissioner reduced Rs, 50,000 and maintained additions of Rs, 9,50,000 In the appeal filed by the assessee the Tribunal agreed with the order of the Appellate Assistant Commissioner. On reference the High Court held that there was no material before the Tribunal to hold that it was the concealed income of the assessee. The department being aggrieved preferred appeal before Supreme Court. The Supreme Court while dismissing appeal observed as follows :- "The onus to prove that the apparent is not the real is on the party who claims it to be so. As it was the department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even through the receipt had been issued in the name of Biswanath, the burden lay on the department to prove that the respondent was the owner of the amount deposit the fact that the receipt was in the name of Biswanath. A simple way of discharging the onus and resolving the controversy was to true the source and origin of the amount and find out its ultimate destination. So far as the source is concerned, there is no material on the record to show that the amount came from the offers of the respondent firm."
16. ' Mr. Shaikh next cited case of Lakhand Bhajat Ambica Ram v. Commissioner of Income-tax, Bihar and Orissa (2) was a decision of Supreme Court. Of India. The fact are in the case that the Income- tax Officer in the course of assessment noticed that the assessee had encashed high denomination notes of the value of Rs, 2,91,000. The Income-tax Officer asked for explanation which the assessee gave statement that these {{FOOT NOTE}}
(1) (1973) 87 I T R 349 (2) (1959) 37 1 T R 288 {{FOOT NOTE}} notices formed part of its cash balances including cash balance in the Almirah account. The Income-tax Officer rejected the explanation and traced the amount as assessee's secreted profits from business and included in total income. The assessee appealed to the Appellate Assistant Commissioner and further to the Tribunal. Both the authorities upheld the order of the Income-tax Officer. On reference the High Court was of the opinion that the onus of proving the source of the said amount was on the assessee which the assessee did not discharge and there was evidence before the Tribunal to come to the conclusion it did. The finding arrived at by the Tribunal was therefore, a pure finding of fact and it could not be urged that it was based on no evidence. The assessee preferred appeal before the Supreme Court of India. The Supreme Court held as follows :- "It is, therefore, clear that the Tribunal in arriving at the conclusion it did in the present case indulged in suspicious, conjectures and surmises and acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, or the finding was, in other words, preverse and this Court is entitled to interfere."
17. ' The learned counsel for the department has contended that it has been well-established by the decision of the Supreme Court of India in Govindarajulu Muderliar v. Commissioner of Income-tax
(1) that, where an assessee fails to prove satisfactorily the source and the nature of amounts received during the accounting year, the Income-tax ooficer is entitled to draw the inference that the receipts are income. In that case, the Income-tax Officer found that the income of the assessee, chargeable to tax was Rs, 54,000 for the assessment year 1945-46, Rs, 2,75,000 for the year 1946-47 and Rs, 54,500 for the year 1947-48. These amounts appeared as credits in the name of the assessee in the account books of a firm of which he was a partner. He was asked by the Income-tax Officer to explain as to how he came to possess these amounts. His explanation was that he got Rs, 80,000 in 1944 from his account with whom his father, who died in 1936, had entrusted it, and that Rs, 42,000 represented his share in the profits of a firm which carried on business in arrack. He was not himself a partner of this firm ; but he stated that one of its partner was a name lender for him. The above explanation was examined by the Income-tax Officer in detail, and rejected ; and he held that the amounts in question represented concealed income.
18. This finding was affirmed by the Appellate Assistant Commissioner and also by the Appellate Tribunal. The assessee appealed to the Supreme Court by Special leave ; it was contended that it did not follow from the failure of the assessee to establish the case put forward by him that these amounts were income of the previous year, and it was the duty of the department to show from what source the income was derived and why it should be treated as concealed income. The contention was rejected : and in doing so the Supreme Court said : "Whether a receipt is to be treated as income or not, must depend very largely on the facts and circumstances of each case. In the present case the receipts are shown in the account books of a firm {{FOOT NOTE}}
(1) (1958) 34 I T R 807
(2) {{FOOT NOTE}} of which the appellant and Govindaswamy Mudaliar were partners. When he was called upon to give explanations he put forward two explanations one being a gift of Rs, 80,000 and the other being receipt of Rs, 42,000 from business of which he claimed to be the real owner. When both these explanations were rejected, as they have been, it was clearly, open to the Income-tax Officer to hold that the income must be concealed income. There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature. The conclusion to which the Appellate Tribunal came appears to us to be amply warranted by the facts of the case."
