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TMI Blog2009 (3) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... te for the appellant. Mr. D. S. Thakur, Advocate for the respondent. JUDGMENT The judgment of the court was delivered by Barin Ghosh, CJ - This is an appeal by the Assessee under Section 260 A of the Income Tax Act, 1961 from the order of the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar. In the year 1991 assessee constructed a house property. The Assessee, who was a partner of six partnership Firms carrying on finance business, had not filed his income tax returns for the earlier four to five years contending that his income was not taxable. A notice under Section 148 dated 18 th February, 2000 was served on the assessee on 7 th March, 2000, whereupon on 11 th February, 2002 assessee filed a return of income de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and certain amounts of money were paid to certain individuals from the said account. The assessee contended that the payments made to the Finance Companies were for repayment of loans taken from them for construction purpose. Assessee contended that payments to those individuals were on account of purchase of materials. Assessee furnished the names and particulars of those Finance Companies as well as of those individuals. Notices sent to them were returned un-served. Partners of those Firms appeared before the Assessing Tax Officer at the instance of the assessee, but individuals did not. Partners of those Firms stated that loans were given to the assessee by the Firms represented by them and those were paid by the assessee through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of time earlier than the dates of payment of the subject amounts from the said account. Similarly, there was no material, except assertions by the assessee, that building materials were procured by the assessee from those individuals, who were paid certain amounts from the said account. A payment can be accepted as repayment or on account of purchase when it is established that an earlier payment was received or a purchase was made. Neither an earlier payment, nor any purchase said to have been made was established. In the circumstances, non-acceptance of payments made to the said Firms as repayment of loans and nonacceptance of payments made to those individuals on account of purchase of materials cannot be said to be an act so caprici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Therefore, in terms of Section 69C of the Act, appellant was required to explain satisfactorily the source of the expenditure of Rs. 17.00 lacs, which he had incurred for construction of the house in question. The explanation as was put forward by the appellant was repayment of loans, which were used for the construction, and payments on account of purchase of materials. Receipt of loans, utilization thereof for construction and purchase of materials were, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'may' and, accordingly, no sooner the explanation of the assessee is not satisfactory, the amounts cannot be deemed to be the income of the assessee. It is true, as pointed out by the Hon'ble Supreme Court in the case referred to above, a discretion has been given to the department in the matter of deeming the unexplained amount as income of the assessee, but such discretion is to be used judiciously for protecting the interest of the assessee as well as of the revenue. In that case, on facts, it was found that having regard to the age of the assessee and the circumstances in which she was placed., she cannot be credited to make income of her own and in those circumstances, the Hon'ble Supreme Court upheld the view of the Tribunal in refus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the assessee to explain, to the satisfaction of the Assessing Officer, the source of expenditure made by him, with a rider that if the explanation is not satisfactory, the Assessing Officer may use his discretion against the assessee, which connotes an obligation to satisfy, apart from the explanation to be given by him, that there was existence of such circumstances in which the assessee was placed that he cannot be credited with having made such income of his own. In the event, such obligation had been discharged but ignoring the same, Assessing Officer had added the expenditure as deemed income and thereby had used his discretion against the assessee, it would have been open to the assessee to call in question user of such d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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