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PETITIONER: MOOSA S. MADHA & AZAM S. MADHA

       Vs.

RESPONDENT: COMMISSIONER OF INCOME-TAX, WEST BENGAL,CALCUTTA

DATE OF JUDGMENT06/02/1973

BENCH: ALAGIRISWAMI, A. BENCH: ALAGIRISWAMI, A. HEGDE, K.S. REDDY, P. JAGANMOHAN

CITATION:  1973 AIR 2356            1973 SCR  (3) 497  1973 SCC  (4) 128

ACT: Income-tax  Act,  1922, s. 4A(a)(iii)-Assessee  held  to  be ’resident’  but ’nor ordinarily resident’-Burden of  proving that  his visit to India in relevant period  was  occasional and  casual  was on assessee-Burden not discharged  by  mere assertion that he had no business in India-Question  whether remittance  of  Income was from  accrued  profits/Burden  of Proving  that  it  was  not  from  accrued  profits-was   on assessee-Question  that Tribunal did not consider  photostat copies of accounts produced before      it  not  raised   in application  under  s. 66(1)-High Court rightly  refused  to take such copies into account.

HEADNOTE: In  respect  of the assessment year 1948-49  the  Income-tax Officer’s  finding that the assessee was ’resident  but  not ordinarily resident’ in that year in India was confirmed  by the  Appellate Assistant Commissioner and the Tribunal.   It was  also  held that a sum of Rs. 2 lakhs  remitted  by  the assessee  to  India from Burma during  the  relevant  period formed  part  of the assessee’s accrued profits.   The  High Court answered both the questions in favour of the  Revenue. The assessee appealed with certificate. HELD : (i) For the finding that the assessee was  ’resident’ but  ’not ordinarily resident’ in the year in  question  the authorities  under  the Act as well as the  High  Court  had relied on the fact that the assessee has failed to prove his visit  to India in 1947 was casual or occasional.  This  was essentially a finding of fact. [501B-C] The burden of proving that the assessee’s visit to India  in 1947  was occasional or casual was on the assessee.  In  the affidavit  filed  by  him before the  Department  he  merely stated  that he visited India for a period of two months  in 1947 but did not state the reason for visiting India nor did he state his visit was occasional or casual.  In the face of this affidavit it was idle for the assessee to contend  that the Tribunal came to an erroneous conclusion in holding that he did not discharge the burden of proving that his visit to India  in 1947 was occasional or casual.  The fact that  the assessee had no business in India during the period of  stay of two months did not discharge the onus. [500 F-G; 501C-E]

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Commissioner  of Income-tax, West Bengal v. B. K. Dhote,  66 I.T.R. 457, referred to. (ii)  The assessee had also failed to prove that the sum  of Rs.  2 lakhs remitted by him to India did not represent  his business  income.  Even though the Income-tax  Officer  gave him  several opportunities to produce his account  books  to establish  his case he failed to produce the account  books. [501 H] The complaint that the Tribunal ignored the photostat copies of the account books without good reasons did not appear  to have  been  made in the application filed  by  the  assessee under  s.  66(1).  The statement of’ case submitted  by  the Tribunal  does  not  refer to  that  fact.   Admittedly  the assessee  did  not  take up  any  question  regarding  these documents.  Hence the High Court was fully justified in  not considering those documents. [502A-D]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 491 of 1970. 498 Appeal by certificate from the judgment and order dated June 3,  1969 of the Calcutta High Court in Income-tax  Reference No. 72 of 1966. N.   N. Goswami and S. N. Mukherjee, for the appellant H. C. Bhandare, S. P. Nayar, J. Ramamurthy and R. N. Sachthey, for respondent. The Judgment of the Court was delivered by HEGDE, J. This is an appeal by certificate.  It arises  from the  decision of the High Court of Calcutta in  a  reference under  section  66(1)  of the Income Tax  Act  1922  (to  be hereinafter  referred  to as the Act).  It  relates  to  the assessee’s  income  tax assessment for the  assessment  year 1948-49,  the  relevant accounting year being  the  calendar year 1947. The  material facts as could be gathered from the  statement of ,case submitted by the Tribunal are as follows : The  assessee, one S. C. Madha (since deceased)  appears  to have  migrated  with his father to Burma in about  the  year 1901.   They  were originally the residents of  the  village Variav  in  the  erstwhile State of Baroda.   In  Burma  the assessee  carried on business in soap and umbrella.   It  is seen  that he was a successful businessman.  The  assessee’s father died in 1936 and thereafter the business was  carried on by a partnership consisting of the assessee and his sons. The assessee had ancestral property in Variay.  He purchased a  plot  of land in Bombay in 1942.  After  the  bombing  of Burma  in 1942 the assessee came over to India and  remained in India till 1946.  He returned to Burma in February  1946. Under  instructions  from the partnership firm,  the  firm’s bankers,  the National Bank of India Limited,  Rangoon,  re- mitted  to Calcutta in the year 1946 a sum of Rs.  5  lakhs, and  the same was credited to assessee’s account.  Again  on October  26,  1947  a  further  sum  of  Rs.  2  lakhs   was transferred  by  the  bankers  of  the  partnership  to  the National  Bank of India Ltd., Calcutta and credited  in  the name  of  the assessee.  Out of the total amount  of  Rs.  7 lakhs remitted from Rangoon, Rs. 5 lakhs was utilised by the assessee for the purchase of two properties in Calcutta; one in  the year 1948 and the other in the year 1949.  On  April 8, 1953, the assessee filed a voluntary disclosure  petition before the Income Tax Department at Calcutta and followed up the  same  with nine voluntary returns  for  the  assessment years  1944-45 to 1952-53, disclosing certain  incomes  from

