1979 (1) TMI 33 - HC - Income Tax

High Court Upholds Tribunal Decision Canceling Added Income

Commissioner Of Income-Tax, Bombay City I Versus SG. Patwardhan

Commissioner Of Income-Tax, Bombay City I Versus SG. Patwardhan - [1980] 121 ITR 719, 3 TAXMANN 581 Issues: Assessment of Rs. 40,000 for the year 1960-61, Source of funds for the purchase of shares, Explanation provided by the assessee, Tribunal's decision to delete the amounts added to the assessee's income.Analysis:The High Court of Bombay was presented with a reference under section 66(2) of the Indian Income Tax Act, 1922, concerning the assessment years 1960-61 and 1961-62. The primary focus was on the sum of Rs. 40,000 related to the assessment year 1960-61. The assessee had purchased shares during the previous year ending on 31st March, 1960, and the Income Tax Officer (ITO) questioned the source of funds amounting to Rs. 42,912, which included the opening cash balance and the purchase amount of shares. The assessee explained that the cash was given to his wife for safekeeping after being withdrawn from the bank account. The ITO rejected this explanation, leading to an appeal by the assessee to the Appellate Assistant Commissioner (AAC).The AAC noted discrepancies in the wealth statement provided by the assessee, where the cash amount claimed to be with his wife was not mentioned. Despite the contentions made by the assessee, the AAC upheld the ITO's decision. Subsequently, the assessee appealed to the Tribunal, presenting various arguments, including clarifications on the absence of the cash amount in the wealth statement. The Tribunal thoroughly considered all contentions and ultimately decided in favor of the assessee, concluding that the assessee was entitled to the benefit of doubt. Consequently, the Tribunal directed the deletion of the added amounts from the assessee's income for the relevant years.The High Court acknowledged the Tribunal's comprehensive analysis and decision-making process. It emphasized that the Tribunal had duly considered all relevant factors, arguments, and evidence, arriving at a plausible conclusion that favored the assessee. The High Court highlighted that its role in the reference jurisdiction was not to reverse the Tribunal's decision unless it was found to be faulty, which was not the case here. The High Court, therefore, affirmed the Tribunal's decision to cancel the assessment of Rs. 40,000 for the year 1960-61, ruling in favor of the assessee. The parties were directed to bear their own costs in the reference.