1977 (3) TMI 4 - SC - Income Tax

Fixed Deposit - Hindu undivided family - deposits in the name of karta s wife - whether penalty proceedings under s. 28(1)(c) of the 1922 Act can be inititated for the failure to disclose the income from the deposits - materials available showed that the amounts of deposits actually belonged to the assessee - No question of law arose out of the Tribunal s order - assessee s appeal is dismissed

Summary

Issues:
- Refusal of High Court to make a reference under section 66(2) of the Indian Income-tax Act, 1922
- Inclusion of interest on fixed deposit receipts in the income of the assessee
- Burden of proof on the department in quasi-criminal proceedings under section 28(1)(c) of the Act
- Discharge of burden by the revenue authorities to establish concealment of income by the assessee

Analysis:
The judgment pertains to appeals against the High Court's order declining to make a reference under section 66(2) of the Indian Income-tax Act, 1922. The appellant, an assessee, sought a reference to the High Court regarding the inclusion of interest on fixed deposit receipts in the income for assessment years 1955-56 to 1958-59. The revenue authorities contended that the fixed deposit receipts, though in the wife's name, belonged to the assessee, justifying inclusion in the assessee's returns and imposition of penalties under section 28(1)(c) for concealment of income.

In quasi-criminal proceedings under section 28(1)(c), the burden rests on the department to prove concealment of income by the assessee. Merely showing receipt of an amount is insufficient; the revenue must establish it as the assessee's income. The revenue authorities presented evidence, including the balance-sheet, wealth-tax returns, and actions of the assessee's manager, indicating the fixed deposit receipts belonged to the assessee. The funds were used to cover losses in a firm, demonstrating their ownership and benefit to the assessee.

The Tribunal and subsequently the High Court held that no questions of law arose from the order, as the revenue authorities adequately discharged the burden of proving concealment. The High Court's decision was upheld by the Supreme Court, dismissing the appeals with costs. The judgment reinforces the principle that in quasi-criminal tax proceedings, the department must establish concealment of income, and in this case, the revenue authorities successfully demonstrated the same, justifying the denial of a reference to the High Court.

Overall, the judgment emphasizes the importance of meeting the burden of proof in tax matters and highlights the significance of evidence in determining the inclusion of income and imposition of penalties for concealment.