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the  properties  in India as well as from  his  business  in Burma during those assessment years.  As those returns  were not   filed  within  time  the  Income  Tax   Officer   took proceedings  under  section  34(i) (a) of the  Act  for  the assessment  years  1947-48  and  1948-49.   The  Income  Tax Officer assessed the assessee in the status of a  ’resident’ but ’not ordinarily 499 resident on a total income of Rs. 6,24,478 for the assessent year 1947-48 and Rs. 3,55,214 for the assessment year  1948- 49.   In  determining the assessee’s residential  status  in these two assessment years the Income Tax Officer relied  on the facts stated by the assessee in his voluntary disclosure statements  as  well as on the affidavit filed by  him.   He also took into consideration the fact that the assessee  had purchased  a  property in Bombay in the year  1942  and  the further  fact  that  in  the years  1948  and  1949  be  had purchased two premises in Calcutta. Aggrieved  by  the  order  of the  Income  Tax  Officer  the assessee  went  up  in appeal  to  the  Assistant  Appellate Commissioner.  The Assistant Appellate Commissioner remanded the case back to the income Tax Officer for the reason  that on the materials collected by the Income Tax Officer, he was unable  to  come  to any firm  conclusion.   Thereafter  the Income  Tax Officer held further enquiries and  reached  the very conclusion which he had reached earlier.  On appeal the Assistant Appellate Commissioner confirmed the order of  the Income Tax Officer.  On a further appeal, the Tribunal  came to  the conclusion that the assessment of the  assessee  for the  assessment  year  1947-48  was  unsustainable  and   it accordingly  set  aside  that  order  but  it  affirmed  the assessee’s assessment for the assessment year 1948-49. The Tribunal came to the conclusion that the assessee was  a resident’ but ’not ordinarily resident’ in India during  the calendar year 1947.  It further came to the conclusion  that the amounts remitted from Rangoon to Calcutta were  remitted by the assessee for his use in India.  It also held that the amounts  remitted  formed  part of  the  assessee’s  accrued profits. Aggrieved by the decision of the Tribunal the assessee moved the  Tribunal  to submit two questions of law  to  the  High Court  of  Calcutta under s. 66(1).  The  Tribunal  accepted that prayer and submitted the following two questions to the High Court of Calcutta :               (i)   On the facts and in the circumstances of               the  case. was there any material or  evidence               for the Tribunal to hold that the assessee was               a resident but not ordinarily resident in  the               taxable  territories for the  assessment  year               1948-49 ?               (ii)  Whether,   on  the  facts  and  in   the               circumstances  of the case, the  Tribunal  was               justified in holding that the amount of Rs.  2               lakhs   had  been  remitted  to  the   taxable               territories   by  the  assessee   during   the               accounting year out of his accrued profits  of               earlier years ? The  High Court answered both those questions in  favour  of the Revenue.  Hence this appeal. 500 For  deciding  the  question  whether  the  assessee  was  a ’resident’  in India but ’not ordinarily resident’ in  India in  the calendar year 1947, we must first examine the  scope of section 4A (a) (iii).  That section reads : "For the purposes of this Act-

