1997 (1) TMI 6

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..... leted
S. C. AGRAWAL. and G. T. NANAVATI. JUDGMENT These appeals have been filed against the judgment of the Kerala High Court (see [1980] 123 ITR 3), dated November 21, 1979, in ITR Nos. 137 and 138 of 1977, whereby the following question has been answered by the High Court in favour of the assessee and against the Revenue. "Whether, on the facts and in the circumstances of the case and on a true interpretation of section 69 of the Income-tax Act, 1961, the Income tax Appellate Tribunal is right in law in holding that section 69 of the Act cannot be invoked in respect of the investments of the assessee and that, therefore, the addition made for the assessment year 1968-69, or, as the case may be, 1969-70, should be deleted ?" The app .....

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..... s income in the course of the assessment year or was even in a position to earn it for a decade or more. The Tribunal took the view that although the explanation of the assessee was liable to be rejected, section 69 of the Act conferred only a discretion on the Income.-tax Officer to deal with the investment as income of the assessee and that it did not make it mandatory on his part to deal with the investment as income of the assessee as soon as the latter's explanation happened to be rejected. On that view, the Tribunal allowed the appeals of the assessee and cancelled the assessment made by the Income-tax Officer. Thereafter, the Tribunal at the instance of the Revenue referred the question abovementioned to the High Court for its opinio .....

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..... was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting section 69 was to confer a discretion on the Income-tax Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the Income-tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not .....

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