ASHOKA SHARAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE writ and the reference applications being based on the same set of facts relating to the same petitioner are being disposed of by this common judgment. In the reference application, the following questions of law were called for by this court under Sec.256(2) of the Income -tax Act, 1961 (in short "the Act" only) :

(2.) THE assessee is an individual. Her husband, Dr. J. Saran, is a medical practitioner. During the assessment year 1973 -74, the assessee claims to have invested a sum of Rs. 1,62,000 in the construction of a house. On being asked to explain the source of the said investment, she filed her detailed explanation. According to that explanation, Rs. 78,000 was said to have been advanced by Dr. J. Saran out of the Hindu undivided family fund. On being examined by the Income -tax Officer, Dr. J. Saran disclosed that his Hindu undivided family was assessed to income -tax for five assessment years, i.e., 1968 -69 to 1972 -73, on the net income of Rs. 15,000 in each year out of a timber business and it was out of this income that the aforesaid loan of Rs. 78,000 was advanced to the assessee. On being questioned by the Income -tax Officer, Dr. J. Saran failed to give any details in respect of the said timber business nor any book of account was produced, rather it was admitted that the Hindu undivided family did not maintain any timber depot or stockyard. What was more fatal to the acceptability of the statement regarding carrying on of timber business was an affidavit, which was filed before the sales tax authorities wherein it was specifically stated that the Hindu undivided family had not carried on any timber business involving any sale or purchase of its own but had acted merely as a broker. This statement before the sales tax authorities was possibly necessitated because admission of sale or purchase of timber would have attracted sales tax liability. Keeping in view the explanation of the assessee, the sum of Rs. 78,000 was added in the hands of the Hindu undivided family in a duly initiated proceeding under the Act against which the Hindu undivided family went in appeal and the Appellate Assistant Commissioner after discussing the facts of the case came to the conclusion that the Hindu undivided family could not and did not advance any money to the assessee. Accordingly, the said addition of Rs. 78,000 was deleted from the assessment of the Hindu undivided family. This finding attained its finality since no appeal was preferred to the Tribunal either by the Hindu undivided family or by the Department.

(3.) KEEPING in view the above facts and circumstances, the Income -tax Officer added the said sum of Rs. 78,000 in the hands of the assessee under Sec. 69 of the Act as unexplained investment, which has been confirmed by the Appellate Assistant Commissioner. The Tribunal also, applying itself to the facts and the materials available on the record, has recorded a finding to the following effect :