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Venkatamma (Decd.) (by Legal Heirs) Vs. Commissioner of Income-tax, Karnataka-i - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberIncome-tax Referred Case Nos. 72, 73 and 74 of 1975
Judge
Reported in[1979]119ITR298(KAR); [1979]119ITR298(Karn)
ActsIncome Tax Act, 1961 - Sections 256(2)
AppellantVenkatamma (Decd.) (by Legal Heirs)
RespondentCommissioner of Income-tax, Karnataka-i
Appellant AdvocateS.P. Bhat, Adv.
Respondent AdvocateS.R. Rajasekharamurthy, Adv.
Excerpt:
.....the national anthem, on the part of the petitioner or prompted by any over act by him constituting an offence under the act. impugned order of magistrate registering the case was quashed. - 699 and 699/1 in favour of the assessee as well as his sons, krishnappa, giriappa and venugopal naidu. it is seen that the settlement as well as the purchase of the property bearing no......bring to tax the entire amount of rs. 12,500 as income from undisclosed sources for the assessment year in question itself (1959-60 (the amounts for the assessment years 1960-61 and 1961-62 are rs. 7,550 and rs. 43,500, respectively). 2. whether the tribunal is justified in law in taxing the income from the properties bearing nos. 699, 699/1 and 1148 in the hands of the assesse ?' 3. so far as question no. 2 is concerned as we have stated earlier, the ito and the aac rejected the claim holding that it had not been established to be huf property and the tribunal also merely confirmed it without any discussion of the material facts bearing on the question. it is seen that the settlement as well as the purchase of the property bearing no. 1148 are evidenced by registered documents and had.....
Judgment:

Srinivasa Iyengar, J.

1. These references relate to the same assessee but for three different assessment years, viz., 1959-60, 1960-61 and 1961-62. The ITO noticed in all the three years that certain investments had been made by the assessee and the sources for the same were not properly explained. Therefore, he treated a sum of Rs. 12,500 as income from undisclosed sources for the assessment year 1959-60, Rs. 7,550 for the assessment year 1960-61 and Rs. 43,500 for the assessment year 1961-62. These additions made have been confirmed by the AAC and also by the Tribunal. Among the house properties the income from which have been brought to tax in the hands of the assessee, there are three items, viz., premises Nos. 699, 699/1 and 1148 at Devaraja Mohalla, Mysore. The assessee's husband dies on September 5, 1943. It transpires that he executed a deed of settlement in respect of the premises bearing Nos. 699 and 699/1 in favour of the assessee as well as his sons, Krishnappa, Giriappa and Venugopal Naidu. The premises bearing No. 1148 had been purchased by him on May 25, 1943. In the assessment for the year 1958-59, this had been brought to the notice of the ITO. Apparently, he did not make an assessment having regard to these documents but assessed the income therefrom in the hands of the assessee. It was allowed to become final. The income from these properties has also been included in the assessment for the subsequent years. A claim had been made that the income must be treated as belonging to the HUF but that was rejected by the AAC. The Tribunal without any discussion merely affirmed that finding.

2. Pursuant to an order of this court under s. 256(2) of the I. T. Act, 1961, two questions have been referred for the opinion of this court. The first question is in relation to the amounts added as income from undisclosed sources and except for the amounts the question is similar. The second question is common for all the years. The questions are as follows :

'1. Whether the Tribunal was right in law and had material to bring to tax the entire amount of Rs. 12,500 as income from undisclosed sources for the assessment year in question itself (1959-60 (the amounts for the assessment years 1960-61 and 1961-62 are Rs. 7,550 and Rs. 43,500, respectively).

2. Whether the Tribunal is justified in law in taxing the income from the properties bearing Nos. 699, 699/1 and 1148 in the hands of the assesse ?'

3. So far as question No. 2 is concerned as we have stated earlier, the ITO and the AAC rejected the claim holding that it had not been established to be HUF property and the Tribunal also merely confirmed it without any discussion of the material facts bearing on the question. It is seen that the settlement as well as the purchase of the property bearing No. 1148 are evidenced by registered documents and had been produced before the ITO during the course of the assessment for the year 1958-59. Merely because the documents were not produced again in the subsequent years, the claim could not be rejected without calling for those documents from the assessee and considering the effect of the same. The assessment for each year is a self-contained one and there is no question of res judicata, merely because the claim is rejected in one year. If such a claim is raised in any subsequent year, it is bound to be considered by the authorities on its own merits. Therefore, we hold that the Tribunal was not justified in confirming the assessment of the income from the properties bearing Nos. 699, 699/1 and 1148 in the hands of the assessee without calling for relevant material. It will be open to the Tribunal to consider the matter afresh by itself or by remanding the matter to the authorities below.

