1983 (11) TMI 24 - HC - Income Tax

Failure To Disclose Fully And Truly, Income From Undisclosed Sources, Reassessment, Reference

Summary

Issues:
1. Disclosure of investment in pick-up van in income-tax return.
2. Treatment of money received from sister-in-law as income from undisclosed sources.
3. Validity of Tribunal's finding on the possession of money by sister-in-law.
4. Competency of Tribunal to sustain addition not arising from previous orders.
5. Legality of Tribunal's order based on irrelevant considerations.

Analysis:
- The judgment pertains to an application under section 256(2) of the Income Tax Act, 1961, for the assessment year 1976-77. The primary issue raised was whether the Income Tax Officer was justified in reopening the assessment under section 147(a) due to non-disclosure of investment in a pick-up van in the original income tax return. The assessee argued that the disclosure in the wealth-tax return sufficed, citing a subsequent amendment dispensing with the requirement to disclose such investments. The court distinguished the case from precedent, emphasizing the absence of legal enforcement for disclosure in this instance, raising a question of law for interpretation of section 147(a) (Malegaon Electricity Co. P. Ltd. v. CIT [1970] 78 ITR 466).

- Regarding the second issue, the Tribunal concluded that the money received by the assessee from his sister-in-law was not a genuine loan but income from undisclosed sources. This finding was based on an assessment of available evidence, particularly the statement of the sister-in-law. The court deemed this conclusion as a factual determination, not giving rise to a legal question, thereby rejecting a reference on this issue.

- The judgment also addressed the Tribunal's finding on the possession of the money by the sister-in-law. The court upheld the Tribunal's decision, emphasizing that it was a factual determination based on the available evidence and did not involve a legal question warranting a reference.

- Furthermore, the court dismissed the consideration of questions 3 to 5 as they were not raised before the Tribunal, limiting the scope of the reference to questions 1 and 2. The Tribunal was directed to draw up a statement of the case and refer question 1 to the court, as it involved an interpretation of the law concerning disclosure requirements under section 147(a).

- In conclusion, the judgment delves into the intricacies of disclosure requirements under the Income Tax Act, factual determinations regarding income sources, and the scope of legal questions for reference to the court, providing a comprehensive analysis of each issue raised in the application.