1977 (6) TMI 22 - HC - Income Tax

Summary

Issues Involved:

1. Whether there is any material, data, or evidence on record to support the findings of the Tribunal that certain sums were the income of the assessee from undisclosed sources for the assessment years 1948-49, 1949-50, and 1950-51.

Issue-Wise Detailed Analysis:

1. Findings of the Tribunal on Income from Undisclosed Sources:

The primary issue revolves around whether the sums of Rs. 50,000 and Rs. 1,40,000 for the assessment years 1948-49 and 1949-50, respectively, and Rs. 70,000 for the assessment year 1950-51, were the income of the assessee from undisclosed sources.

The assessee, a Hindu undivided family (HUF), was assessed based on certain deposits in the name of Shrimati Parwatibai. The Income-tax Officer (ITO) found deposits of Rs. 50,000 on November 9, 1947, and Rs. 50,000, Rs. 40,000, and Rs. 50,000 on April 21, 1948, October 22, 1948, and January 2, 1949, respectively, in the books of Messrs. Kaluram Puranmal. For the assessment year 1950-51, deposits of Rs. 40,000 and Rs. 30,000 were noted in the books of Ishwardas Hanuman Parshad.

The assessee explained that these deposits were from amounts received by Shrimati Parwatibai under a partition deed dated November 29, 1943. However, the ITO found discrepancies in the statements of Shrimati Parwatibai and Onkarmal, the karta of the HUF, and concluded that the deposits were the income of the HUF from undisclosed sources.

The Appellate Assistant Commissioner and the Tribunal confirmed the ITO's findings, rejecting the additional evidence provided by the assessee, such as balance sheets for the years 1942-43 and 1946-47, due to the non-production of books for the intervening years.

Material and Evidence Considered:

The court examined the statements of Shrimati Parwatibai and Onkarmal, the partition deed, and account statements from the books of Messrs. Kaluram Puranmal and Ishwardas Hanuman Parshad. The partition deed was found to be dubious due to several reasons, including the unnatural recitals, the manner of execution, and the lack of registration.

The court noted that Shrimati Parwatibai's statements were inconsistent, particularly regarding the receipt of interest and the withdrawal of the principal amount. The entries in the books of Messrs. Kaluram Puranmal contradicted her statements, showing that interest was collected by individuals unknown to her and that the principal amount was withdrawn by Onkarmal.

Inference and Conclusion:

The court concluded that the material on record, including the discrepancies in the statements and the entries in the books of third parties, supported the inference that Shrimati Parwatibai was a benamidar for the HUF. The deposits were thus considered the income of the HUF from undisclosed sources.

Rejection of Additional Evidence:

The court upheld the rejection of the balance sheets for the years 1942-43 and 1946-47, as the explanation for the non-production of books for the intervening years was not satisfactory. An adverse inference was drawn against the assessee, and the absence of a link between the initial amounts and the subsequent deposits further weakened the assessee's case.

Double Taxation Concern:

The court acknowledged the assessee's concern about potential double taxation of the income in the hands of the HUF and Shrimati Parwatibai. The court suggested that the taxing authorities consider this aspect and make necessary adjustments if required.

Final Decision:

Both questions referred to the court were answered in the affirmative and against the assessee. The court found ample material to justify the additions made by the taxing authorities for the assessment years in question.

The assessee was directed to pay the costs of the reference to the revenue. The court also recommended that the taxing authorities address the issue of double taxation as highlighted by the assessee's counsel.