1983 (1) TMI 3 - HC - Income Tax

Court rejects assessee's explanation, adds income from 'Other sources' without corroboration.

Commissioner Of Income-Tax Versus Krishnaveni Ammal (Legal Representative Of KM Parthasarathy)

Commissioner Of Income-Tax Versus Krishnaveni Ammal (Legal Representative Of KM Parthasarathy) - [1986] 158 ITR 826, 38 CTR 331 Issues involved: The judgment involves the following issues: (1) Whether the Appellate Tribunal was right in deleting the addition of Rs. 2,87,000 and allowing interest of Rs. 31,269 for the assessment year 1957-58, and (2) Whether the Appellate Tribunal's finding was based on valid and relevant materials.Issue 1: Addition of Rs. 2,87,000 and Interest of Rs. 31,269:The Income-tax Officer reopened the assessment for the year 1957-58 u/s 147(a) of the Income-tax Act based on credit entries in the names of multani bankers, suspecting them to be hawala transactions. The assessing officer determined the total income at Rs. 3,08,999, rejecting the assessee's explanation. The Appellate Tribunal, however, accepted the explanation that borrowings from multani bankers were genuine, based on the production of discharged hundis. The Revenue contended that the Tribunal erred in accepting the assessee's testimony without other corroborative evidence like crossed cheques, which were not produced by the assessee. The court held that relying solely on the interested testimony of the assessee without supporting material was unacceptable and characterized such a finding as perverse.Issue 2: Validity of Appellate Tribunal's Finding:The court considered various decisions cited by the counsel for the assessee, emphasizing the acceptance of the assessee's statement by the Tribunal in those cases due to lack of other material. However, in the present case, the Tribunal's reliance on unworthy evidence led to the rejection of the finding as perverse. The court highlighted the principle that the best evidence must be presented, and failure to do so can lead to adverse inferences. As the crossed cheques were not produced by the assessee, the Tribunal's finding based solely on the assessee's statement was deemed unacceptable. The court decided not to remand the matter due to the lapse of time and held that the income of Rs. 16,000 and interest of Rs. 31,269 should be treated as income earned by the assessee under 'Other sources.'In conclusion, the court answered the questions in the negative, against the assessee, and made no order as to costs.