1980 (1) TMI 66 - HC - Income Tax

Summary

Issues:
Explanation of undisclosed income sources for Rs. 30,000 and Rs. 25,000 by the assessee.

Analysis:
The judgment delivered by the High Court of ALLAHABAD involved a case where the Income-tax Appellate Tribunal referred a question of law regarding the validity of the finding that amounts of Rs. 30,000 and Rs. 25,000 represented the income of the assessee from an undisclosed source. The assessee, an individual conducting business as an agent, had advanced a loan of Rs. 55,000 to a person named Banwarilal. The Income Tax Officer (ITO) added the entire amount to the assessee's income as income from an undisclosed source, which was contested by the assessee in appeal before the AAC. The AAC partly allowed the appeal, accepting the explanation for Rs. 30,000 but rejecting the explanation for Rs. 25,000. Both parties appealed to the Income-tax Appellate Tribunal, which upheld the addition of Rs. 55,000 to the assessee's income. The Tribunal rejected the explanation provided by the assessee for both amounts, leading to the reference of the question to the High Court.

Regarding the Rs. 30,000 amount, the assessee claimed to have advanced a loan to Mangal Datt Shastri in 1955, and the amount was returned to her and used to advance the loan to Banwarilal. However, the Tribunal found the explanation inadequate due to lack of evidence regarding the source of the loan to Shastri, absence of the loan date record, and doubts about Shastri's authenticity. The Tribunal also disregarded the interest income shown in previous tax returns as insufficient evidence. The High Court, following legal precedent, could not consider additional evidence from an affidavit and upheld the Tribunal's decision that the Rs. 30,000 represented undisclosed income.

Concerning the Rs. 25,000 amount, the assessee explained it came from the sale of her ornaments in 1955. The Tribunal questioned the plausibility of using money from a sale four years prior to advance a loan in 1959. The High Court supported the Tribunal's decision to treat the Rs. 25,000 as income from an undisclosed source. Ultimately, the High Court ruled in favor of the department, affirming the addition of Rs. 55,000 to the assessee's income and awarded costs of Rs. 200 to the department.