4. Broadly stated, the facts bearing on question No. 1 are as follows :

The assessee purchased properties bearing Nos. 695/1, 683 and 1107/1 for an aggregate sum of Rs. 17,500 during the accounting year relevant to the assessment year 1959-60. She had also borrowed a sum of Rs. 10,000 from a co-operative society. The ITO allowed a deduction of Rs. 5,000 from out of the loan amount and held that the net investment during the year would be Rs. 12,500.

5. In the accounting year ended March 31, 1960, the assessee had made investments in the purchase of two properties for a sum of Rs. 7,550. In the accounting year, relevant to the assessment year 1961-62, the assessee had purchased house property for a sum of Rs. 50,000 but a sum of Rs. 6,500 was yet to be paid in this regard. The ITO, therefore, took the actual investment at Rs. 43,500. The assessee was called upon to explain the investments and the source for those investments. It was claimed by the assessee that her husband left some cash amounting to over Rs. 19,000 when he died in 1943 and together with jewellery she had, and that belonging to her mother-in-law and a dowry amount that had been received at the time of the marriage of her son and some other amounts received from certain parties were available for making the investments. It was also claimed that she had made savings between 1943 and 1948 and the same would amount to about Rs. 32,400. The ITO noticed that by 1958, the investments on house property had been made in a sum of Rs. 17,300 and, therefore, the claim that any cash left by the husband would be available was unbelievable assuming that her husband who was only an employee drawing Rs. 45 per month could have amassed such an amount of cash. No details were given in regard to jewels and to whom it was sold and when it had been sold. There was also no evidence about the receipt of any amount from third party or by way of dowry, except the assertion of the assessee herself. In these circumstances, the ITO rejected the claim of the assessee and made the additions by way of income from undisclosed sources. The AAC and the Tribunal have confirmed the same.

6. So far as the assessment years 1960-61 and 1961-62 are concerned we do not find any justifiable ground to say that the Tribunal was in error in confirming the additions. The investments made and the amount of investment were not in dispute at all. The known sources of the assessee would not have been sufficient to make these investments and it could not also be said that any substantial contribution towards the investment could have been made from the known sources of income. In these circumstances, it was open to the income-tax authorities to hold that the investments made were from undisclosed sources. The assessee who would have been in actual knowledge of the real facts ought to have furnished tangible and acceptable evidence in that behalf and in the absence of such evidence the inference made by the ITO was legitimate : vide A. Govindarajulu Mudaliar v. CIT : [1958]34ITR807(SC) . However, in regard to the assessment made for the assessment year 1959-60, the view taken by the Tribunal is plainly erroneous. The Tribunal observed in its order as follows :

'Then there remains the loan from Mysore Co-operative Society in 1959 for Rs. 10,000. This is not disputed by the department. We, therefore, consider that it would be reasonable to hold that this sum would have been available for investment.'

7. Having said so, the Tribunal proceeded to say :

'The Income-tax Officer has already given credit for Rs. 5,000. We, therefore, consider that no further adjustment is called for.'

8. We find it very difficult to reconcile the conclusion arrived at by the Tribunal with its findings in the extract quoted earlier. The Tribunal ought to have held that a sum of Rs. 10,000 was available for the investment that had been made in the accounting year relevant to the assessment for 1959-60, and should have given credit for the balance of Rs. 5,000. Accordingly, for that assessment year the unexplained investment would be Rs. 7,500 only. Therefore, question No. 1 in relation to the assessment year 1959-60 is answered as follows :

9. The Tribunal was not right in law in upholding the inclusion of Rs. 12,500 as income from undisclosed sources, but ought to have held that only a sum of Rs. 7,500 could be so included. Question No. 1 in relation to the assessment years 1960-61 and 1961-62 are answered in the affirmative. Question No. 2 in all the cases is answered in the negative and the Tribunal would have to decide the question afresh in accordance with law and in the light of the observations made above.

10. Parties to bear their own costs.


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