1982 (4) TMI 189 - AT - Income Tax

Issues Involved:
1. Assessment of Rs. 72,950 for the assessment years 1971-72 and 1972-73.
2. Evidence regarding the source of remittances.
3. Assessment of Rs. 72,950 in two assessment years versus spreading over various years.
4. Tribunal's considerations regarding the appellant's financial capacity and assessment under "other sources."

Detailed Analysis:

1. Assessment of Rs. 72,950 for the Assessment Years 1971-72 and 1972-73:
The primary issue was whether the Tribunal was correct in assessing a total of Rs. 72,950 for the assessment years 1971-72 and 1972-73, specifically Rs. 21,450 for 1971-72 and Rs. 51,500 for 1972-73. The Tribunal upheld the Income Tax Officer's (ITO) assessment, rejecting the assessee's claim that the investments were made from remittances sent from Singapore. The Tribunal's decision was influenced by the Madras High Court ruling in CIT vs. Shri Khateeb Mohmood, which emphasized the necessity of establishing a clear link between the source of funds and the remittances.

2. Evidence Regarding the Source of Remittances:
The Tribunal questioned the validity of the source of the remittances claimed by the assessee. The assessee argued that the funds were remitted from Singapore through illicit channels, originating from her husband's business earnings. However, the Tribunal found no substantial evidence supporting this claim and concluded that the source of Rs. 72,950 was not adequately proven. This decision was consistent with the Tribunal's reliance on the principles established in the Khateeb Mohmood case, which required a clear nexus between the source and the remittances.

3. Assessment of Rs. 72,950 in Two Assessment Years Versus Spreading Over Various Years:
The Tribunal addressed whether the sum of Rs. 72,950 should be assessed in two assessment years (1971-72 and 1972-73) or spread over multiple years (1967-68 to 1972-73). The Tribunal decided to assess the amount in the two specific years, rejecting the assessee's contention that the income should be spread over six years. This decision was based on the Tribunal's determination that the investments were made during the two years in question and not over a longer period.

4. Tribunal's Considerations Regarding the Appellant's Financial Capacity and Assessment Under "Other Sources":
The Tribunal considered whether the appellant had the financial capacity to make such significant investments during the assessment years 1971-72 and 1972-73. The assessee argued that she could not have accumulated such a large amount solely from income earned in those years. The Tribunal, however, assumed without accepting that the amounts could be assessed under "other sources" as undisclosed income and concluded that the income should be assessed in the two specific years rather than spread over multiple years.

Additional Considerations:

Delay in Filing Reference Applications:
The Tribunal also addressed the issue of whether the reference applications were time-barred. The applications were filed with a delay of 621 days. The Tribunal concluded that the delay was justified as the assessee's power of attorney holder was not properly served with the Tribunal's order. The order was initially sent to an incorrect address and later to the advocate, who did not communicate it to the assessee or her power of attorney holder. The Tribunal accepted the affidavit of the power of attorney holder, confirming that he became aware of the order only in April 1979, thus making the reference applications timely.

Legal Question for the High Court:
The Tribunal decided to refer a consolidated question to the Madras High Court for its opinion: "Whether, on the facts and in circumstances of the case, there was any link between the withdrawals in Singapore from the assessee's husband's accounts of Rs. 72,950 and whether such withdrawals were remitted through illegal channels to India during the asst. yrs. 1971-72 and 1972-73 (Rs. 21,450 during 1971-72 and Rs. 51,000 during 1972-73) for the purpose of investment in India during those two years?"

Conclusion:
The Tribunal upheld the ITO's assessment of Rs. 72,950 for the years 1971-72 and 1972-73, rejecting the assessee's claims regarding the source of the funds. The decision was based on the lack of evidence linking the remittances to the claimed source and the application of legal principles from the Khateeb Mohmood case. The Tribunal also addressed procedural issues regarding the timeliness of the reference applications and referred a legal question to the Madras High Court for further consideration.

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