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TMI Blog2002 (7) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case, there is any material for the Tribunal to hold that the sum of Rs. 3,49,000 representing the estimated family expenses during the block period 1987-88 to 1997-98 represents the undisclosed income of the appellant?" - - - - - Dated:- 31-7-2002 - Judge(s) : V. S. SIRPURKAR., N. V. BALASUBRAMANIAN. JUDGMENT The judgment of the court was delivered by N.V. BALASUBRAMANIAN J. -The appellant (hereinafter called the "assessee") has filed this appeal against the order of the Income-tax Appellate Tribunal made in I. T. (SS) A No. 372/Mds of 1997, dated November 21, 1996, raising the following questions: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that an investment in the name of the assessee's wife may be treated as the undisclosed income of the appellant, where admittedly, the property belongs to the wife, if the wife is not in a position to explain the sources of the investment? (2) Whether, on the facts and in the circumstances of the case in the absence of a categorical finding that the investment was made by the appellant in the name of the wife, such investment can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d entered politics and became the District Secretary of A.I.A.D.M.K. party at Karur. When he was the District Secretary of the political party, a search was made by the Income-tax Department on November 21, 1996, in his residential premises at Karur and pursuant to the search a notice under section 158BC of the Income-tax Act, 1961 (hereinafter called "the Act") was issued. After considering the particulars furnished by the assessee in the return, it was found that a house property at No. 53, Pudu Street, Karur, was purchased for an admitted consideration of Rs. 1,50,300 in the name of his wife Mumtaz for which a stamp duty of Rs. 12,780 was paid. The registration charges paid were Rs. 3,095. The said document was registered in the office of the Sub-Registrar of Assurances, Parasala, Kerala, and the property was purchased on January 24, 1996. At the time of search, the statements of the assessee and his wife were recorded. In the statement of the wife of the assessee, she did not mention anything about the property standing in her name at Karur. As a matter of fact, she had stated in her statement that apart from a plot at Tambaram, Chennai, there was no other property either in he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l savings of Rs. 1,00,000, the Asses sing Officer found from the bank account of the assessee's brother-in-law that he had taken various crop loans every year from the bank for a period of five years. The Assessing Officer held that had the brother-in-law of the assessee possessed the sum of Rs. 1,00,000 in his hands from his agricultural lands, there would not have been any occasion for him to borrow small amounts as crop loans from the bank every year paying interest at 11.5 per cent. per annum. The brother-in-law's further statement that he was doing retail business in textiles getting the goods from Bombay during the period 1988-92 was also not found to be genuine as it was found that he sustained loss Of Rs. 1,50,000 in the said business. The Assessing Officer came to the conclusion that if the money was really available with the brother-in-law, no prudent man would obtain loan of small amounts and pay interest at 11.5 per cent. per annum. The Assessing Officer came to the conclusion that the claim of the assessee that the property at Karur purchased by his wife was funded by her brother, Y. A. M. Shahul Hameed, was not true and the wife of the assessee had no separate income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income for the purpose of assessment. The Tribunal, in this view, dismissed the appeal. The assessee has filed the appeal challenging the order of the Tribunal. Learned counsel for the appellant vehemently argued that the Tribunal was not correct in sustaining the addition as the assessee was not the owner of the property and she submitted that it cannot be taken as unexplained income of the assessee under section 69 of the Act. She strenuously argued that the Department has not brought any shred of material to show that the assessee had some unexplained income which was utilised for the purchase of the property and in the absence of any such material, the Tribunal was wrong in sustaining the addition. Learned counsel further argued that merely because the assessee was not able to explain the source of the source for the investment, it does not mean that the investment should be treated as undisclosed income of the assessee. Learned counsel further submitted that the wife of the assessee had certain agricultural lands settled in her favour by her father and in lieu of relinquishment of her interest in the said property in favour of her brother, the assessee's wife had received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife had no separate income of her own and she could not have made use of the money said to have been given by her brother for the purchase of the property. It was also found that no member in the family of the assessee was having an independent source of income to advance money to the assessee's wife which was also not the case of the assessee. In the absence of any source for the purchase of the property, it was found by the Tribunal as a matter of fact that the assessee had acquired the property at Karur on January 24, 1996 in the name of his wife and that investment represents his unexplained income. The Tribunal relied on section 69 of the Act incidentally to rebut the contention raised by learned counsel for the assessee to the effect that the assessee was not the owner of the property and the income could not be assessed in the name of the assessee as undisclosed income. The Tribunal held that under section 69 of the Act, the unexplained investment is the deemed undisclosed income of the assessee for the purpose of assessment. We hold that the finding that the investment made in the house property in the name of his wife represents the undisclosed income in the name of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sought for explanation for the source for the purchase of the property standing in the name of the wife of the assessee. The document of sale was found as a result of search and the explanation offered by the assessee that the source of the investment was the loan from his brother-in-law which was found to be false and that the assessee's wife had no separate income of her own to make the investment in her name. Hence the decision in Roshan Lal Seth's case [1989] 178 ITR 660 (P H) is not helpful to the assessee. In KM. N. N. S. N. Subramanian v. CIT [1965] 55 ITR 610, this court was dealing with a case of addition made to the income of the assessee. The addition was made of the deposit amounts standing in the name of the assessee's wife. The assessee in his explanation had stated that the deposits were made out of the amounts given to his wife by her adoptive father. It was found that the adoptive father could not have gifted the amount to her nor could the sum have come from her parents and there was no other source of income except her husband. This court held that the finding of the Tribunal that the deposits represented the undisclosed income of the assessee from undisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectly it affects substantial rights of the parties; or (2) the question is of general public importance ; or (3) whether it is an open question in the sense that the issue has not been settled by pronouncement of the Supreme Court or the Privy Council or by the Federal Court ; or (4) the issue is not free from difficulty ; and (5) it calls for a discussion for alternative view. We are in respectful agreement with the views observed by the Delhi High Court. We find that the tests laid down in the case of Bhagat Construction co, (P.) Ltd. [2001] 250 ITR 291 (Delhi) are not satisfied and the finding that the amount added would represent the undisclosed income of the assessee is a finding of fact as the finding was rendered by the Tribunal with reference to the facts of the case and further it does not affect substantial rights of the parties either directly or indirectly. The other tests laid down have no application to the facts of the case. We hold that the finding of the Tribunal that it is an unexplained income of the assessee is a finding of fact and the Tribunal found that the assessee's wife had no source of income to purchase the property and her own statement sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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