TMI Blog1993 (9) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... for a consideration of Rs. 1,00,000 on December 17, 1984, between the assessee and Shri Maru in the presence of one Shri L. P. Patil. Out of the sale price of Rs. 1,00,000, an amount of Rs. 10,000 was received as earnest money on November 19, 1984, and the balance of Rs. 4,00,000 was received in cash on December 17, 1984. She further disclosed that the sum of Rs. 1,00,000 was deposited with the Central Bank of India and the balance of Rs. 4,00,000 was kept in lockers. According to her, the sale price was delivered at her residence by Shri Vadilal Maru in the presence of her grandson on December 17, 1984, before they went to the Registrar's office to complete the formalities of the transfer of property. During the investigation, Shri Vadilal Maru was also examined and cross-examined on March 21, 1984. During that examination Shri Maru denied the suggestion that he had paid Rs. 4,00,000 in addition to the stated price of Rs. 1,00,000 to the assessee. On the basis of the material available before him, the Income-tax Officer came to the conclusion that the entire unexplained cash of Rs. 4,10,000 found in her possession is to be treated as income from undisclosed sources. On the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut here again we do not find ourselves in agreement with learned counsel. Except the statement of the assessee herself, there is no other evidence to substantiate the assessee's claim. On the other hand, the assessee's explanation stands contradicted not only by the sworn testimony of the buyer, viz., Mr. Vadilal Maru, but also by the sale deed executed by the assessee herself. According to the assessee, one Mr. L.P. Patil was present at the time of the payment of the sale consideration. The lady has further stated that her grandson, Sunil Rele, was also present at the time of the payment. But none of these two persons has been produced by the assessee as witness. The buyer, Shri Vadilal Maru, has been cross-examined by the assessee and during that crossexamination, he has denied the suggestion that he had paid Rs. 4,00,000 in addition to the stated price of Rs. 1,00,000 to the assessee. So far as the two rulings are concerned, here again we find that they do not offer any material assistance to the assessee's case. In the case before the Kerala High Court, the explanation offered by the assessee was accepted on the basis of the surrounding circumstances. But then, in that case the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the agreement was signed. It was further deposed at the time of cross-examination that this Rs. 4 lakhs was kept in lockers, Rs. 1.5 lakhs at Oriental Bank of Commerce and Rs. 2.5 lakhs at State Bank of India, Dadar. It was, therefore, claimed that the said income should be assessed as income arising out of the transfer of the property as the assessee had no other source of income. She claimed that she was not assessed to income-tax either before or after the raid. She was an old widow of about 65 years and was physically unfit to run any business for earning income. Learned counsel before us submitted that the search itself was actuated by the very sale transaction and the officer issued authorisation for search under section 132 in consequence of information in his possession regarding this transfer of property. If it was not so and if there was material information which could lead to any other inference, it was on the Revenue to produce such evidence. In the absence of such evidence, it was submitted that the income should be assessed as capital gains arising out of the sale of the property. On careful consideration of the rival submissions and keeping in view the findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view which I am adopting is all the more apposite in view of the fact that the Revenue has not come forward with the information in its possession which impelled the action under section 132 of the Act. Adverse inference against the Revenue can reasonably be drawn in this regard as the failure appears to be deliberate. The next question for our consideration is whether the Tribunal can ignore the contents of the documentary evidence in the form of sale deed which specified the sale consideration and hold that the assessee received an amount over and above the one recorded in the instrument ? In this regard, the decision of the Patna High Court in the case of CWT v. Rohtas Industries Ltd. [1968] 67 ITR 283 is directly on this point. In that case, it was held that, in the absence of any direct evidence, a judicial or quasijudicial Tribunal can base its conclusions on the basis of what are known as notorious facts bearing in mind the principles of section 114 of the Evidence Act. Only a court may assume the existence of any fact which it thinks likely to have happened in the course of normal conduct of public and private business. It is, therefore, in the fitness of things that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of her residential premises and, therefore, a capital gain and should be assessed as such. The learned Members of Bombay Bench 'E' who heard this appeal differed on this issue. While the learned Judicial Member took the view that it was income from undisclosed sources, i.e., supported the Revenue's stand, the learned Accountant Member supported the assessee's stand holding that it was income from capital gains and should be assessed as such. It was to resolve this dispute that this point of difference of opinion has come up before me as a Third Member. The relevant facts are not too many to assimilate or too difficult to grasp. The assessee is the widow of R. C. Rele, 68 years old, and first became an income-tax assessee on the death of her husband as a successor to the estate left by her husband. Her husband was an income-tax assessee and his income consisted of income from property, income from shares and income from fixed deposits. Her husband died on November 16, 1983, and she inherited the immovable property known as "RELE NIWAS" at 22, D.L. Vaidya Road, Dadar, Bombay-28. This property was