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Dr. Prakash Tiwari Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 203 of 1981
Judge
Reported in[1984]148ITR474(MP)
ActsIncome Tax Act, 1961 - Sections 69 and 69B
AppellantDr. Prakash Tiwari
RespondentCommissioner of Income-tax
Appellant AdvocateR.C. Kochatta, Adv.
Respondent AdvocateR.C. Mukati, Adv.
Excerpt:
- .....on further appeal the tribunal reduced the addition of income to rs. 10,000.3. the assessee had a house property, namely, a residential house in dhan mandi, ratlam, which was stated to be ancestral property. the assessee had 1/3rd share in the said house. his father, lalchand, and his brother, ramchandra, relinquished their rights in favour of the assessee. the ito held that the said house was the property of the assessee and was not the property of the huf as claimed by him. on appeal, the aac confirmed the order passed by the ito. on further appeal, the tribunal held that 1/3rd share of the house belonged to the huf and 2/3rds share therein belonged to the assessee absolutely.4. at the instance of the assessee, the tribunal has referred the aforesaid questions of law for the opinion.....
Judgment:

Vijayvargiya, J.

1. By this reference under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as ' the Act') the Income-tax Appellate Tribunal, Indore Bench, Indore, has referred the following questions of law for the opinion of this court:

' 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that at the beginning of the assessment year the assessee had savings to the tune of Rs. 15,000 only as against Rs. 25,000 shown by him and that the balance of Rs. 10,000 stands assessable under Section 69B of the Income-tax Act, 1961 ?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that 1/3rd of tne property situated at Dhan Mandi, Ratlam, belonged to the HUF of the assessee as ancestral property and the remaining 2/3rds of the same belonged to him in his individual capacity '

2. The material facts giving rise to this reference briefly stated are as follows : While framing the assessment of the assessee for the assessment years 1972-73 to 1977-78, the ITO added Rs. 15,000 to the income of the assessee from undisclosed sources in the assessment year 1972-73. On appeal, the AAC confirmed the order of the ITO. On further appeal the Tribunal reduced the addition of income to Rs. 10,000.

3. The assessee had a house property, namely, a residential house in Dhan Mandi, Ratlam, which was stated to be ancestral property. The assessee had 1/3rd share in the said house. His father, Lalchand, and his brother, Ramchandra, relinquished their rights in favour of the assessee. The ITO held that the said house was the property of the assessee and was not the property of the HUF as claimed by him. On appeal, the AAC confirmed the order passed by the ITO. On further appeal, the Tribunal held that 1/3rd share of the house belonged to the HUF and 2/3rds share therein belonged to the assessee absolutely.

4. At the instance of the assessee, the Tribunal has referred the aforesaid questions of law for the opinion of this court.

5. We have heard the learned counsel for the parties. The learned counsel for the assessee contended that as the assessee did not maintain any accounts, Section 69B of the Act was not applicable and, therefore, the Tribunal was not justified in adding Rs. 10,000 to the income of the assessee from undisclosed sources. In our opinion, on the facts and in the circumstances of the case, reference to Section 69B of the Act was not appropriate because the assessee did not maintain any accounts. However, the matter is squarely governed by Section 69 of the Act which provides that:

' Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year '.

6. In the present case, the Tribunal has found that the explanation given by the assessee in respect of the investment of Rs. 10,000 made by the assessee in advancing loan to others was not satisfactory. In the circumstances, Section 69 of the Act squarely applied and the Tribunal was justified in adding the said amount to the income of the assessee of the financial year in question.

7. In view of the fact that the reference to Section 69B of the Act in the question is not appropriate, we reframed question No. 1 as follows :

' Whether, on the facts and in the circumstances of the case, theAppellate Tribunal was justified in holding that at the beginning of theassessment year the assessee had savings to the tune of Rs. 15,000 onlyas against Rs. 25,000 shown by him and that the balance of Rs. 10,000stands assessable under Section 69 of the Income-tax Act, 1961 ?'

8. Our answer to question No. 1 reframed by us is in the affirmative and against the assessee.

9. On the facts stated above, the assessee's brother and father relinquished their 2/3rds share in the house property in favour of the assessee. It is not the case of the assessee, that his father and brother transferred their shares in the house property to the assessee representing as undivided family. In the circumstances, the transfer of the interest of the assessee's father and brother in the house property in favour of the assessee has to be held in his individual capacity and not in the capacity of karta of the HUF. The Tribunal, therefore, did not commit any error of law in holding that the assessee was the absolute owner of 2/3rds share in the house property and 1/3rd share belonged to the HUF of which the assessee was the karta. Our answer to question No. 2 is in the affirmative and against the assessee.

10. The reference is answered accordingly. There shall be no order as to costs of this reference.


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