1979 (7) TMI 115 - AT - Income Tax

Summary

Issues:
1. Addition of Rs. 11,000 as income from undisclosed sources.
2. Dispute over the nature and source of the investment made by the assessee in his building.
3. Evaluation of evidence provided by the creditor Shri Arjun Singh and Shri D.P. Dwivedi.

Detailed Analysis:
1. The case involved an addition of Rs. 11,000 as income from undisclosed sources. The appellant, a medical practitioner, claimed that the amount represented separate sums of Rs. 6,000 and Rs. 5,000 received from Shri Arjun Singh and Shri D.P. Dwivedi. The authorities treated the entire amount as undisclosed income. The appellant argued that the sums were not from undisclosed sources but were specific loans and gifts.

2. The assessee made an investment of Rs. 13,000 during the relevant period, sourced from a loan from Shri Arjun Singh and a gift from Shri D.P. Dwivedi. The Income Tax Officer (ITO) did not accept the explanation provided by the assessee and considered the entire amount as income from undisclosed sources. The evidence included statements by both lenders. The ITO doubted the credibility of the loan transaction due to lack of formalities like promissory notes and bank accounts.

3. The gift from Shri D.P. Dwivedi was also disputed by the ITO, questioning the donor's financial capacity. The ITO rejected the claim of past savings by the assessee due to the absence of maintained bank or Post Office accounts. The Appellate Authority Commissioner (AAC) deleted the addition related to past savings but upheld the Rs. 11,000 addition. The burden of proof was on the assessee under sections 68 to 69 of the IT Act, 1961.

4. The appellant contended that the burden of proof was discharged by producing the lenders before the ITO, who accepted the transactions. The appellant argued that the Department should have provided evidence to rebut the lenders' statements if they were not believed. The Tribunal found that the AAC erred in not accepting the lenders' version, considering their substantial land ownership as proof of their financial capacity. The Tribunal concluded that the burden of proof was met by the assessee, deleting the Rs. 11,000 addition and allowing the appeal.