19. ' The learned counsel for the department has contended that it is not open to this Court to go behind the finding given by Income-tax Officer supported by the Income-tax Appellate Tribunal with regard to the treating the cash credits as income from undisclosed sources in the present case. The learned counsel for the department has relied upon the case of Commissioner of Income-tax v. S. Zoraster & Co. (1) in which the Income-tax Officer disallowed a sum of Rs, 10,000 out of the expenditure of Rs, 85,650 incurred by the assessee in the renovation of the cinema building and capitalized the rest of the amount, on which depreciation was allowed under the heading "building" as in the opinion the expenses incurred by the assessee in respect of renovation of the cinema building was of the nature of capital expenditure. The assessee preferred an appeal against the assessm ent order. The Appellate Assistant Commissioner held that the claim of the assessee was not unreasonable and so he allowed a deduction in respect of a sum of Rs, 17,124 representing 1/5th of the expenditure incurred by the assessee on renovation. The revenue department filed appeals before the Income-tax Appellate Tribunal in respect of both the assessm ent years, challenging the correctness of the order passed by the Appellate Assistant Commissioner. The Appellate Tribunal while dismissing the appeal of the department, held by its order, that the expenditure incurred by the assessee on account of repairs carried out for the upkeep of the picture house and that 1/5th of such expenditure was rightly allowed by the Appellate Assistant Commissioner as claimed by the assessee. On these facts the High Court of Rajasthan held that the preliminary facts found by the Tribunal and the factual inferences drawn by it were not open to review by the Court, as the question as to whether the expenditure incurred on renovation was spent on repairs or otherwise was essentially a question of fact. On the basis of this judgment, the learned counsel for the department has urged that it is not open to this Court to go behind the finding given by the Income-tax Officer supported by the Appellate Tribunal with regard to treating the cash credits as income from the undisclosed sources. The case is distinguishable as, in that case the Appellate Assistant Commissioner and the Tribunal had recorded a finding that the expenditure was incurred on account of repairs carried out for the upkeep of the picture house. {{FOOT NOTE}}
(1) 1982 PTD 339 {{FOOT NOTE}} ' The learned counsel for the department has- also relied upon the cases of Nazir and Co. v. C. I. T
(1) and case of Messrs Ibrahim Brother v. C. I. T. Karachi (2). It was held in those cases that there was material to support the finding of the Tribunal and no question of law arose out of its orders. In cases involving applicability of the proviso to section 13 of the Income-tax Act, the question to be determined by the Income-tax Officer was a question of fact, namely, whether the income profits and gains could or could not be properly deduced from the method of accounting regularly adopted by the assessee. There was nothing special about this question of fact, and generally the only question of law that could possibly arise was whether there was any material for the finding.
20. ' He has further submitted that the question whether an explanation offered by an assessee is acceptable or not is a pure question of fact, and that the Court is not entrusted to examine the correctness of the finding of the Tribunal in the said matter. The learned counsel also referred us to the decision of the Supreme Court of India in Kala Khan Muhammad Han if v. Commissioner of Income-tax (3) wherein the decision in Govindarjulu Muderliar's case had been followed :- "These cases are distinguishable, as, in these cases, the conclusions recorded by the Tribunal on the facts brought to their notice by the learned counsel for the department could not be said to be perverse and accordingly we reject the contention of the learned counsel for the revenue."
