2017 (2) TMI 1284 - HC - Income Tax

Treatment to unexplained money as the Stridhan - Held that - The proposition of law enunciated in Pratibha Rani s Vs. Suraj Kumar and another (1985 (3) TMI 60 - SUPREME Court) relied upon by the learned counsel for the appellant is unexceptionable. It was held by the Apex Court that a Hindu married woman is the absolute owner of her Stridhan property and can deal with it in any manner she likes. She may spend the whole of it or give it away at her own pleasure by gift or will without any reference to her husband. Ordinarily the husband has no right or interest in it with the sole exception that in terms of extreme distress as in famine illness or the like the husband can utilise it but he is morally bound to restore it or its value when he is able to do so. This right is purely personal to the husband. The property so received by him in marriage cannot be proceeded against even in execution of a decree for debt. However in the present case the appellant was unable to substantiate that the amount which was treated to be unexplained money was the Stridhan of the appellant s wife. In view of the above once the additions have been held to be sustained no substantial question of law arises.

Summary

Issues Involved:
1. Penalty under Section 271(1)(c) of the Income Tax Act.
2. Ownership and taxability of Stridhan under Section 27 of the Hindu Marriage Act, 1955, and Section 14 of the Hindu Succession Act, 1956.
3. Chargeability of income under Section 5 of the Income Tax Act, 1961.
4. Assessment of cash credits under Section 68 of the Income Tax Act.
5. Genuineness of transactions and creditworthiness of lenders.

Detailed Analysis:

1. Penalty under Section 271(1)(c) of the Income Tax Act:
The appellant-assessee contested the imposition of penalty under Section 271(1)(c), arguing it was unreasonable and mechanically influenced by quantum proceedings. The Tribunal upheld penalties on certain additions but deleted penalties on others where the assessee could substantiate the transactions. Specifically, penalties on the additions of ?25,75,000 and ?20,00,000 were canceled as the assessee proved the transactions' genuineness and creditworthiness. Conversely, penalties on additions of ?3,30,000, ?10,00,000, and ?29,000 were upheld due to the lack of supporting evidence.

2. Ownership and Taxability of Stridhan:
The appellant-assessee argued that the amount of ?3,30,000 was from his wife's Stridhan, which should not be taxable under Section 5 of the Income Tax Act. The Tribunal, however, found the explanation unconvincing as the affidavit provided was contradictory and unsupported by evidence. The Tribunal upheld the addition under Section 68, treating it as unexplained cash credit.

3. Chargeability of Income under Section 5 of the Income Tax Act:
The appellant-assessee claimed that the transactions involving dasti money among relatives were genuine and should not be chargeable under Section 5. The Tribunal examined the evidence and upheld the addition of ?10,00,000 from Shri Gurdiwan Singh, as his statement denied any loan transaction. Similarly, the addition of ?29,000 from Shri Iqbal Singh was upheld due to the lack of evidence.

4. Assessment of Cash Credits under Section 68:
The Tribunal scrutinized various cash credits. The addition of ?3,30,000 was upheld due to insufficient evidence of the source. The addition of ?10,00,000 from Shri Gurdiwan Singh was upheld based on his denial of the loan. However, the Tribunal deleted the addition of ?25,75,000 received from Shri Jeet Singh, finding the explanation plausible given the agricultural background and lack of banking facilities. Similarly, the addition of ?20,00,000 from Shri Pritam Singh was deleted as the assessee substantiated the transaction's genuineness.

5. Genuineness of Transactions and Creditworthiness of Lenders:
The Tribunal evaluated the creditworthiness of lenders and the genuineness of transactions. It upheld additions where the assessee failed to provide credible evidence or where affidavits contradicted earlier statements. For instance, the affidavit of Shri Gurdiwan Singh was not accepted as it was unsupported by evidence and contradicted his earlier statement. Conversely, the Tribunal accepted the genuineness of transactions involving Shri Jeet Singh and Shri Pritam Singh, leading to the deletion of related additions.

Conclusion:
The Tribunal's findings were upheld as they were based on a thorough evaluation of evidence and legal principles. The appellant-assessee's inability to substantiate certain claims led to the upholding of penalties and additions in those instances. The appeals were dismissed, affirming the Tribunal's decision.