1985 (8) TMI 28 - HC - Income Tax

Summary

Issues:
Jurisdiction of Income-tax Officer to include sum as income, Validity of voluntary disclosure by third parties, Onus of proof on Department, Findings of fact by Tribunal, Sufficiency of reference question

Analysis:

In this case, the primary issue is the jurisdiction of the Income-tax Officer to include a sum of Rs. 20,000 as income of the assessee Hindu undivided family. The Income-tax Officer treated the loans from two ladies as income from "other sources" due to their lack of income-tax assessments. However, the Appellate Assistant Commissioner accepted the explanation provided by the assessee, leading to the deletion of the additions.

The Tribunal further supported the assessee's case, emphasizing that the voluntary disclosure made by the two ladies should be considered valid. The Tribunal found that the Department failed to prove the investment of the amounts elsewhere, thereby affirming the availability of the sum with the ladies for deposit.

The issue of onus of proof was raised by the Revenue, arguing that the Department should not be burdened with proving the absence of investment by the two ladies elsewhere. The court noted that the Income-tax Officer's rejection of the case due to the absence of the ladies for recording statements was not substantial, especially when confirmatory letters and affidavits were provided.

The Tribunal's findings of fact, which established that the deposits belonged to the two ladies, were deemed conclusive. The court highlighted that in a reference under section 256(1) of the Act, challenging such findings of fact is beyond its scope. The court criticized the vague nature of the reference question and emphasized the need for a more pointed reference if the Revenue intended to dispute the basis for the findings.

Ultimately, the court upheld the Tribunal's decision, concluding that the Tribunal was justified in confirming the Appellate Assistant Commissioner's order to delete the addition of Rs. 20,000. The judgment favored the assessee, and no costs were awarded. Judge Nazir Ahmad concurred with this decision.