Bhikaji Vyankatesh Dravid & Co. v. Commissioner Of Income-Tax

1. The applicant Rao Sahib Bhikaji Vyankatesh Dravid & Co. has applied to this Court for a mandamus requiring the Commissioner of Income-tax to state a case under Section 66, sub-Section (2) of the Indian Income-tax Act, 1922 for decision by this Court.

2. The facts of the case are sufficiently given in the application and need not be repeated here. On the application coming on for hearing to-day, only the first point contained in the final paragraph of the application was pressed.

3. The case for the applicant company in this connexion is that, in the verified return submitted by the applicant as well as in his statement on oath made before the income-tax officer on 20-9-25, certain losses were shown as debatable to the partnership concerned, whereas the assessing officer held that these losses were the concern of Rao Sahib B.V Dravid in his personal capacity. The alleged legal point which is raised on behalf of the applicant is that in the present case we had the verified statement of the applicant, as well as his oral statement on oath to the opposite effect. In addition there were the entries in the partnership account books for the year in question. On behalf of the income-tax authorities, it is alleged, there was no evidence on the other side. It is urged that the income-tax authorities have, in these circumstances, erred in law in holding that the transactions in question were personal ones and should not have been incorporated in the partnership account. In support of this position, the decision of Sanderson, C.J, in Bishnu Priya Chowdhuranir in the matter of a petition of(1) has been relied on. In that case an assessee had stated that he had derived no income from certain lands. The Assistant Commissioner of Income-Tax required the assessee to prove his negative assertion and, in the absence of such proof, the assessment was confirmed. Sanderson, C.J in the said case, held that the ordinary principle of evidence applied and that the burden of proof was on the party which would fail if no evidence were produced, i.e in the said case on the officers of the Income-Tax Department.

4. The present case, however, seems to me to be clearly distinguishable from the Calcutta case referred to. Here the facts are that up to the year we are concerned with the connected transactions relating to analogous debits took place on the applicant's private account. This is admittedly so, but the explanation offered by the applicant is that in the year in question there had been no combination of ginning factories as there had been in previous years, and it was owing to this that the applicant carried on purchases for the partnership and not, as in previous years, on his own personal account. Moreover, it was apparently not until the end of the year that the debits in question were made in the partnership account. In these circumstances, it seems to me impossible to hold that there was no evidence on the side of Government to favour the view that items of debit were wrongly incorporated in the partnership account. Moreover, under Section 23(2) of the Income-Tax Act, 1922, the income-tax officer had power to call on the assessee to produce evidence on which he relied in support of the return. Notice to this effect issued to the assessee on the 20th of September 1925, but he apparently produced no other evidence except that of himself. A somewhat unsatisfactory explanation is given that the applicant could not produce D.G Dravid as a witness as he would have proved hostile to him, but presumably, had this been the case, the Income-Tax Commissioner would have allowed him to have been cross-examined by the applicant. I do not, therefore, think that it can be predicated of the present case that there was an error or mistake of law on the part of the income-tax officer.

5. The circumstances of the case as regards the debiting of these items in the personal account, were not free from suspicion. The income-tax officer was perfectly entitled to draw a presumption from the state of matters which had admittedly existed in previous years, and in the present state of income-tax law an onus rested on the assessee of discharging his contention that the debits were properly made in the partnership accounts as opposed to being personal ones of his own. That onus was not sufficiently discharged by his verified return and statement on oath, and he failed to make any use of the opportunity given to him of producing other evidence in support of his allegation, the case from this point of view seems clearly outside the purview of the principle laid down in the Calcutta decision quoted above, and it seems tome impossible to hold in the circumstances that any error of law has been committed by the income-tax authorities which would justify my calling on the Commissioner of Income-Tax for a reference to this Court.

6. The application is accordingly dismissed. I allow Rs. 50 as pleader's fees. The applicant must bear the non-applicant's costs.

7. Application dismissed.