1997 (12) TMI 79 - HC - Income Tax

Summary

Issues:
Petition under section 256(2) of the Income-tax Act, 1961 seeking direction to the Income-tax Appellate Tribunal for drawing up a statement of case and referring a question for the opinion of the High Court. The main issue revolves around whether the Tribunal was correct in holding that the onus on the assessee within the meaning of section 69A had shifted to the Department merely by owning up the seized cash in the hands of the director and paying taxes on it.

Analysis:

The case involves a petition under section 256(2) of the Income-tax Act, 1961, filed by the Revenue to direct the Income-tax Appellate Tribunal for drawing up a statement of case and referring a question for the opinion of the High Court. The question pertains to the correctness of the Tribunal's decision regarding the shift of onus on the assessee under section 69A. The Revenue contended that the question arises as a legal issue from the Tribunal's order, while the respondent-assessee argued that the Tribunal's findings were mainly factual and did not give rise to a legal question.

The assessee, a lending and borrowing money business, had cash seized during a search by the Enforcement Directorate. The Assessing Officer added the disputed amount as unexplained income under section 69A as the assessee's explanation was deemed unsatisfactory. However, the Tribunal reversed this decision based on various findings, including the admission of possession by the director, who offered to pay tax on the amount and had his own business utilizing the company's premises.

The Tribunal concluded that the cash seized had been satisfactorily explained as per the requirements of section 69A, which allows for deeming unexplained assets as income if not satisfactorily explained. The Tribunal's decision was based on the belief in the director's statement and relevant circumstances. The Revenue's suggested question did not challenge the Tribunal's findings directly, leading to the rejection of the petition under section 256(2) of the Income-tax Act, 1961.

The legal principles cited in previous cases emphasized the finality of the Tribunal's factual findings and the High Court's limited jurisdiction to question these findings without specific challenges in a reference. The Tribunal's belief in the assessee's statement was considered sufficient material for its decision, and the question posed by the Revenue did not challenge the Tribunal's findings directly, leading to the rejection of the petition.