1971 (10) TMI 29

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..... ast date of the accounting year relevant to the assessment year under consideration, fresh shares of the face value of Rs. 90,000 were issued and allotted to the assessee, his wife, his major and minor sons. In the books of the company, the share money was entered as having been received from the respective shareholders. The Income-tax Officer in course of assessment of the assessee doubted the payments made by the wife, the two major and the two minor sons of the assessee as having been in fact paid by them. The assessee submitted an explanation to the effect that the shares allotted to him and his two minor sons were not against payment, but were in consideration of stocks of medicines, furniture and other stores transferred by the ass .....

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..... n the record to this effect, the addition was unjustified. The question now referred to us by the Tribunal is whether the Tribunal misdirected itself in not upholding the addition of Rs. 40,500 as income from an undisclosed source. Counsel for the department has urged that inasmuch as the explanation given by the assessee of the source from which his wife and his major sons had acquired the necessary funds for purchase of the shares had been found to be false, the amount had been rightly brought to tax. In respect of this proposition, he has drawn our attention to the following cases : Govindarajulu Mudaliar v. Commissioner of Income-tax, Kale Khan Mohammad Hanif v. Commissioner of Income-tax and Commissioner of Income-tax v. Ganapath .....

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..... he present case, there is no finding that the company or the assessee was making any attempt to circumvent tax obligations or perpetrate fraud, and as such the question of application of that principle does not arise. The revenue, in the circumstances of this case, could only succeed in case they had brought on record material from which it could be concluded that the deposit made by the wife and the two major sons were in fact made by the assessee. This has not been done, and as such the amount in question could not be added. We are of the view that the Tribunal was justified in deleting the addition of Rs. 40,500 as income from an undisclosed source. We, therefore, answer the question in the negative and in favour of the assessee. The .....

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