1980 (4) TMI 74 - HC - Income Tax

Summary

Issues involved: The judgment involves the assessment of whether a sum of Rs. 20,000 declared under the Voluntary Disclosure Scheme in 1951 and subsequently deposited in the names of two daughters of the assessee represented income from undisclosed sources.

Summary:
The High Court of Punjab and Haryana considered the case of an assessee, a karta of a Hindu undivided family (HUF), who declared Rs. 20,000 under the Voluntary Disclosure Scheme in 1951. The amount was later deposited in the names of his two daughters. The Income Tax Officer (ITO) added this amount as income from undisclosed sources, which was contested by the assessee. The Appellate Authority Commission (AAC) initially allowed the appeal, but the Income-tax Appellate Tribunal reversed the decision. The main question referred to the court was whether there was evidence to hold that the Rs. 20,000 represented undisclosed income.

The court noted that the Rs. 20,000 declared under the scheme was not found in the accounts of the assessee or the HUF. The assessee claimed that the deposited amount belonged to the disclosed sum. The court emphasized that the burden lay on the revenue to disprove the explanation provided by the assessee. Referring to a Supreme Court case, the court highlighted that the revenue must show inherent weaknesses in the explanation or provide contrary evidence to reject it. Since there was no evidence to suggest the disclosed amount was utilized differently, the court accepted the assessee's explanation.

Additionally, the court considered that the deposited amount was in the accounts of the major daughters, not the assessee himself. Without evidence to refute the connection to the disclosed sum, the presumption of undisclosed income could only apply to the daughters, not the assessee. Therefore, the court ruled in favor of the assessee, concluding that the Rs. 20,000 did not represent income from undisclosed sources. The judgment was delivered by Judges B. S. Dhillon and G. C. Mital, with both concurring on the decision.