21. The question raised by the assessee in the case before us is not whether the Income-tax Officer is entitled to draw the inference that the cash credits are income of the year in which they were found with the assessee on his failure to explain their source, but whether there is material to reject the assessee's explanation and draw such an inference on the facts of this case. Now as stated in the passage quoted in the earlier part of this judgment, the question whether a receipt is to be treated as income or not must depend very largely on the facts and circumstances of each case. It is not the law that when once the explanation is rejected, it automatically follows that the receipts are income. Whether an explanation is acceptable, and if not, whether it should be inferred that the receipts constitute income or not has to be decided on a consideration of all the relevant facts and circumstances of the case. It is quite legitimate in the case of an assessee who is known to be carrying on several activities of an income earning character or who can reasonably be found to be involved in such activities, to draw the inference that the amounts found with him constitute income from undisclosed sources, in the absence of satisfactory explanation regarding their source. Such an inference should not be readily made in the case of a person, who has no known business or other source of income or who cannot even be reasonably suspected as engaged in any income earning activities. In th latter case there must be more substantial reasons to reject the assessee's explanation, and draw the inference that the amounts found with him constitute income.
22. ' On behalf of the assessee, it is contended by the learned counsel that .(1) 1982 PTD 185 (2) 1979PTD1 (3) (1963) 50 1 T the Tribunal based its conclusion on wrong facts. It gave no cogent reason for rejecting the explanation of the applicant. It disregarded and take into account the relevant material on record and has based its finding on mere conjectures and surmises, He submits that the purchases of Phutti and the prices thereof were not doubted by the Income-tax Officer even. In fact the Income- tax Officer has accepted the applicants trading results. For these reasons he invites us to ignore the basis of the Tribunal's conclusion and hold on the materials on record, that the sums standing to the credit of various parties are not the income of the applicant from undisclosed sources.
23. ' The findings reached by the Tribunal are, prima facie, findings of fact. Before rejecting these findings, we must be satisfied that there are grounds in this case recognised by law which empower us to interfere with those findings. We think that the questions on which the reference has been made impugne the findings and validity of the Tribunal's conclusion that Rs, 1,68,000, Rs, 2,52,000 and Rs, 81,000 were not an income from undisclosed sources, but the sums standing to the credits of various parties.
24. ' In our view, this Court has always the jurisdiction to intervene if it appears that either the Tribunal has arrived at a finding based on no evidence or where the finding is inconsistent with the evidence or contradictory of it, or it has acted on material partly relevant and partly irrelevant or where no person judicially acting and properly instructed ag to the relevant law could have come to the determination reached. In all such cases the findings arrived at are vitiated. In a number of cases the superior Courts have set out the principles upon which they will interfere with the findings of fact arrived at by the Tribunal. We need not in this case travel beyond the scope of those principles. The Tribunal, in our view, has failed to take into account the relevant material on record in arriving at its findings. It has based its conclusion on conjectures, surmises and wrong facts. It has further failed to consider that the purchases of Phutti and the prices thereof were not doubted by the Income-tax Officer even. The Income-tax Officer accepted the applicant's trading effect. It seems to have been influenced by scrutinizing one or two items and found the applicant's explanation to be totally incorrect.
