Karnataka H.C : Whether on the facts and in the circumstances of the case, the Tribunal was right in rejecting the explanation of the assessee that the amount of Rs. 75,000 had come out of the income of the firm M/s Madhu Sweets and in holding ultimately that the amount represented the income of the assessee from undisclosed sources ?

High Court Of Karnataka

Birendra Singh vs. CIT

Sections 69A

G.C. Bharuka & A.V. Srinivasa Reddy, JJ.

ITRC No. 3 of 1997

15th January, 2002

Counsel Appeared

Smt. Gayathri for K.R. Prasad, for the Applicant : M.V. Seshachala, for the Respondent

ORDER

A.V. SRINIVASA REDDY, J. :

The Tribunal has referred the following question of law along with the statement of the case, under s. 256(2) of the IT Act, 1961 for the opinion of this Court : “Whether on the facts and in the circumstances of the case, the Tribunal was right in rejecting the explanation of the assessee that the amount of Rs. 75,000 had come out of the income of the firm M/s Madhu Sweets and in holding ultimately that the amount represented the income of the assessee from undisclosed sources ? A search was conducted at the residence of the assessee on 17th Aug., 1984, and the assessee was found in possession of Rs. 50,000 in cash and Rs. 50,000 in the bank locker of his son. The assessee claimed that Rs. 75,000 out of Rs. 1,00,000 belonged to the firm M/s Madhu Sweets of which he was a partner. This explanation was not accepted by the AO and the said amount was treated as income of the assessee from undisclosed sources, under s. 69A of IT Act, 1961 (‘Act’ for short). The assessee took the matter in appeal before the CIT(A). The CIT(A) directed deletion of the amount of Rs. 75,000 from computation of total income of the assessee. In the appeal preferred by the Department to the Tribunal, the Tribunal found that the assessee failed to discharge the burden placed on him to trace the unexplained amount to the firm. On an application by the assessee the Tribunal referred the above question for the opinion of this Court.

The learned counsel for the assessee cited the decision in Parimisetti Seetharamma vs. CIT (1965) 57 ITR 532 (SC) : TC 54R.394 in support of the proposition that the Act does not provide that whatever is received by a person must be regarded as income liable to tax. This rule would apply only in a case where the assessee claims that a receipt did not fall within the taxing provision, the source of the receipt is disclosed by the assessee and there is no dispute about the truth of that disclosure. The source of the receipt as disclosed by the assessee is disputed by the Department. The assessee has not discharged the burden cast on him under s. 69A of the Act to establish the source of the receipt. Thus, the decision cited by the learned counsel for the assessee is not of any relevance in the facts of the case. In order to assume that the amount of Rs. 75,000 found in the residence of the assessee was the income of another assessee M/s Madhu Sweets of which the assessee is a partner, it was for the assessee to trace this undisclosed income to the firm. The Tribunal has found that the assessee had failed to discharge the said burden. The question whether the said sum of Rs. 75,000 belonged to the assessee or the firm in which the assessee was a partner, being purely a question of fact, its decision by the Tribunal does not give rise to any question of law. The reference is, accordingly, rejected.

[Citation : 256 ITR 696]

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