1. ' SALEEM AKHTAR, J.--In respect of assessment years 1970-71 and 1971-72 the Tribunal has referred the following questions?
(1) Whether on the facts of the case the Tribunal rightly held that the assessee had failed to discharge the burden of proof, in respect of the cash credits, appearing in his books of account?
(2) Whether the evidence oral and documentary produced before the Assessing Officer did not prima facie establish that, the assessee's wife had the means to advance the loan in question?
(3) Whether on the facts and in the circumstances of the case, the Tribunal came to the right conclusion that, the two amounts Rs,3,21,885 and Rs,1,20,000 in question constituted undisclosed income of the assessee from unknown source?
(4) Whether on the facts admitted on record, the Tribunal rightly included the amount of Rs,72,000 advanced through cheques in the undisclosed income of the assessee?
(2) Whether after reversing the decision of the Appellate Assistant Commissioner, the Tribunal rightly directed the Appellate Assistant Commissioner, to re-consider and decide the question as regards the levy of tax, on these amounts under section 12 of the Income Tax Act?
2. ' The appellant is a consulting engineer and Architect who is assessed as an individual. He had claimed a loss of Rs, 3, 09,935 in his return for the charge year 1970-71. The assessment framed by the Income Tax Officer was set aside by the Commissioner of Income Tax in exercise of the Provisional Jurisdiction and the case was remanded for re-examination by the Income Tax Officer.
3. The balance sheet for the year 1970-71 showed a debit entry of Rs,5,54,912 due to sundry creditor.
4. Out of this amount Rs,5,25,331 stood in the name of the assessee's wife Mrs. M. Zafar. Rs,2,11,500 had been brought forward from the past and balance of Rs,3,13,830 was said to have been advanced to the assessee by his wife in this year. The Assessing Officer examined the account book and found that except an amount of Rs, 72,300 the balance had been advanced in cash at various points of time. The Assessing Officer then called upon the applicant to explain the source of the income and also to furnish evidence to support it. The applicant explained that his wife owns 1/3rd share in agricultural land jointly with her brother which was inherited by her from her father who died about 40 years back. She has received Rs,20,000 to Rs,25,000 every year as her share from the income of this land. He also produced a certificate signed by Mr. MA. Salim brother of his wife stating that she was co-owner to the extent of 1/3rd share in the agricultural land. He also produced a certificate signed by the Assistant Collector and Tehsildar of Naushera which certified that Muhammad Salim and Mrs. Mumtaz Begum own 509 kanals of land and 10 marlas in Naushera and the income from the agricultural land could be more than Rs,1,19,000 per annum. Mrs. Zafar also owns a bungalow in Karachi portion of which was let out to her husband for the purposes of his profession on a monthly rent of Rs,2,000. This bungalow was completed by borrowing Rs,1,95,000. The plot was purchased in 1961 while the construction was started in late 1968. It was explained that Rs,2 lacs had already been blocked in the business of her husband and the remaining cash available was kept for reserve for requirement of her husband. The assessee's wife filed an affidavit stating that she has not mentioned this fact in her wealth statement nor her share in the agricultural land was mentioned in that statement. The Income-Tax Officer did not accept assessee's explanation as no cogent and reliable documentary evidence of income from agricultural land of his wife was produced. The certificate produced by the Tehsildar was also not accepted as it did not disclose the basis on which the expected income from land was fixed at Rs,111,900 per annum. The certificate issued by the brother of the assessee's wife was also not accepted. Consequently the Income-tax Officer held that Rs,3,21,885 including the payments of Rs,72,300 made by cheque introduced in the books of account of the assessee in the name of his wife in the first year and a sum of Rs,1,20,000 introduced in the second year were his secret income from undisclosed sources.
5. This amount was charged to tax under section 12 of the Income Tax Act. The assessee challenged this order in appeal which was allowed by the Appellate Assistant Commissioner who directed the addition of Rs,3,21,885 made in the assessment year 1970-71 and Rs,1,20,000 made in the assessm ent year 1971-72 to be deleted. The Department then filed an appeal before the Tribunal which by order dated 28-11-1978 set aside the order passed by the Appellate Assistant Commissioner. The order of the Income-Tax Officer was maintained. On question whether the said undisclosed income could be taxed under section 12 of the Income-Tax Act the Tribunal observed as follows:- "Now what remains to be considered in this connection is whether the assessment of the said undisclosed income could be made under section 12 of the Income-Tax Act, the learned Appellate Assistant Commissioner, as stated earlier, has not recorded a finding on this aspect of the case.
6. We would, therefore, remit the case to him for his decision on this aspect of the case in accordance with law and after providing the assessee a fair and reasonable opportunity of being heard."
7. ' Mr. Mahmood Iqbal, the learned counsel for the applicant has contended that merely by disbelieving the certificate issued by the brother-in-law of the assessee and the affidavit of assessee's wife the Tribunal could not have come to the conclusion that the sum of Rs,3,21,885 and Rs,1,20,000 were income from undisclosed sources. It was contended that the affidavit of Mrs. Zafar could not be rejected without cross-examining her and further that even if there was no mutation in the name of the applicant's wife she had inherited the property under the Muslim Law. Therefore, merely by rejection of assessee's explanation without any further material it could not be treated as income of the assessee.
