1978 (3) TMI 15 - HC - Income Tax

Fact By Tribunal, Finding Of Fact, In Part, Income From Undisclosed Sources, Wealth Tax Return

Summary

Issues Involved:
1. Whether there was any material before the Tribunal to hold that a sum of Rs. 40,000 represented income from undisclosed sources of the assessee.
2. Whether the findings given by the Tribunal were defective, unreasonable, perverse, and vitiated.
3. Whether there was any justification on the part of the Tribunal to hold that the sum of Rs. 40,000 represents income of the assessee.

Issue-wise Detailed Analysis:

Issue 1: Material Before the Tribunal
The Tribunal held that a sum of Rs. 40,000 represented income from undisclosed sources of the assessee. The assessee had disclosed jewellery worth Rs. 65,000 in her wealth-tax return for the assessment year 1964-65. The Income Tax Officer (ITO) required the assessee to explain the source of acquisition of the jewellery, but no explanation was provided. Consequently, the ITO assessed the entire value of the jewellery as income from undisclosed sources. The Appellate Assistant Commissioner (AAC) accepted that the assessee belonged to a rich family and must have received some ornaments at her marriage. However, the AAC held that only Rs. 25,000 worth of jewellery could be explained, treating the balance of Rs. 40,000 as from unexplained sources. The Tribunal confirmed the addition of Rs. 40,000, finding no sufficient evidence that the entire jewellery was received as marriage presents.

Issue 2: Defective, Unreasonable, Perverse Findings
The findings given by the Tribunal were challenged as defective, unreasonable, perverse, and vitiated. The Tribunal's decision was based on the lack of immediate explanation by the assessee before the ITO and the credibility of certificates provided by the assessee's in-laws. The Tribunal doubted the certificates due to the time elapsed and the detailed recollections they contained. However, the High Court found that the assessing authorities did not dispute the assessee's rich family background and the likelihood of receiving substantial jewellery at marriage. The High Court noted that the AAC and Tribunal's partial acceptance of the explanation was based on surmises and conjectures, which was not supported by evidence.

Issue 3: Justification for Tribunal's Holding
The Tribunal's justification for holding that Rs. 40,000 represented income of the assessee was questioned. The High Court observed that the assessee had provided a reasonable explanation for the possession of the jewellery, supported by certificates and evidence of family wealth. The High Court cited Supreme Court precedents, emphasizing that findings based on surmise and conjecture cannot be sustained. The High Court concluded that the partial acceptance of the explanation by the assessing authorities was unjustified and that the entire value of the jewellery should be accepted as explained.

Conclusion:
The High Court answered:
- Question 1 in the negative, in favor of the assessee, finding no material to support the Tribunal's holding.
- Question 2 in the affirmative, against the revenue, deeming the Tribunal's findings defective and unreasonable.
- Question 3 in the negative, in favor of the assessee, finding no justification for the Tribunal's conclusion.

Each party was ordered to bear its own costs.