HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Lalchand Bhagat Ambica Ram v. Commissioner of Income-tax, Bihar & Orissa
Civil Appeals Nos. 679 and 680 of 1957
[1960] 1 SCR 301 ·
Indian Income-tax Act, 1922, section 66 · Excess Profits Tax Act
Sources & disclosures includedDownload original judgment / order
3-judge bench · S. R. Das · N. H. Bhagwati · M. Hidayatullah
Assessment years: 1946–47; excess-profits chargeable period 9 January 1945–2 February 1946
01 · Facts of the case
Grain-trading HUF encashed Rs 2,91,000 demonetised high-denomination notes and explained them through existing cash balances exceeding that amount. Tribunal accepted underlying account books despite admitted later denomination annotations, but arbitrarily treated Rs 1,41,000 as concealed business profits.
Source: Primary report: SCR 303–308
02 · Discussion by the Hon’ble Court
Unsupported suspicions about local smuggling, speculative opportunity and prior prosecution could not replace evidence. Accepted genuine balances and business cash needs explained holdings; no evidential basis justified allowing only Rs 1,50,000. Perverse factual findings or findings based on irrelevant material remain reviewable as legal error.
Source: Primary report: SCR 308–319
03 · Judicial decision
Tribunal’s partial rejection was a rule-of-thumb inference unsupported by material and could not sustain income-tax or excess-profits addition.
Source: Primary report: SCR 313–320
04 · Outcome / in whose favour
Both appeals allowed; High Court judgment set aside; common reference answered negatively; assessee awarded reference and appeal costs.
Source: Primary report: SCR 320
05 · AKHB REVIEW POINT
Use as evidence-appraisal principle on this record, not automatic immunity for cash deposits or endorsement of altered books. Tribunal had accepted books’ underlying genuineness and explanation for annotations.
Source & verification
Download original judgment / order · Open cited source rendition
Complete 20-page Supreme Court Reports scan. Any adjoining report fragments remain in the unchanged original and are excluded from this analysis.
Statutory scope
Historical legislation expressly identified in this note. This is not a decision under the Income-tax Act, 1961 or the Income-tax Act, 2025. Verify enacted wording, commencement, transition and subsequent judicial treatment independently before modern reliance.
Later treatment
Source checked 2026-10-23. Subsequent treatment and present-law applicability have not been comprehensively checked.
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General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. AKHB REVIEW POINT is editorial analysis, not the Court’s holding.