8. ' The learned counsel has referred to L. Sohan Lal Gupta v. Commissioner of Income-tax (1958) 33 I T R 786, and relied on the observation that the Tribunal was not entitled to reject the affidavit filed by the assessee on the mere ground that he has produced no documentary evidence if it was not accepted as sufficient proof the assessee should have been called upon to produce documentary evidence or he should have been cross-examined to find out how far his assertion in the affidavit were correct. In the referred case the assessee had filed an affidavit to prove in what circumstances and background the shares were purchased. This affidavit was not accepted as no corroborative evidence had been produced.In this background the aforestated observation was made. In the present case the assessee had not filed any affidavit. In fact the affidavit of assessee's wife was filed to substantiate the facts alleged by him. This was one of the documents the assessee had filed to corroborate and explain the entries questioned by the Assessing Officer. The Tribunal could reject any piece of evidence which was not reliable and impeachable. In these circumstances it was not necessary for the Income-Tax Officer to have called the wife of the assessee for cross-examination before rejecting her affidavit. If from material produced on record it can be shown that the statement made in the affidavit to support the assessee's case is not correct or that it is not supported by cogent evidence then such statement could be rejected without calling the deponent for cross-examination. In the present case the question about the ownership of the land may be accepted but the moot point is whether the wife of the applicant had received income from the land and she had advanced any amount to assessee. The assessee has failed to prove that his wife had earned income from agricultural land. This aspect of the case has been discussed by the Income-Tax Officer and the Tribunal. In this regard there was sufficient material to arrive at such a finding by the Tribunal. The certificate of the brother-in-law of the assessee was not sufficient to establish that agricultural income had been earned and paid to the assessee's wife which she had advanced to her husband. The very source of the agricultural income has not been established. The certificate issued by the Assistant Collector merely gives an estimate of income which could have accrued from land. But this is not a proof of accrual of income because no authentic document has been produced to establish the agricultural income nor any unimpeachable evidence has been produced to show that for the last about 20 years the agricultural income had accrued and was paid to the assessee's wife by her brother.
9. ' Mr. Mahmood Iqbal has also referred to Dilip Kumar Roy v. C I T Poona (1974) 94 I T R 1 and relied upon the observation that the burden lies upon the Revenue to show that the amount claimed by the assessee is an income and taxable. On the other hand Mr. Shaikh Haider has referred to section 4 subsection (2-A) which read as follows:- "(2-A) Where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to imcome-tax as the income of the assessee of that previous year."
10. ' Mr. Shaikh Haider has also referred to Mrs. Samina Shaukat Ayub Khan v. C.I.T., Rawalpindi PLD 1981 SC 85 a judgment of the Supreme Court of Pakistan where it was observed as follows:- "It will be seen that the term income'as used in the Income-Tax Act is, indeed, a term of wide significance, and generally and ordinarily it connotes a periodical monetary return, coming in with some sort of regularity, or expected regularity, from a definite source; but as observed by the Privy Council, the multiplicity of forms which income may assume is beyond enumeration and income need not necessarily be the recurrent return from a definite source, though it is generally of that character. It may consist of a series of separate receipts, as for instance happens in the case of professional earnings. In the last analysis, the question whether a particular kind of receipt is income or not would depend for its answer on the peculiar facts and circumstances of the case. If the nature of receipt and its source are not satisfactorily explained by the assessee, facts which are generally within his peculiar knowledge, the Income-tax Officer may legitimately presume that the amount in question is an income of the assessee from an undisclosed source."
11. ' Reference has been made to Miss Assia v. Income-tax Appellate Tribunal PLD 1979 SC 949 where the following observation was made:- "The Assessing Officer, was not bound to rely on all the evidence produced by the assessee in case he was not satisfied about it. He was entitled to reject the account believed by him to be a false and unreliable, although there may be no direct and definite evidence with him to prove their incorrectness. There is no rule of law compelling a Judge to accept evidence, even though it is uncontradicted, which he believes to be a pack of lies. (In re: Baghat Halwai) 3 1 T R 48. In this connection in Gangaram Balmokand v. Commissioner of Income-tax Punjab (1937) I T R 464 it was held that the law does not impose any burden on the Income-Tax Authority to prove by positive evidence that the accounts are unreliable or that the figure at which they assess is the correct figure. On the other hand, the question of the unreliability of account is a question of fact and primarily falls for the determination of the Income-Tax Authorities alone. If, therefore, it is once decided by them that the accounts are fictitious or unreliable, their finding cannot be disturbed unless it is altogether capricious and injudicious. In matters like these a very wide discretion vests in the Income-tax Authorities in view of the exigencies of the case, and the control exercisable on them is very meager. What alone has to be seen in such cases is whether the discretion has been judicially exercised and if it is once found to be so exercised, no Court can interfere with the order.
12. In this connection their Lordships of the Privy Council in Commissioner of Income-tax, United and Central Provinces v. Badridas Ramrai Shop, Akola AIR 1937 PC 133 has held that the assessing officer must make what he honestly believes to be a honest estimate of the proper figure of assessm ent, and for this purpose he must be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assessm ent of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate, and though there must necessarily be guess-work it (in) the matter, in
(it) must be honest guess-work. In that sense to the assessment necessarily be arbitrary."
13. In the light of the a fore stated observation it can safely be concluded that if the source and nature of receipts questioned by the assessing officer are not satisfactorily explained then he would be justified in treating it as income of the assessee. In the present case the Income-Tax Officer has dealt with the evidence and the Tribunal has also minutely gone into question of fact, scrutinized the evidence considered all the aspect of the case and for cogent reasons disbelieved the evidence produced by the assessee. The finding of fact is based on proper appreciation of evidence. It is not assailable as neither it is arbitrary nor perverse. The finding and inference drawn by the Tribunal is correct and cannot be interfered with. We, therefore, answer questions Nos.1 to 4 in the affirmative.
14. ' So far question No,1 is concerned the Tribunal has not recorded any finding and has remanded it for decision of the Appellate Assistant Commissioner after hearing the parties. There is no such direction that the case should be re-considered and decided under section 12 of the Income Tax Act. Our reply to question No,5 is that as there is no direction to assess under section 12 of the Income-Tax Act this question is completely redundant.