2001 (10) TMI 34 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction to restore a reference application dismissed as time-barred.
2. Maintainability of the reference case referred by the Tribunal.
3. Addition of unexplained investments in the name of minor children.
4. Addition of unexplained wealth in the name of the assessee's minor son.

Summary:

1. Jurisdiction to Restore a Reference Application Dismissed as Time-Barred:
The Tribunal initially dismissed the reference application filed by the Commissioner of Income-tax, Cochin, as time-barred. The Department later contended that the correct date of receipt of the appellate order should be when the Commissioner of Income-tax, Cochin, received it, making the application timely. The Tribunal restored the reference application, which the assessee challenged. The Court held that the Tribunal has inherent power to correct its own mistakes, including restoring a reference application dismissed by mistake. The Tribunal's restoration of the reference application was upheld.

2. Maintainability of the Reference Case Referred by the Tribunal:
The assessee's two cases challenged the maintainability of the reference case, I.T.R. No. 61 of 1997, referred by the Tribunal at the instance of the Commissioner of Income-tax, Cochin. The Court found that the Tribunal rightly restored the reference application and decided it on merits. The original petition filed by the assessee challenging the Tribunal's order was dismissed, and the questions in I.T.R. No. 275 of 1999 were answered in favor of the Department.

3. Addition of Unexplained Investments in the Name of Minor Children:
The Tribunal directed the Assessing Officer to determine whether the investments by the assessee's minor children were out of past accumulations. The Court found that the assessee admitted in a sworn statement that he made investments in the name of his minor children. The Tribunal's order for further investigation was deemed unjustified as the Department had already probed and established the non-existence of sufficient sources for the investments. The Court held that the materials produced before the Tribunal did not justify a remand.

4. Addition of Unexplained Wealth in the Name of the Assessee's Minor Son:
The Tribunal ordered an investigation into the unexplained increase in the wealth of the assessee's minor son. The Court found that the assessee did not establish a source for his minor son's wealth during the assessment or first appeal. The only case presented was that the children made a declaration under the Amnesty Scheme. The Court held that even if such a declaration was made, the addition could be made in the name of the assessee. Both questions referred in I.T.R. No. 61 of 1997 were answered in favor of the Department and against the assessee.