1972 (9) TMI 11 - SC - Income Tax

Discretionary jurisdiction declined where departmental and tribunal rejection of assessee's explanation was arbitrary, no merits re-examination permitted

Departmental and tribunal rejection of the assessee's explanation was characterised as arbitrary, and the court declined to re-examine the merits of the ... Department as well as the Tribunal had arbitrarily rejected the explanation given by the assessee. Under these circumstances we do not think that we will be justified in going into the niceties of the law, whether the High Court was justified in going into the merits of the findings reached by the Tribunal. All that we need say is that this is not a fit and proper case where we should exercise our discretionary jurisdiction Issues: Whether the addition of Rs. 60,813 or any portion thereof as income of the assessee family from undisclosed sources for the previous year ended March 31, 1951 (assessment year 1951-52) is valid and justified in law.Analysis: The authorities assessed credits and property acquisitions as income from undisclosed sources without examining the assessee's explanation that the funds were derived partly from remittances by a family member resident abroad and partly from income of immovable agricultural property owned by the Hindu undivided family. The assessing officer, the Appellate Assistant Commissioner and the Tribunal recorded rejection of the explanation in terse terms without investigating the existence, extent or income-yielding capacity of the immovable property or the alleged remittances. The explanations were prima facie plausible and capable of factual inquiry; therefore the unexplained-credit assessment could not be sustained where the department failed to inquire into or test the offered sources of the funds.Conclusion: The addition of Rs. 60,813 as income from undisclosed sources is not justified; the decision is in favour of the assessee.