1998 (8) TMI 121 - AT - Income Tax

Unexplained Money Statement Of Affairs Brought Forward Capital Balance Stone-walled Investigation Addition

Summary

Issues:
1. Disputed additions of opening capital and gift receipts.

Analysis:
1. The assessee disputed additions of Rs. 1,44,510 and Rs. 12,415 as opening capital and gift receipts, respectively. The assessee's counsel argued that invoking section 69A was unjustified as there was no evidence that the assessee acquired the capital during the relevant financial year. The counsel emphasized that the revenue failed to prove ownership acquisition in line with section 69A requirements. The counsel presented the assessee's Statement of Affairs since 1982-83 to support that the opening capital was accumulated over the years and not acquired in the assessment year. It was contended that the revenue should have accepted the Statement of Affairs or rejected all, as per law, thereby precluding the addition of opening capital. Additionally, the counsel highlighted the revenue's acceptance of similar Statements of Affairs in subsequent years, questioning the inconsistency in doubting the genuineness of the opening capital.

2. The Departmental Representative argued that the onus was on the assessee to prove the source of investments, failing which the addition should be sustained under section 69. However, the Tribunal opined that the provisions of sections 69 and 69A differ significantly. It was noted that the revenue's case could not be supported by shifting the addition from section 69A to section 69. The Tribunal agreed with the assessee's counsel that the genuineness of the brought-forward capital, supported by the Statement of Affairs since 1982-83, should not be doubted merely because the income became taxable in the relevant year. The Tribunal also dismissed the revenue's allegation of the assessee obstructing investigations, emphasizing the Assessing Officer's authority to conduct necessary inquiries independently.

3. The Tribunal concluded that the addition of opening capital could not be sustained, given the circumstances and the evidence presented. However, regarding the addition of Rs. 12,415 as gift receipts, since the assessee failed to provide supporting evidence, the revenue's decision to tax the amount was deemed justified. Consequently, the Tribunal deleted the addition of Rs. 1,44,510 but sustained the addition of Rs. 12,415, partially allowing the assessee's appeal.