High Court upholds Income Tax reassessment for undisclosed bank account

The High Court of Calcutta upheld the reassessment under section 34 of the Income Tax Act for the assessment year 1946-47, finding the assessee, Mriganka Mohan Sur, to be the proprietor of Oriental Traders with an undisclosed bank account. Despite the assessee's denial of involvement, circumstantial evidence, including bank records and property ownership, supported the connection. The court affirmed the Income-tax Appellate Tribunal's decision, ruling in favor of the revenue, emphasizing that strict rules of evidence do not apply in income-tax proceedings. Justice Sen concurred with the decision.

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Issues involved: Reassessment u/s 34 of the Indian I.T. Act, 1922 based on undisclosed bank accounts and ownership of business.

Judgment Summary:

The High Court of Calcutta considered a reference u/s 256(2) of the I.T. Act, 1961, regarding a reassessment for the assessment year 1946-47. The assessee, Mriganka Mohan Sur, was found to be the proprietor of a business named Oriental Traders with an undisclosed bank account. The Income Tax Officer (ITO) reopened the assessment based on this information.

The assessee denied any connection with Oriental Traders or its bank account during reassessment proceedings. However, circumstantial evidence, including bank records and property ownership, indicated otherwise. The Appellate Authority Commissioner (AAC) partially allowed the appeal, but the Income-tax Appellate Tribunal upheld the reassessment, noting the strong evidence linking the assessee to the business and bank account.

Upon a reference to the High Court, the court considered whether the Tribunal's conclusions were supported by evidence. The assessee argued that the lack of specific documents absolved him of connection to the business and account. The revenue contended that the assessee's conduct and circumstantial evidence pointed to his ownership of Oriental Traders.

The court upheld the Tribunal's findings, emphasizing that strict rules of evidence do not apply in income-tax proceedings. The cumulative effect of various facts supported the conclusion that the account belonged to the assessee. The court ruled in favor of the revenue on both questions referred, affirming the connection between the assessee and Oriental Traders.

In a separate judgment, Justice Sen concurred with the decision.

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