Undisclosed income and construction cost estimates sustained where assessee failed to prove source of investment or produce accounts.

Where an assessee failed to satisfactorily explain the source of investment for construction, the High Court upheld the Tribunal's finding that the amount represented income from undisclosed sources because it was based on relevant material and not conjecture. The Tribunal's estimate of construction cost was also sustained because the assessee produced only an architect's estimate and withheld fuller accounts, while the authorities were entitled to make their own estimate on the available evidence and experience. On reference, such fact-finding conclusions will not be disturbed unless perverse or unsupported by evidence.

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Issues: (i) whether the Tribunal was justified in holding that Rs. 42,000 represented income from undisclosed sources; (ii) whether the Tribunal's estimate of the cost of construction at Rs. 84,000 was based on evidence.

Issue (i): whether the Tribunal was justified in holding that Rs. 42,000 represented income from undisclosed sources.

Analysis: The assessee's explanation as to the source of funds for construction was examined against the surrounding circumstances and the evidence produced, including the statements of the assessee, his wife, the alleged seller of gold, and the purchaser. The Tribunal rejected the explanation as unreliable and found that the alleged acquisition and sale of gold were not proved. In such a case, where the assessee fails to satisfactorily explain the source of investment and the Tribunal's finding is based on relevant material and not on conjecture, the High Court will not interfere with the fact-finding conclusion.

Conclusion: The finding that Rs. 42,000 represented income from undisclosed sources was upheld and is against the assessee.

Issue (ii): whether the Tribunal's estimate of the cost of construction at Rs. 84,000 was based on evidence.

Analysis: The assessee produced only an architect's certificate, which was merely an estimate, and failed to produce full accounts though the construction accounts were said to exist. The income-tax authorities and the Tribunal were entitled to make their own estimate on the material before them and on their experience. The estimate could not be treated as unsupported by evidence merely because it differed from the architect's figure.

Conclusion: The estimate of Rs. 84,000 was supported by evidence and is against the assessee.

Final Conclusion: Both referred questions were answered in favour of the revenue, sustaining the addition and the valuation adopted by the Tribunal.

Ratio Decidendi: Where an assessee fails to prove the source of investment and the Tribunal's finding is based on relevant evidence, the resulting inference of undisclosed income and the Tribunal's own estimate of cost will not be disturbed in reference unless the finding is perverse or unsupported by evidence.

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