25. ' In our view there is ample justification for the comment of the learned counsel for the assessee that the Tribunal has misread the evidence and has indulged in conjectures and surmises. The Income-tax Officer after referring to the fact that statement of one of the parties namely Haji Muhammad Saleh was recorded. The counsel did not produce any other party as promised by him in order to prove the genuineness of the cash credits. Mere production of certificates on stereotyped forms in no way exonerates the assessee from this onus. No reliance can be placed on the certificates. He, therefore, added to the total income of the assessee as income from undisclosed sources. The curious thing is that the Tribunal observed "that the accounting system that it is adopting is a tricky device of inflaming cotton purchased by falsely crediting to the accounts of various sellers of Phutti higher prices. They are in fact paid correct price while their accounts are debited. The surplus shown in their accounts in the shape of the balances not, in fact due to them, are thereafter transferred by this subtile device to the "amount Khata", and are ultimately given the shape of outstanding credits in various accounts for disbursement to the applicant ; itself according to its own convenience." The applicant's explanation as we have already stated was that the sums standing to the credit of the various parties represent certain short-time deposits from the parties from when the applicant makes purchases of Phutti. The certificates produced before the Income-tax Officer admitting the fact that the amount standing to their credits in the books of the applicants was owed to them by the applicant and were later paid to them. This explanation did not receive any consideration by the Appellate Tribunal. The Tribunal also rejected applicant's plea that interest is also charged on those amounts and is allowed by the department does not in any way prove the genuinenss of the parties. It, however, stirred over the lacuna by seeking to put the blame for the omission on the officer who, it though, ought not to have ignored the second fictitious part. As it was the department which claimed that the amounts belonged to the applicant even though they are standing in the names of various parties, the burden lay on the department to prove that the applicant was the owner of the amounts despite the fact that the credits were in names of various parties. A simple way of discharging the onus and resolving the controversy was to trace the source and origins of the amount and find out its ultimate destination. So far as the source is concerned, there is no material on the record to show that the amounts came from the coffers of the applicant As regards the destination of the amounts it has already been mentioned that there is nothing to show that it went to the coffers of the applicant. On the contrary there is positive evidence that the amounts were received by the parties. It would thus follow that both as regards the source as well as destination of the amounts the material on the record gives no support to the claim of the department.
26. ' The following observations of the Home of Lords in Bean H. M. Inspector of Taxes v. Doncaster Amalgamated Coiling Ltd. (I).
27. "Unless the Commissioners, having found the relevant facts and put to themselves the proper question, have produced to give right answer, they may be said, on this view, to have erred in point of law. If an inference from facts was not logically allowed with and followed from them, then one must say that there is no evidence to support it. To come to a conclusion which there is no evidence to support is to make an error of law."
28. ' It is contended by Mr. Shaikh Gul that the Income-tax Officer did not summon the parties as provided by section 37 of the Act. No opportunity was given to the applicant for producing and/or making available their addresses to the I. T.
0. The applicant was condemned unheard. It appears that the I.-1.0. Called on 22nd June, 1973 to produce the parties on 23rd June, 1973. Section 37 (1) of the Act confers on the I,-T.
0. The Appellate Assistant Commissioner, the Commissioner and the Tribunal the powers vested in a Court under the Code' of Civil Procedure when trying a suit in respect of the following viz. :- "Enforcing the attendance of any person including any officer of a banking company and examining him on oath."
29. ' The provisions of Order X VI of the Code of Civil Procedure deals with the examination and attendance of witnesses. {{FOOT NOTE}}
(1) (1946) 27 T C 296 {{FOOT NOTE}} (2)
30. Admittedly, no steps as are provided for by these statutory provision, for the appearance of the witness were .Taken by the I.-T.
0. For the appearance of the parties whose details were in the books of account of the applicant.
31. ' We are of the opinion that under these circumstances neither the I.-T.
0. Nor the Tribunal were justified in fastening the blame at the door of the applicant and disbelieving its version that the amount of Rs, 1,68,000, Rs, 2,52,960 and Rs, 81,000 entered in its account books were the short-time deposits made and were duly repaid to the said parties on the ground that the former has failed to produce the said parties. The applicant took all steps that lay in his power to secure the presence of those parties who do not ordinarily reside in the same place of the applicant. Even the learned representative sought extension of time for production of those parties which was not allowed.
32. ' In these circumstances it appears to us that the Tribunal wrongly took into consideration the circumstances that, these parties had not been produced on the material on record there is nothing to refute the allegation of the applicant that these sums of Rs, 1,68,000, Rs, 2,52,960 and Rs, 81,000 are the deposits of said parties with the applicant. It seems that the Tribunal did not deal with the objection with regard to no opportunity being afforded to the applicant. The Tribunal had before it no legal material on which it could come to a contrary conclusion.
33. ' Consequently, these are our reasons for our short order, dated 1st February, 1985 by which we answered the questions 1, 3 and 6 in the negative in favour of the applicant and against the department with no order as to costs.