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Issues Involved:
1. Addition of Rs. 4,10,000 as income from undisclosed sources. 2. Whether the amount should be treated and taxed as capital gain. Summary: Issue 1: Addition of Rs. 4,10,000 as Income from Undisclosed Sources The assessee challenged the order of the learned Commissioner of Income-tax (Appeals) for the assessment year 1985-86. The solitary question in this appeal relates to the addition of Rs. 4,10,000 being the cash found in the possession of the assessee at the time of the search and treated as income from undisclosed sources. During the search on January 22, 1985, cash of Rs. 4,15,000 was seized from two bank lockers. The assessee disclosed that she had sold her house property for Rs. 5,00,000, but the sale deed was signed for Rs. 1,00,000. The Income-tax Officer concluded that the unexplained cash of Rs. 4,10,000 is to be treated as income from undisclosed sources. The assessee's appeal before the learned Commissioner of Income-tax (Appeals) failed. Issue 2: Whether the Amount Should be Treated and Taxed as Capital Gain The assessee argued that the cash of Rs. 4,10,000 was part of the sale proceeds of the house property and should be treated as a capital gain. The Tribunal considered the facts and circumstances but did not accept the contention that the amount should be treated as a capital gain. The Tribunal noted that there was no evidence to substantiate the assessee's claim, and the explanation was contradicted by the buyer's testimony and the sale deed. The Tribunal held that the Revenue authorities were justified in not accepting the assessee's explanation and dismissed the appeal. Separate Judgement by Accountant Member: The Accountant Member agreed with the assessee's contention that the income should be assessed as capital gains. He noted that the assessee was an old widow with no known source of income and the only financial transaction was the sale of the property. The Accountant Member referred to various High Court decisions supporting the assessee's claim and concluded that the amount should be treated as income from capital gains. Order of Reference to Third Member: Due to a difference of opinion between the Judicial Member and the Accountant Member, the point of difference was referred to the President u/s 255(4) of the Income-tax Act: "Whether on the facts and in the circumstances of the case, the cash amount of Rs. 4,10,000, which u/s 69A is deemed to be the income of the assessee for the financial year under appeal, should be treated and taxed as capital gain?" Order of Third Member: The Third Member resolved the dispute by agreeing with the Accountant Member. He concluded that the sum in question should be regarded as sale consideration received by the sale of the house and taxed as income from capital gains. The matter was sent back to the regular Bench for disposal in accordance with the opinion of the majority.
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