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TMI Blog1993 (2) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case, the mere expenditure of a sum of Rs. 78,000 by the assessee can be taxed under section 69 of the Act on the ground that receipt of money remained unexplained by the assessee ? (iii) Whether, on the facts and circumstances of the case, the finding of the Tribunal is vitiated on account of irrelevant matters ?" The assessee is an individual. Her husband, Dr. J. Saran, is a medical practitioner. During the assessment year 1973-74, the assessee claims to have invested a sum of Rs. 1,62,000 in the construction of a house. On being asked to explain the source of the said investment, she filed her detailed explanation. According to that explanation, Rs. 78,000 was said to have been advanced by Dr. J. Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Hindu undivided family could not and did not advance any money to the assessee. Accordingly, the said addition of Rs. 78,000 was deleted from the assessment of the Hindu undivided family. This finding attained its finality since no appeal was preferred to the Tribunal either by the Hindu undivided family or by the Department. Keeping in view the above facts and circumstances, the Income-tax Officer added the said sum of Rs. 78,000 in the hands of the assessee under section 69 of the Act as unexplained investment, which has been confirmed by the Appellate Assistant Commissioner. The Tribunal also, applying itself to the facts and the materials available on the record, has recorded a finding to the following effect : "We confirm t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid situation, under legal advice, the petitioner has filed the present writ application challenging the very constitutional validity of section 69 of the Act. Mr. Chatterji, learned counsel for the petitioner, by referring to entry 82 of List I of the Seventh Schedule to the Constitution, which runs "Taxes on income other than agricultural income", has sub mitted that under the said legislative entry, tax can be levied by Parliament only on actual or real income and no tax can be levied on a deemed or fictional income as has been sought to be done under the statutory provision like section 69 of the Act. His submission was that the legislative power has to take its colour from the field assigned to it and cannot be made dependent on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the assessee has made an investment of Rs. 78,000 but the source of acquiring the same has remained unknown, if she cannot be subjected to tax by creating a legal fiction, it will be easy for anybody to keep making investments without letting the Department know about his income and paying tax thereon. It is bare common sense that if a person makes an investment in a particular financial year, then, the amount so invested must represent either his current income or his savings from past income or receipt by loan or otherwise from some other person. If such person fails to explain the source of investment, which can reasonably be accepted then the only irresistible conclusion can be a presumption that he has earned the said amount dur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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