TMI Blog1992 (8) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... after a month of the statement at the time of search, she again admitted the ownership and also declared the amount as her income claiming immunity as provided in Explanation 5 of section 271(1)(c) of the Act. We may clarify here that we are concerned with part of such deposits standing in assessee's own name for which details are separately given hereinafter. Thereafter after the lapse of approximately 16 months the assessee filed returns in accordance with what was submitted earlier. Notice under section 148 was issued in July 1989 in response to which the assessee submitted that returns were submitted on20th April, 1989, wherein the amounts invested in deposits were declared as income and further that those returns should be taken as returns filed under section 143. However, subsequently after about 7 months, on 26th December, 1989 the assessee submitted revised returns showing reduced income by excluding investments in fixed deposits with National Confederation of Bank Employees (NCBE) and interest accrued thereon. The reason for revising the returns was stated to be the claim of the assessee for the first time that the fixed deposits did not belong to the assessee. When the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessing officer, therefore, held that the investment in the deposits belonged to the assessee and additions had to be made as income of the assessee under section 69 of the Act. He accordingly made additions as under :--- Year Value of deposit Interest accrued 83-84 Rs. 85,000 Rs. 4,940 84-85 Rs. 4,23,500 Rs. 29,965 85-86 Rs. 11,64,000 Rs. 1,25,098 86-87 Rs. 80,000 Rs. 2,20,402 3. The assessee appealed. The grounds raised before the Commissioner (Appeals) were on various aspects of the controversy, legality as also on merits. Briefly they were as under : 3.1 The action taken under section 148 read with section 147 was irregular.The Commissioner (Appeals) rejected this ground after observing that the assessee could not exactly specify the grievance. This ground is raised in the memo of appeal but no reference was made to this ground at the time of hearing and, therefore, this ground is rejected as not pressed. 4. The assessee also challenged the completion of the assessment on the basis of lack of jurisdiction and limitation as provided under section 153 of the Act. The Commissioner (Appeals) held that the assessments were completed within the time and regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect that the assessee had no independent source of income, whether section 69 could be invoked, it was posed because in section 69 the words used are. ". . . . . the assessee has made investments ....... and these words are very significant. In the context of these words he highlighted the judicial approach required to be adopted, as was done in the following cases :--- (i) K.S. Kannan Kunhi's case ; (ii) in the case of CITV. Smt. P.K. Noorjehan [1980] 123 ITR 3 (Ker.) ; (iii) in the case of Navnit Lal C. Javeri v. K.K. Sen, AAC [1965] 56 ITR 198 (SC) especially the observations at page 210 ; and (iv) in the case of K.P. Varghese v. ITO [1981] 131 ITR 597 (SC), where certain observations were made with regard to right to receive something. It was submitted that in the absence of any source of income and considering the status of the lady, as also the age of the assessee it could not be believed that such large amounts invested in various deposits could have come out of undisclosed income of the assessee. The learned Departmental Representative relied upon the appellate order. 9. On consideration of the material placed before us we are not inclined to take a view differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee contended that it was not the law that once the explanation was rejected it automatically followed that the receipt was income. The High Court observed that in the case of assessee, who was known to be carrying on several activities of income earning character or who can reasonably be found to be involved in such activities, to draw the inference that the credits constituted income from undisclosed sources, in the absence of satisfactory explanation, but such an inference should not be readily made in the case of a person who had no known business or other sources of income, or who could not even be reasonably suspected as engaged in income earning activities, in which case there must be substantial reasons to reject the assessee's explanation so as to make an addition. Mr. Ganesan highlighted these observations of their Lordships. But on going through the facts before us we find that the assessee had admitted engagement in income earning activities. Besides, there was a categorical and specific admission by the assessee during several proceedings in the case under consideration. Therefore, the ratio laid down by the Hon'ble Supreme Court in the case of A. Govindarajulu Mud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Tribunal under section 254, it was open to the Tribunal to interfere with the judicial discretion exercised by the tax authorities and substitute the same by its own discretion even after rejecting the explanation of the assessee and in so acting differently it could not be said that the Tribunal acted arbitrarily or capriciously because it took into account complete absence of resources of the assessee, besides having regard to the age of the lady and the circumstances in which she was placed. 13. We would have happily followed this judgment so as to decide the issue in favour of the assessee because the judgment highlights the finer aspect of the judicial discretion which can be exercised by the Tribunal because of the wide powers granted to it under section 254, but in the case before us the facts are not exactly similar. In the case under consideration there was no explanation as fairly stated by Mr. Ganesan, apart from the same being unsatisfactory. Besides, the lady has admitted time and again that she used to earn income from various sources like tuition and speculation. The age of the lady is also not that tender as was the case before the Kerala High Court. On th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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