1984 (2) TMI 32 - HC - Income Tax

Summary

Issues:
Assessment of income based on overdraft facility, validity of collateral securities, ownership of fixed deposit receipts, deletion of addition by Tribunal, reference application under s. 256(2) of the I.T. Act, finality of Tribunal's factual findings, interference by High Court.

Analysis:
The judgment pertains to an income tax case involving the assessment year 1970-71 where the assessee, engaged in the business of woollen shawls, had an overdraft facility with a bank. The Income-tax Officer (ITO) discovered that the overdraft was secured against hypothecated stock and collateral security from guarantor's deposits. The ITO, suspecting benami transactions, added an amount of Rs. 84,500 to the assessee's income, attributing ownership of fixed deposit receipts to the assessee. The assessee's appeal to the AAC and subsequently to the Tribunal resulted in the deletion of the addition. The Commissioner's application for reference to the High Court was also declined by the Tribunal.

The Tribunal, in its decision, emphasized the lack of evidence establishing the assessee as the real owner of the fixed deposits. It considered all relevant evidence and concluded that the fixed deposit receipts did not belong to the assessee but to the individuals in whose names they were prepared by the bank. Citing the decision in Rai Bahadur Mohan Singh Oberoi v. CIT, the Tribunal reiterated that determinations of benami transactions are factual inquiries, and the Tribunal's findings in this regard are final. The High Court, following precedent, noted that it would not interfere with the Tribunal's factual findings unless they were unsupported by evidence or perverse.

The High Court dismissed the petitions, finding no merit in the additional arguments presented. The court upheld the Tribunal's decision, emphasizing the finality of factual findings and the limited grounds for review by the High Court. The judgment underscores the importance of evidence in establishing ownership and the deference accorded to the Tribunal's factual determinations in such matters.