RAMKINKAR BANERJI vs COMMISSIONER OF Income Tax, BIHAR AND ORISSA.

MOHAMMAD NOOR, J. - Under the orders of this Court, dated August 20, 1934, the Commissioner of Income Tax has u/s 66(3) of the Income Tax Act submitted a statement of the case for the orders of this Court. The proposition of law which, as ordered by this Court, he has submitted is "whether upon the facts as found by the lower Appellate Court (meaning thereby the Assistant Commissioner) the assessee is entitled to a deduction of Rs. 15,352 as claimed by him". The facts as stated by the Commissioner are these.

The assessee has an interest in the Sitalpur Colliery which was being worked by Mesrs. Ojha & Co. who paid him in the year in question Rs. 15,408-14-0 as royalty. The assessee did not include this income in the return. The Income Tax Officer somehow or other came to know of this income and called upon the assessee to show cause why a penalty should not be imposed upon him u/s 28 of the Indian Income Tax Act for concealing this income. Thereupon the assessee appeared and stated that he did not in fact get any income inasmuch as he had paid Rs. 15,353 as royalty to the superior landlord who, admittedly for some time, was Mr. L. A. Creet, but whose right to receive the royalty had been acquired by Saibalini Debi, the wife of the assessee. The assessee also gave some other figures showing a loss of Rs. 184-11-3 on his colliery income. The Income Tax Officer seems to have accepted the other figures of the assessee but apparently treating the lady to be his benamidar refused to allow him to deduct Rs. 15,353 for the royalty and included this amount for the purpose of the assessment. The assessee appealed to the Assistant Commissioner of Income Tax who upheld the order of the Income Tax Officer But allowed a deduction of Rs. 4,000 which the lady had to pay to her own superior landlord. The Income Tax Commissioner having refused to refer the question of law stated above to this Court, the assessee came up to this Court and obtained the order above referred to.

Now the contention on behalf of the assessee before us has been that as it was not disputed by the department that if in fact Rs. 15,353 was paid as royalty, it was not open to the Income Tax Officer or to the Assistant Commissioner to refuse to deduct this amount on the ground that there was no evidence to show that the lady acquired the right of Mr. Creet from her own stridhan funds. Mr. Gupta contends that having shown the payment of royalty, the duty of the assessee ended. If the department wanted to refuse deduction of this amount on the ground that the lady was a benamidar, they could only do so on some evidence and not on the ground that there was no evidence that the lady was the real owner. The facts found by the Assistant Commissioner and his reasons summarised by the Commissioner are :

(a) That the right by virtue of which the payment of Rs. 15,353 was made stands in the name of S. Devi, the assessees wife;

(b) That it was not seriously contended that she acquired this right with her stridhan nor was any evidence to that effect produced, and

(c) That in the absence of any evidence to the contrary, it was reasonable to presume that the right in question as acquired by the assessee head of the undivided family in the name of his wife.

There being, therefore, no dispute that the property stands in the name of the lady, she must be taken to be the owner of it unless there is any evidence to show that she is a benamidar. Nos. (b) and (c) are not strictly speaking findings of fact but are reasons given by the Assistant Commissioner for holding that the real owner was the assessee. They are based upon no evidence whatsoever. There is no presumption that a property standing in the name of a married Hindu lady does in fact belong to her husband. The ordinary presumption of law is that the apparent state of affairs is real unless the contrary is proved. The absence of evidence one way or the other did not under the law justify the Assistant Commissioner in drawing an inference that the lady was a benamidar of her husband. If the Assistant Commissioner had disbelieved the payment of the money, much would have been said in favour of the view that it was a finding of fact but in this case the payment is not disputed. What the Assistant Commissioner has found is this, that the payment was to himself because the lady in whose name the payment has been made was a benamidar. For coming to this finding some evidence was essential, which, in my opinion, was wanting in this case.

I would, therefore, answer the question of law referred to this Court in the affirmative.

The petitioner will be entitled to a refund of his deposit and also to his costs incurred in this Court; hearing fee ten gold mohurs.

COURTNEY-TERRELL, C.J. - I agree.

Answered in the affirmative.