2007 (2) TMI 205 - HC - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 10,00,000 u/s 69 as unexplained investment in shares.
2. Onus of proof on the appellant regarding no new investment in the assessment year 1997-98.
3. Applicability of section 2(24)(iv) for credit card expenses of Rs. 46,28,108.
4. Applicability of section 2(24)(iv) for LIC premium payment of Rs. 26,668.

Summary:

Issue 1: Addition of Rs. 10,00,000 u/s 69 as unexplained investment in shares
The assessees were called upon to explain their investments in shares of M/s. Sai Television for the assessment year 1997-98. The Revenue found that the assessees had pledged one lakh shares of M/s. Sai Televisions Limited with UTI Bank Limited, issued on January 31, 1997. The assessees claimed these were jumbo certificates consolidating shares from October 18, 1995. However, the assessing authority noted the lack of authenticated balance sheets and non-declaration of these shares in previous assessments. The Tribunal upheld the addition of Rs. 10,00,000 as unexplained investment u/s 69, noting the assessees' failure to provide original certificates or substantial evidence.

Issue 2: Onus of proof on the appellant regarding no new investment in the assessment year 1997-98
The Tribunal held that the burden of proof was on the assessees to substantiate their claim of no new investment. Despite requests, the assessees failed to provide necessary details or original certificates. The Tribunal concluded that the addition was justified due to the lack of evidence from the assessees.

Issue 3: Applicability of section 2(24)(iv) for credit card expenses of Rs. 46,28,108
The assessing authority found that the assessees incurred personal expenses through credit cards, settled by cheques from NEPC group firms. The Tribunal noted that the funds were transferred indirectly to clear credit card dues, and the expenses were personal in nature. The Tribunal upheld the addition under section 2(24)(iv), as the payments were made by the company on behalf of the directors, deeming it as income of the directors.

Issue 4: Applicability of section 2(24)(iv) for LIC premium payment of Rs. 26,668
Similarly, the Tribunal upheld the addition of Rs. 26,668 for LIC premium paid by the firm on behalf of the appellant under section 2(24)(iv). The Tribunal found no evidence of business-related expenses and confirmed the personal nature of the payments.

Conclusion:
The High Court confirmed the Tribunal's order, dismissing the appeals. The court held that the findings were based on substantial evidence and the assessees failed to provide necessary proof to counter the additions made by the assessing authority. The appeals were dismissed with no costs.