partly rented and partly self-occupied. This property was sold to one Vadilal Maru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined Vadilal Maru, the purchaser, by summoning him under section 131 of the Income-tax Act and recorded his statement on oath. He flatly denied having paid to the assessee anything more than Rs. 1 lakh. On account of this contradiction and denial by the purchaser, Vadilal Maru, the Income-tax Officer treated the sum of Rs. 4,10,000 out of the sum of Rs. 4,15,000 as income from undisclosed sources and brought the same to tax as such with the following observations : "It was, therefore, considered necessary to allow the assessee to cross-examine Shri Vadilal Maru and accordingly an opportunity was allowed to the assessee, vide this office letter No. G/9-M(3)/85-86, dated March 17, 1986. Here again the assessee could not come out with any concrete evidence or convincing statement to establish that the sum of Rs. 4,15,000 seized during the search operation under section 132 represented the amount received from Mr. Vadilal Maru. Considering this above facts, the said sum of Rs. 4,00,000 + Rs. 10,000 alleged to have been received as on money is considered as assessee's income from undisclosed sources. '' On appeal, this decision was confirmed by the Commissioner of Income-tax ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all being Rs. 430 and Rs. 1,616, respectively, as to even remotely suggest that any income would be accumulated to be kept as income from undisclosed sources aggregating to the magnitude of Rs. 4 lakhs either separately or in conjunction with income from other sources. The income from dividends is always confined to the shareholdings. It may be possible to keep the shareholdings undisclosed for a short time or a long time. But, the income from dividends is next to impossible to be kept undisclosed unless these dividends relate to undisclosed shareholdings. In order that the income may be relatable to dividends from undisclosed shareholdings, the shareholdings must be quite huge and so too the dividends. Is it possible to keep the shareholdings undisclosed to the Department for a length of time ? Is it possible for an assessee not to take advantage of the tax deducted at source by filing returns at one time or the other ? The possibilities, in my opinion, are not only remote but almost extinct. Therefore, the dividend income, in my opinion, is not such as to give scope for concealing it so as to accumulate it to the extent of Rs. 4 lakhs either separately or in conjunction with ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purposes of the Indian Income tax Act, 1922, then they may authorise a search subject to the conditions provided for in the subsequent provisions of section 132. It is, therefore, possible that the Department has information in its possession that the assessee has money or jewellery which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922, and that such money or jewellery represents either wholly or partly income which has not been, or would not be, disclosed. Unless this information was in the possession of the concerned officers inducing in them the belief that the sum in question would not be disclosed, they cannot authorise the search. I do not know what was the information in consequence of which the search was authorised. Since the search was authorised so close on the sale of the house, the normal expectation would be that it has nexus to the sale of the house. This is one probability. The second probability is that one can take judicial notice of the fact that sales of immovable properties are taking place on a large scale in our country involving change of black money by understating the sale consideration in the documents o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee whether the purchaser remembered that he had brought cash of Rs. 4 lakhs in a cotton bag along with his brother, S. D. Maru, on November 19, 1984, and that the cash was mostly in Rs. 100 denomination and the cash was counted and found to be in order and that the bundles were tied with rubber band and pinned up, the reply of the vendee, Vadilal Maru, was that there was no question of remembering anything when there was no cash payment. This shows that the cash of Rs. 4 lakhs must have passed to the assessee only on November 19, 1984, and not on December 17, 1984, and, therefore, the statement of the grandson that the money was received on November 19, 1984, could not be discounted as unreliable. May be on account of old age and confusion as a result of prolonged proceedings recording statements after statements, the assessee might have said the date of receipt as December 17, 1984. Secondly, the next four questions are more revealing : "By Mrs. M. Rele : You are not telling the truth, because you and your brother Shri S. D. Maru, had agreed that this cash would be paid. You have first met me in August, 1984, regarding the dealing of this property, before that I was conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the money, bullion, jewellery or other valuable article, or the explanation offered is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. The important ingredients of the section are that the assessee must be found to be the owner of the money, bullion, etc. Either there must be no explanation about the nature and source of acquisition of the money or bullion, etc., or the explanation is not satisfactory, then the money and the value of the bullion, etc., may be deemed to be the income of the assessee for the financial year in which it was found. The expression "may be deemed to be the income" is very relevant for our present purpose. If the explanation is satisfactory, it cannot be deemed as the income of the assessee. Therefore, the use of the phrase "may be deemed to be the income" gives the Income-tax Officer a discretion to exercise judiciously and judicially. The second thing is that it is to be deemed as the income. The income need not necessarily be income from undisclosed sources. Under section 14 of the Income-tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
