The judgment of the court was delivered by
SHAH J.--The appellant is a Hindu undivided family which
derives its income from property, managing agency, dividends and forward
transactions. In proceedings for assessment for 1945-46, the appellant claimed
before the Income-tax Officer, Ajmer, that as a result of speculation in silver,
gold and cotton, it had suffered a net loss of Rs. 1,58,080 in the previous
year. In support of its claim the appellant produced entries in the cash book,
journal, ledger and ankdas of the original contracts received from commission
agents, which according to the appellant proved the losses. The appellant also
contended that it had sold family ornaments of the value of Rs. 85,137 to
satisfy some of the losses in speculation. The Income-tax Officer rejected the
claim of the appellant that it had incurred losses in speculation and treated
Rs. 85,137 as income from an undisclosed source. The Appellate Assistant
Commissioner of Income-tax, B-Range, Delhi, confirmed the order of the
Income-tax Officer. The Income-tax Appellate Tribunal disallowed the claim of
the appellant about the losses in speculation, but about the amount of Rs.
85,137 the Tribunal observed :
"...we are of opinion that there is no justification
for making this addition....There is nothing improbable in the assessee selling
the gold ornaments for the purpose of paying the speculation losses. They were
sold, according to the books, in 4 or 5 lots. We would, therefore, direct that
the addition of Rs. 85,137 may be deleted."
The appellant then applied under section 66(1) of the
Indian Income-tax Act, 1922, for reference of the following questions to the
High Court of Judicature at Allahabad :
" (i) Whether there is any evidence on record to
justify the finding of the Tribunal that the assessee failed to prove that they
had suffered speculation losses to the tune of Rs. 1,58,080 ?
(ii) Whether the loss suffered by the assessee in
speculation, viz., Rs. 1,58,080, is an admissible deduction under the Indian
Income-tax Act ?"
The Tribunal rejected the application holding that no
question of law arose out of its order. The appellant then moved the High Court
of Allahabad under section 66(2) of the Income-tax Act and prayed that the
Tribunal be called upon to state the case and refer the questions of law stated
in the application. The High Court was of the view that the order of the
Tribunal disallowing losses claimed by the appellant in speculative business was
founded on appreciation of evidence, and no question of law arose therefrom, on
which a statement of the case could be called for. But the High Court observed :
" The argument of learned counsel for the assessee is
that, in view of this finding which amounts to acceptance of the case of the
assessee that there were some speculation losses, the Tribunal was entirely
wrong in disallowing the claim of speculation losses at least to the extent of
the sum of Rs. 85,137. In our opinion this point raised on behalf of the
assessee is a question of law on which we should ask for a statement of the case
from the Tribunal. In the circumstances, we direct the Tribunal to state the
case on this point as indicated by us above after framing an appropriate
question."
Against the order of the High Court refusing to state the
case with regard to the loss of Rs. 1,58,080, the appellant has appealed to this
court with special leave.
On the evidence before it, the Tribunal held that the
appellant failed to prove that it had suffered losses in speculative business in
the year of account amounting to Rs. 1,58,080. The case of the appellant about
the losses in speculation was disbelieved, because (1) the appellant failed to
produce a copy of its account with the brokers and admitted not to have
maintained a sauda nondh for the purpose of the speculative transactions, (2)
that the appellant did not maintain any proper accounts for its speculative
business, (3) that " there was no guarantee " that the appellant had
produced all ankdas, and (4) that in the cash book of the appellant there were
many cash credits which were not satisfactorily explained. The burden of proving
that the appellant had suffered losses in speculation lay upon it, and the
Tribunal on a review of the evidence held that the appellant failed to prove
that case. No question of law arises from the finding recorded by the Tribunal.
It was urged by Mr. Shroff for the appellant that this
finding was inconsistent with the order of the High Court calling for a
statement of the case in respect of the amount of Rs. 85,137. The High Court
directed that a statement of the case be submitted in respect of this amount of
Rs. 85,137, and a reference was made pursuant to that order. We do not feel
called upon to consider at this stage whether there is any inconsistency in the
order. Prima facie the order that the amount of Rs. 85,137 is not income from
undisclosed sources, and is on that account not liable to be included in the
appellant's income has no direct bearing on the question relating to proof of
loss of Rs. 1,58,080.
We have felt greatly disturbed at the leisurely pace at
which this case has reached this court. The Income-tax Appellate Tribunal passed
its order in appeal under section 33 of the Act on July 2, 1951, and the
application under section 66(1) was dismissed by the Tribunal on October 20,
1951. A petition under section 66(2) was moved in the High Court on April 15,
1952, and that petition was disposed of on December 11, 1957. This court was
then approached for special leave on March 31, 1958, and the printed record
which runs into no more than 81 pages was sent by the High Court to this court
in 1964. The High Court, as we have already stated, called for a statement of
the case in respect of one question, and we are informed at the Bar that the
reference is still pending. These proceedings relate to assessment for the year
1945-46. More than twenty years have elapsed since the end of the year of
account and more than fourteen years have gone by since the Tribunal disposed of
the appeal. It is a matter of regret that the end of assessment proceedings is
not yet in sight. It is hardly necessary to say that delays of this nature in
the hearing of cases are apt to bring the administration of justice into
contempt.
The appeal is dismissed with costs.
Appeal dismissed.
