2015 (3) TMI 808 - HC - Income Tax

Undisclosed investment - additions of two amounts of ₹ 1.50 lacs and ₹ 1 lac which the assessee claimed to have been received from his mother and wife respectively - Held that - In the present matter undoubtedly the investment having been found to be in the name of the assessee and assessee alone, that too in the course of search and seizure under Section 132 of the Act, the presumption can only be that they form part of unaccounted income of the assessee and the mere fact of producing an affidavit by the wife or mother of the assessee may not be treated by the Assessing Officer as sufficient explanation and neither the Assessing Officer nor the Tribunal has found the same to establish the genuineness of the two transactions. The said findings are purely findings of fact which is in the domain of the Assessing Officer and the Tribunal and it cannot be said that the findings are either based upon no material and are perverse. This Court is of the view that such findings are the natural presumption to be drawn from the nature of evidence that the assessee had produced before the Assessing Officer. - decided against assessee.

Summary

Issues:
Assessment of undisclosed income based on gifts received from mother and wife.

Analysis:
The appeal challenges the Income Tax Appellate Tribunal's order upholding the additions of two amounts claimed as gifts from the assessee's mother and wife. The assessee, a footwear business proprietor, received gifts during a search and seizure under Section 132 of the Income Tax Act. The mother and wife claimed to have given the amounts, but the affidavits were deemed insufficient, leading to the additions in the assessment years 1994-95 and 1995-96.

The appellant relies on Section 69 of the Income Tax Act, arguing that the burden shifted to the Assessing Officer after offering an explanation about the source of investments. Citing the Sarogi Credit Corporation case, the appellant asserts that the burden was not discharged by the Assessing Officer. The appellant also refers to decisions by the Apex Court to support their position.

In contrast, the respondent contends that the burden on the appellant is higher due to the search and seizure under Section 132, which presumes the truth of the contents found. The respondent argues that the appellant failed to rebut the presumption and did not meet the burden under Section 69. The lack of corroborating documents and heavy burden on the assessee, as per previous court decisions, are highlighted by the respondent.

Examining Section 132 and Section 69, the court emphasizes the assessee's responsibility to provide a satisfactory explanation for income sources. Referring to the Sarogi Credit Corporation case, the court clarifies the burden on the assessee based on the nature of entries. In this case, as the investments were in the assessee's name alone during a search and seizure, the presumption of unaccounted income arises. The court finds the affidavits insufficient to establish the genuineness of the transactions, supporting the findings of the Assessing Officer and Tribunal.

Ultimately, the court dismisses the appeal, stating that no substantial question of law arises from the Tribunal's order. The findings regarding the nature of evidence presented by the assessee are upheld as reasonable and based on factual assessments by the authorities.