Itta/73/2000 Of Sri K. Ramachandraiah v. The Commissioner Of Income Tax

HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDHON’BLE Ms. JUSTICE G.ROHINI I.T.T.A.No.73 of 2000 Date: 27.06.2013 Between: K.Ramachandraiah, Kurnool .....Appellant AND The Commissioner of Income Tax,Anantapur. ...Respondent HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAANDHON’BLE Ms. JUSTICE G.ROHINI I.T.T.A.No.73 of 2000 JUDGMENT:(per Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta ) This appeal is directed against the judgment and order ofthe learned Tribunal dated 26.06.2000 in I.T.(SS)A.No.31/Hyd/97. By an order of this Court dated 21.12.2000, this appealwas admitted on the following substantial questions of law: i. Whether on the facts and in the circumstancesof the case, the Tribunal is correct in law in relying on theoral evidence (statements) of the appellant in preferenceto the documentary evidence available for explaining thesource for investments? ii. Whether, on the facts and in the circumstancesof the case, the Tribunal is correct in law in passing theorder on surmises and conjectures without any materialevidence in support of its findings? We have heard the learned Counsel for the appellant andgone through the impugned judgment and order. We answer question No.2 in affirmative, as we are of theview that the learned Tribunal has not rendered any findings basedon surmises or conjectures. We record our reason in support ofour decision as mentioned hereunder:- The fact of the case is that there was a search conductedby the department of the officials in the residential premises andbusiness premises of the assessee. After search and aftercollecting material, block assessment under Section 158BC of theIncome Tax Act, 1961 was undertaken. The block period coversfrom 01.04.1985 to 05.01.1996 relevant to assessment years1986-87 to 1996-97. The assessment has been completed by theAssistant Commissioner of Income Tax, Investigation Circle-1,Anantapur, by his order dated 28.01.1997. The assessee is a partner of Sri Rama Medical and Surgical Agencies, Kurnool. Hiswife and other close relatives are also partners of the said firm aswell as other firms like M/s Sri Rama Medical Agencies. TheDepartment was in possession of certain information to the effectthat the partners of the firm were engaged in money lendingbusiness outside the books of account. On the basis ofinformation, search was conducted and certain relevantinformation and materials were seized. On the basis of thematerial collected out of the search and the evidence availablefrom the relevant materials, Investigating Officers found out thatan investment of Rs.11,49,125/- has not been accounted for by theassessee in the books of account. This investment was mainly inthe form of money lent on promissory notes, acquisition of sharecertificates etc., When the appellant was asked to explain aboutthe source of the investment, he did so swearing affidavit dated05.01.1996 and admitted that investments worth Rs.11,49,125/-has not been recorded in the books of account and that he was notin a position to explain the sources for the investment. Later on,after conclusion of the enquiry by the Investigating Officers, whenthe assessee was again called upon to explain finally to come toan agreed assessment of the case regarding the undisclosedincome in the hands of the assessee, the assessee changed hisversion and denied that he made any such statement earlier thatinvestments worth Rs.11,49,125/- remained un-accounted for. Hedenied all his earlier admissions and statements, which mightimplicate him. The assessing officer found that the assessee has to beassessed for the undisclosed income found out in the course ofsearch. The assessee was called upon to file the return in Form-2B. In his nil return, he did not admit any undisclosed income. The assessing officer examined the materials, item wise and The assessing officer found that the assessee has to beassessed for the undisclosed income found out in the course ofsearch. The assessee was called upon to file the return in Form-2B. In his nil return, he did not admit any undisclosed income. The assessing officer examined the materials, item wise and finally determined an undisclosed income of Rs.6,14,945/- in thehands of the assessee as against undisclosed income ofRs.11,49,125/- earlier admitted by the assessee. Against theaforesaid assessment order, the assessee preferred secondappeal before the learned Tribunal. The learned Tribunal, after scrutinizing the details, hasdeleted a sum of Rs.84,945/- from the computation of undisclosedincome in the hands of the assessee. The aforesaid amount ofRs.84,945/- consists of unexplained investment in sterling holidayresorts, shares in the name of minor son of the assessee andinterest on promissory notes. Thus, the learned Tribunal directedthe assessing officer to re-compute the undisclosed income of theassessee, after deleting the above items, and determine theundisclosed income at Rs.5,30,000/-. The learned Counsel for the appellant submits that thejudgment and order of the learned Tribunal is based on surmisesand conjectures and on the statements made in the affidavit andalso during search and seizure and, therefore, all the impugnedorders should be set aside. The learned Standing Counsel appearing for therespondent-Revenue supported the judgment and order of thelearned Tribunal and contends that it is the initial burden of theappellant-assessee to explain the source of income and that wasnot done so. The learned Tribunal, after scrutinizing everything, came tothe conclusion that source income of Rs.84,945/- was properlyexplained by the assessee, and therefore, the said amount wasdeleted from the computation of undisclosed income. After hearing the learned Counsel for the parties, we are ofthe view that in this case the question of basing the decision onsurmises and conjectures does not and cannot arise because as rightly contended by the learned Standing Counsel for therespondent-Revenue that it is the burden of theappellant-assessee to establish the source of income. Therefore,when there is no proof or explanation, the Revenue Authority andthe Tribunal has no option but to come to the conclusion that theunexplained amount is undisclosed one. Since the initial burdenwas not discharged by the assessee, the version of the Revenuehas to be accepted to be correct. If no evidence is produced bythe assessee, in this situation, the income remain undisclosed oralso its source. Under the above circumstances, we are of the view thatthere is no element of surmise or conjecture in the present caseas contended by the learned counsel for the appellant. The learnedTribunal has decided the matter on correct proposition of law andalso on facts. Therefore, we affirm the order of the learnedTribunal. Accordingly, the appeal is dismissed. Miscellaneouspetitions, if any, pending shall also stand closed. No order as tocosts. ___________________ K.J. SENGUPTA, CJ _______________ G.ROHINI, J 27.6.2013 Gsn.