KUMARI KANAGAM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The assessee is on appeal as against the order of the Income Tax Appellate Tribunal raising the following questions of law in respect of the block assessment period 1986-87 to 1996-97 (upto 19.1.1996) :-

(2.) The assessee is an individual. There is no dispute as to the fact that the residential status of the assessee is "Not Ordinarily Resident". The assessee is a Singapore citizen married to an Indian and settled in India. There was a search conducted in the case of one Dyaneswaran on 19.1.1996 and in connection with this search the residential premises of the assessee and the place of business of the firm Tvl.Maniammal Textiles Pvt., Ltd., in which the assessee was a partner were also searched. Based on that search, proceedings were initiated for assessment under Chapter XIV-B. One of the materials seized during the course of search revealed that the assessee had advanced a sum of Rs.78/- lakhs to Smt.Maniammal of M/s.Maniammal Textiles Pvt. Ltd., Chennai on 8.11.1995. On enquiry, the assessee explained that the said amount was received through banking channel from Singapore from her family members. The assessee produced confirmation letters from her mother, her four brothers as well as sisters-in-laws wherein they had stated that they were permanent residents of Singapore having independent sources of income and that the amounts were paid to the assessee, who was their only sister so as to enable her to make permanent income in India out of this sum.

(3.) Since there was no material indicating the source of the said amount ., the Assessing Officer pointed out that the assessee had not made any substantive proof to show the source of the above funds and in the absence of any material regarding the source the amount would be treated as undisclosed income. It is seen from the assessment order that enquiries were made with the Revenue Authorities in Singapore and it was found that none of the donors had sufficient income to make the gift. Even in respect of two of the so called donors who were found to be assessed to tax, the income shown was not sufficient to make a gift of Rs.13 lakhs by each one of the donors. Thus, based on the information and in the absence of substantive evidence regarding the source of funds, the Assessing Officer concluded that the amount of Rs.78/- lakhs which was credited in the assesseee's bank by way of demand drafts from Singapore was not satisfactorily explained. Thus, the same was assessed as undisclosed income. Aggrieved by this, the assessee went on appeal before the Income Tax Appellate Tribunal.