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2009 (7) TMI 62 - HC - Income TaxUnexplained money u/s 69A recording of findings before initiation of proceedings u/s 147 investment made in the FDRs of Rs.1,50,000/- each on 9.6.95 and 14.8.95 - Held that In the present case, the findings having been recorded by the Assessing Officer, CIT(A) as well as the Tribunal that the assessee had unexplained income which could be added to taxable income, cannot be held to be perverse merely because the assessee was aged 19 addition u/s 69A upheld.
Issues:
1. Initiation of assessment proceedings without specific finding on the source of income. 2. Invocation of Section 69A for treating unexplained money as income. 3. Acceptance of partial explanation by departmental authorities. 4. Justification of assessing cash available as opening balance under Section 69A. Issue 1 - Initiation of Assessment Proceedings: The appellant appealed against the order passed by the Income Tax Appellate Tribunal, Delhi Bench-I, for the assessment year 1996-97. The appellant questioned the initiation of assessment proceedings under Section 147 of the Income Tax Act without a specific finding that the investments in Fixed Deposit Receipts (FDRs) were out of income that escaped assessment. The appellant contended that the Assessing Officer did not adequately establish the source of income for the investments in question. However, the Tribunal, after considering the explanations provided by the appellant, upheld the addition of undisclosed income represented by the FDR investments. The Tribunal found the appellant's explanations unsatisfactory, noting discrepancies in the appellant's financial history and lack of evidence supporting the claimed sources of income. Issue 2 - Invocation of Section 69A: The appellant raised a concern regarding the invocation of Section 69A of the Income Tax Act for treating certain amounts as income when no actual money was found in possession of the appellant during the relevant period. The Tribunal, in its decision, highlighted that the appellant failed to provide a satisfactory explanation for the source of funds used to purchase the FDRs. The Tribunal rejected the appellant's argument that the funds were carried over from previous years, emphasizing the lack of evidence supporting this claim. The Tribunal concluded that the presumption of the revenue to treat the undisclosed income as taxable in the relevant year was justified in the absence of credible explanations from the appellant. Issue 3 - Acceptance of Partial Explanation: The appellant contested the partial rejection of explanations provided by the appellant regarding the money available in assessment years 1994-95 and 1995-96. The appellant claimed that the funds invested in the FDRs were earned in previous years and carried over. However, the Assessing Officer, CIT(A), and the Tribunal found the appellant's explanations unsatisfactory, noting inconsistencies in the appellant's financial records and lack of verifiable sources of income. The Tribunal emphasized that the appellant's reliance on a previous court decision was not applicable to the current case due to the absence of supporting evidence for the claimed sources of income. Issue 4 - Justification of Assessing Opening Balance: The appellant challenged the justification of assessing the cash available as an opening balance under Section 69A for the assessment year 1996-97. The appellant argued that the addition of income was not warranted merely based on the Assessing Officer's discretion, citing a Supreme Court judgment in a similar context. However, the Tribunal and subsequent authorities upheld the addition of undisclosed income, emphasizing the lack of credible explanations and evidence supporting the sources of income claimed by the appellant. The courts concluded that the findings regarding the unexplained income were factual and not perverse, dismissing the appellant's appeal. In conclusion, the High Court dismissed the appeal, emphasizing that the substantial questions raised were primarily factual in nature, and no significant legal issues were identified to warrant a reversal of the Tribunal's decision.
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