Court upholds assessment under Income Tax Act, confirms cash deposits addition. Assessee fails to prove genuineness.

The court held that the assessment completed on September 3, 1968, was valid under section 139(4) of the Income Tax Act, 1961, and within the prescribed time under section 153. Additionally, the Tribunal's decision to confirm the addition of Rs. 46,000 as cash deposits was deemed correct, as the assessee failed to prove the genuineness of the loans and the nature of the cash deposits. No costs were awarded in this case.

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Issues Involved:
1. Validity of the assessment completed on September 3, 1968.
2. Justification for confirming the addition of Rs. 46,000 as cash deposits.

Issue-Wise Detailed Analysis:

1. Validity of the Assessment:

The assessee filed a voluntary return on September 14, 1964, under section 139(4) of the Income Tax Act, 1961, showing an income of Rs. 10,294. A revised return was submitted on September 7, 1967, showing an income of Rs. 18,429. The Income Tax Officer (ITO) completed the assessment on September 3, 1968. The assessee contended that the revised return was invalid as it was not filed under sections 139(1) or 139(2) and thus the assessment was barred by limitation under section 153(1)(a). The Appellate Assistant Commissioner (AAC) construed section 139(4) to include returns filed under sections 139(1) or 139(2) and upheld the assessment under section 153(1)(c), considering the revised return valid. The Tribunal agreed that multiple returns could be filed under section 139(4) and upheld the assessment's validity.

The court concluded that if an assessee files another return under section 139(4), it is assumed that the previous return is withdrawn, and the subsequent return is the correct one. The ITO's acceptance of the subsequent return without objection from the assessee validates the return and the assessment. Therefore, the assessment completed on September 3, 1968, was held to be valid under section 139(4) and within the time prescribed by section 153.

2. Justification for Confirming the Addition of Rs. 46,000:

The assessee claimed that the sum of Rs. 46,000 was sourced from loans and deposits from her mother and five brothers. The ITO rejected this claim, adding the amount as income from undisclosed sources, as the assessee failed to produce the creditors despite several adjournments. The AAC accepted the genuineness of the loans based on declarations made under section 24 of the Finance (No. 2) Act of 1965. However, the Tribunal restored the addition, noting that the creditors were related to the assessee, did not appear before the ITO, and the cash deposits did not pass through bank accounts.

The court observed that the Tribunal's conclusion was based on facts such as the close relationship between the assessee and creditors, failure to produce the creditors, and the nature of the cash deposits. The court held that the Tribunal's inference that the assessee did not discharge the burden of proving the genuineness of the credits was justified. It was noted that the protection under the Finance (No. 2) Act of 1965 did not extend to third parties, and the revenue could investigate the genuineness of loans shown by third persons.

The court concluded that the Tribunal's decision to confirm the addition of Rs. 46,000 was correct, and the declarations under the Finance (No. 2) Act did not preclude the revenue from investigating the genuineness of the loans.

Judgment:

1. The assessment completed on September 3, 1968, was valid in law.
2. The Tribunal was justified in confirming the addition of Rs. 46,000 representing the cash deposits.

In the facts and circumstances of this case, there was no order as to costs.

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