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Issues Involved:
1. Assessability of income from Archana Jewellery in the hands of the assessee. 2. Ownership of Archana Jewellery business and whether it can be treated as benami. Detailed Analysis: 1. Assessability of Income from Archana Jewellery: The primary issue in both I.T.R. No. 90 of 1993 and I.T.R. No. 147 of 1995 is whether the income from Archana Jewellery, ostensibly owned by A. N. Chellappan, is liable to be assessed in the hands of the assessee. The Tribunal, Commissioner of Income-tax (Appeals), and the assessing authority relied on their earlier decisions for the assessment years 1979-80 and 1981-82, which concluded that the income from Archana Jewellery should be included in the assessee's total income. The assessee had declared an income of Rs. 16,340 for the assessment year 1980-81, which was rejected by the assessing authority based on incriminating documents seized during a search. The assessment was completed on a total income of Rs. 5,82,760, including Rs. 1,38,348 from Archana Jewellery. Similarly, for the assessment year 1983-84, the assessee declared a net loss of Rs. 9,090, but the assessing authority determined the total income at Rs. 82,350, including Rs. 14,993 from Archana Jewellery. 2. Ownership of Archana Jewellery Business: The core question is whether the business of Archana Jewellery, standing in the name of A. N. Chellappan, actually belongs to the assessee. The Tribunal found that the business was started during the accounting period relevant to the assessment year 1979-80. During a search, documents and other materials were seized, including an agreement dated September 5, 1978, indicating that the lease agreement executed by A. N. Chellappan was for and on behalf of the assessee. The assessing authority noted that Chellappan had no capacity to contribute capital and that the business was controlled and managed by the assessee. The Tribunal concluded that the initial capital, control, and management of the business were with the assessee, making him the real owner. The Tribunal's findings were based on several factors: - Chellappan was a man of straw with no means to run a business of such magnitude. - The lease agreement for the shop was for and on behalf of the assessee. - The assessee facilitated a cash credit facility of Rs. 2,00,000 from the Bank of Cochin for Archana Jewellery. - The assessee and his family advanced loans to the business. - The bank account of Archana Jewellery was operated by the assessee. - Documents showing business transactions were found in the assessee's bedroom. The Tribunal's findings were supported by the presumption under section 132(4A) of the Income-tax Act, which places the burden on the assessee to rebut the presumption that the materials seized belong to him. Conclusion: The Tribunal's conclusion that the assessee is the real owner of Archana Jewellery and that Chellappan was merely a name-lender is based on relevant and cogent materials. The Tribunal's findings are factual and supported by evidence, making them final and not open to interference unless they are perverse or unreasonable. The court affirmed the Tribunal's decision, holding that the income from Archana Jewellery should be assessed in the hands of the assessee. The court also noted that principles of res judicata do not apply to income-tax proceedings, and the findings for the assessment year 1979-80 do not preclude the court from considering the question for subsequent years. The questions referred to the court were answered in the affirmative, in favor of the Revenue and against the assessee.
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