1997 (3) TMI 647 - HC - Income Tax

Court upholds IT Act addition of unexplained investment on draft purchase.

Wadhwa Ram Versus Commissioner of Income Tax.

Wadhwa Ram Versus Commissioner of Income Tax. - TMI Issues:Petition under s. 256(2) of the IT Act, 1961 for reference to High Court regarding addition of unexplained investment on purchase of drafts.Detailed Analysis:Issue 1: Addition of Rs. 1,95,000 on account of unexplained investment- The petitioner's return declared income of Rs. 29,260 for 1989-90, but the assessing authority assessed total income at Rs. 5,34,424.- Tribunal sustained addition of Rs. 1,95,000 as unexplained investment on purchase of drafts but deleted other additions.- Petitioner sought reference of questions of law to High Court under s. 256(1) of the Act, but Tribunal declined.- Counsel argued Tribunal's decision was unjustified based on cash flow statement showing sufficient cash available.- Tribunal found no question of law requiring adjudication by High Court.Issue 2: Source of funds for purchase of drafts- Assessing authority observed discrepancies in petitioner's statements regarding source of funds for drafts purchase.- AO treated Rs. 4,49,527 as investment from unexplained source, adding it to total income.- Tribunal agreed that funds were used for customs duty and demurrage charges, but only Rs. 1,95,000 could be considered unexplained investment peak amount.- Tribunal reasoned that entire amount of drafts not simultaneously available to assessee, supporting peak amount addition.- Tribunal's decision based on evidence and material on record, no grounds to substitute findings.Precedents and Conclusion:- Counsel argued for reevaluation of evidence, but Tribunal's findings based on evidence and not open to challenge.- Citing precedents, Tribunal's factual findings on acceptance or rejection of evidence not a question of law.- Upheld Tribunal's decision as no question of law arose in the case.- Petition dismissed by the High Court.