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             (a) any    individual   is  resident  in   the               taxable territo-               ries  in any year if he-               (i)................               (ii)................               (iii) having  within the four years  preceding               that year been in the taxable territories  for               a period of or for periods amounting in all to               three hundred and sixty-five days or more,  is               in  the  taxable territories for any  time  in               that  year otherwise than on an occasional  or               casual visit;               (iv)...................               To determine whether this provision applies to               the facts of the present case we must find out               :-               (1)   Whether during the first of January 1943               to  31st of December 1946 the assessee was  in               India for a period of three hundred and  sixty               five days or more;               Whether the assessee was in India at any  time               between the 1st January 1947 to 31st December,               1947; and               (3)   Whether the presence of the assessee  in               India in 1947 was not an occasional or  casual               visit. So  far as the first two ingredients are concerned there  is no  dispute.  It is admitted that the assessee was in  India during  the, years 1943-46 for a period of more  than  three hundred  and sixty five days.  It is also admitted  that  he was  in India for a period of two months in the  year  1947. Therefore, the only question that requires to be decided  is whether his visit to India in 1947 was occasional or casual. The  burden  of  proving this point is  undoubtedly  on  the assessee.   The  Department cannot be expected  to  prove  a negative.   The assessee knows best why he stayed  in  India for  a period of two months in 1947.  This question  is,  no more  res  Integra.   In Commissioner of  Income  Tax,  West Bengal v. B.  K.  Dhote(1), this court ruled that  in  order that the assessee may    be  treated as resident in  British India under Section 4A (a)    (iii)  of the Act the onus  of proving  that the assessee was in British India  during  the four years preceding the previous year (1)  66 I.T.R. 457.                             501 for  a  period of or for periods amounting in all  to  three hundred  and  sixty-five days and in the  relevant  previous year  at any time, lies upon the Department.  But  if  these two  conditions are established or admitted, the  onus  lies upon  the assessee to prove that his visits in the  previous year were occasional or casual.  In the present case it  may be  noted  that  the  Income  Tax  Officer,  the   Assistant Appellate  Commissioner,  the Tribunal as well as  the  High Court  have come to the conclusion that the assessee  failed to  prove  that  his visit to India in 1947  was  casual  or occasional.   This is essentially a finding of fact.   Hence the  only  point  that calls for  decision  is  whether  the finding  reached  by  the Tribunal  is  unsupported  by  any evidence.   We have earlier stated the legal position.   The burden of proving that the assessee’s visit to India in 1947 was  occasional or casual is on the assessee.  According  to the  Tribunal the assessee had not discharged  that  burden. The  assessee had produced no evidence whatsoever  to  prove that his visit during the year in question was an occasional or  casual.  Worst still is, in the affidavit filed  by  him

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before the Department he merely stated that he visited India for  a  period of two months in 1947 but did not  state  the reason  for visiting India nor did he state that  his  visit was occasional or casual.  In the face of this affidavit  it is  idle for the assessee to contend that the Tribunal  Came to  an erroneous conclusion in holding that he did not  dis- charge the burden of proving that his visit to India in 1947 was occasional, or casual, The  sole  circumstance on which Mr.  Goswami,  the  learned counsel  for the appellant, relied on was that the  assessee had no business in India.  The fact that the assessee had no business  in  India  during the period of his  stay  of  two months in India does not discharge the onus which is  placed on  the  assessee  to  show that  his  visit  to  India  was occasional or casual. For  the  reasons mentioned above we agree  with  the,  High Court in the answer given to the first question. Now turning to the second question, admittedly the  assessee had  no business in India.  He had not explained why in  the year 1947.  Rs. two lakhs were remitted from Burma to India. It is seen from the evidence on record that the assesses did purchase  a  house  in  Calcutta  in  1948.   The   assessee contended  before  the Tribunal as well as before  the  High Court that the money transferred from Burma to India was his capital asset and not income earned from business in  Burma. This  was a matter which the assessee had to prove.  He  has failed  to  prove  the same.  Even  though  the  Income  Tax Officer  gave  him  several  opportunities  to  produce  his Account Books to establish his case that the money  remitted to India did not represent his business income, he failed to produce his Account Books.  It was contended by Mr.  Goswami that he produced certi- 502 fied  photostat copies of his accounts before  the  Tribunal and  the Tribunal erred in not considering those  documents. In the first place it must be noted that the assessee has no satisfactory explanation for not producing Ms account  books before  the  Income  Tax Officer as well  as  the  Assistant Appellate Commissioner.  Photostat (Copies have very  little evidentiary value’ Further it is seen from the order of  the Tribunal that there is no reference to the photostat  copies in that order.  It does not appear from that order that  any reliance was placed on those documents before the  Tribunal. The  complaint  that the Tribunal  ignored  those  documents without  good reasons does not appear to have been  made  in the application ’filed by the assessee under section  66(1). The statement of the case submitted by the Tribunal does not refer to that fact.  Admittedly the assessee did not take up any  question  regarding those ,documents.  Hence  the  High Court is fully justified in not considering those documents. In our opinion the Tribunal was right in its conclusion that the remittance of Rs. 2 lakhs from Burma to India during the year  1947  is  not proved to be the capital  asset  of  the assessee.  Hence, there is no reason to interfere with  that finding of the Tribunal.  In this respect also we are  fully in agreement with the High Court.  For the reasons mentioned above  this  appeal  fails and the same  is  dismissed  with costs. G.C.                             Appeal dismissed.