1998 (2) TMI 105 - HC - Income Tax

High Court upholds IT Act addition for 1981-82 assessment year, emphasizing proof of ownership.

The High Court upheld the addition of Rs. 40,37,351 under section 69A of the IT Act for the assessment year 1981-82, ruling in favor of the Revenue. ... Unexplained Money Issues involved:The judgment addresses the following Issues:1. Justification of deleting the addition of Rs. 40,37,351.2. Whether section 69A of the IT Act was applicable to the case.3. Existence of material to establish possession of gold bars by the assessee in 1972.4. Support of Tribunal's findings regarding the applicability of section 69A.Issue 1: Addition of Rs. 40,37,351The assessee, a proprietor, disclosed income of Rs. 3,31,900, later revised to Rs. 3,31,250 for the assessment year 1981-82. The Income Tax Officer (ITO) assessed total income at Rs. 43,83,991, including Rs. 40,37,351 as income under section 69A. The gold bars seized from the assessee's compound led to this addition.Issue 2: Applicability of Section 69AThe ITO invoked section 69A, concluding the gold articles belonged to the assessee, representing concealed income. The CIT(A) held that ownership was not proven, emphasizing the Revenue's duty to establish ownership for invoking section 69A. The Tribunal upheld this decision.Issue 3: Possession of Gold Bars in 1972The assessee denied ownership, suggesting a former associate might have planted the articles. The ITO's statement and the CIT(A) found no evidence of ownership or possession by the assessee in 1972, leading to the deletion of the addition.Issue 4: Tribunal's FindingsThe Tribunal supported the CIT(A)'s decision, emphasizing the need for the Revenue to prove ownership for section 69A application. The Revenue argued ownership should be presumed unless proven otherwise, citing legal precedent. The High Court rejected the Revenue's arguments, reinstating the addition of Rs. 40,37,351.In conclusion, the High Court ruled in favor of the Revenue, upholding the addition of Rs. 40,37,351 under section 69A of the IT Act for the assessment year 1981-82.