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TMI Blog2007 (5) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... blished and based on the facts and in the circumstances of the case, the learned Income-tax Appellant Tribunal is legally justified in concluding that burden of proof cast on the appellant under section 68 of the Income-tax Act, 1961 has not been discharged and the ingredients for invoking section 68 of the Income-tax Act are present? (c) Whether in the facts and circumstances of the case, the conclusion of the Tribunal that the claim of gift is not genuine is reasonable and based on relevant material and not perverse?" These appeals relate to the assessment years 1995-96 and 1996-97. The dispute in all these appeals essentially relates to the addition made by the Assessing Officer in respect of several foreign gifts stated to have been received by the assessees from one common donor namely Sampath Kumar. The gifts received were from one Ariavan Thotan and Suprotoman. It is during the enquiry by the Revenue it is asserted that they were the aliases of Sampathkumar. These gifts were made to A. Srinivasan and his wife, Smt. S. Kalavathy, his son, S. Balaji Manikandan and to one of his brothers, Rajendran and Smt. Mohanakala. Each one of them is an assessee within the jurisdiction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his income earned in England. As far as his Indian income is concerned' he stated that he filed the returns for the assessment years 1996-97 and 1997-98 before the Income-tax Officer, Ward 1(4), CBE only on October 23, 1997. His investment in Indian companies according to him will be around Rs. 5 crores and made out of his income earned in the foreign countries. He did not reveal the details of his bank account in India and stated that he would be submitting the details through his auditor which he did not. Except the self serving statement there is no material evidence as regards his financial status. He stated from 1972-73 he knew Srinivasan, Rajendran and their families. His father was a taxi driver, and was very poor. Srinivasan and his family members were supporting him when he was in India. To a pointed query as to whether there is any evidence to show that he was also known by any other name other than Sampathkumar, he stated that "no evidence. Only Mr. Srinivasan used to call me as Suprotoman." The Assessing Officer after an elaborate consideration of the material available on record and the statements of the assessees as well as that of Sampathkumar noted that all the gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation was a round about manner of showing of he having been compensated either in India or abroad." The Tribunal also took note of the various other attending circumstances and found it difficult to accept the explanation offered by the assessees. We may at this stage profitably note that the Assessing Officer, the Commissioner of Income-tax (Appeals) and the Tribunal in one voice held that the explanation offered by the assessees as regards cash credit entries is not acceptable. The material and the evidence available on record according to each one of the authorities lead to one and only possible inference that the so-called gifts received by the assessees in reality are no gifts. The High Court vide the impugned judgment in exercise of its jurisdiction conferred upon it under section 260A of the Act reversed the finding of fact and allowed the appeals. The High Court virtually re-appreciated the evidence available on record and substituted its own findings for that of the Tribunal and the other authorities. The High Court came to the conclusion that the reasons assigned by the Tribunal and other authorities" are in the realm of surmises, conjectures and suspicions. . . the aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the assessee of that previous year." The question is what is the true nature and scope of section 68 of the Act? When and in what circumstances would section 68 of the Act come into play? A bare reading of section 68 suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be of a sum during the previous year; and the assessees offer no explanation about the nature and source of such credit found in the books; or the explanation offered by the assessees in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income-tax as the income of the assessees of that previous year. The expression "the assessees offer no explanation" means where the assessees offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessees. It is true the opinion of the Assessing Officer for not accepting the explanation offered by the assessees as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 under section 69 has to be considered in the light of the facts of each case. The contention of Shri Iyer was that the ratio of the decision would equally be applicable to interpret section 68 of the Act. There is no dispute about the same but the assessees in no manner raised any plea that even if their explanation is not acceptable the same cannot be treated as an income in their hands. In cases where the explanation offered by the assessee about the nature and source of sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, viz; the receipt of money, the burden is on the assessee to rebut the same, and if he fails to rebut it, it can be held against the assessee that it was a receipt of an income nature. The alternative submission made by Shri Iyer before us would not help the assessees in this case in hand. In K. S. Kannan Kunhi v. CIT [196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax assessees and while being assessed, they had made statements before the respective Income-tax Officer admitting that they were allowing their names to be lent without giving loans as creditors of different asses sees. In those circumstances, the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him. This court held that the Tribunal's conclusion was not unreasonable or perverse or based on no evidence and accordingly further held that no question of law as such had arisen for consideration. In CIT v. Deviprasad Khandelwal and Co. Ltd. [1971] 81 ITR 460, the Bombay High Court took the view that in every case where the Income-tax Officer rejects the explanation submitted by an assessee in respect of unexplained cash credits in his books of account, a finding against the assessee must be made that the cash credit entry represents the assessee's income from undisclosed sources. After the tax authorities reject the explanation submitted by the assessee the further question that must always arise for decision would be, "whether it could justly, in the facts and circumstances of the case, be held that the unexplained cash credit was the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all the so-called gifts came from Ariavan Thotan and Suprotoman. The assessees did not declare that they are the aliases of Sampathkumar. It is only an afterthought they have come forward with the said plea. The Assessing Officer also found that the gifts were not real in nature. Various surroundings circumstances have been relied upon by the Assessing Officer to reject the explanation offered by the assessees. The Commissioner of Appeals confirmed the findings and conclusion drawn by the Assessing Officer. The Tribunal speaking though its Senior Vice President concurred with the findings of fact. The findings in our considered opinion are based on the material available on record and not on any conjectures and surmises. They are not imaginary as sought to be contended. Relying on the decisions of this court in Bejoy Gopal Mukherji v. Pratul Chandra Ghose, AIR 1953 SC 153 and Orient Distributors v. Bank of India Ltd. AIR 1979 SC 867, Shri Iyer, learned senior counsel contended that the issue relating to the propriety of the legal conclusion that could be drawn on the basis of proved facts gives rise to a question of law and, therefore, the High Court is justified in interfering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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