Law:

Section:

Section 69 of the income-tax act, 1961-Unexplained investments-Assessee purchased two house properties on 15-11-1967 and 27-11-1968-ITO rejected assessee's explanation about source of investments and included purchase money in latter's hand in respective years as Income from other sources-Tribunal deleted addition, holding that section 69 could not be invoked qua investments as assessee's income merely by rejection of assessee's explanation-Whether tribunal right in law in said deletion-Held, yes Facts The assessee, a muslim lady aged about 20 years, purchased two house properties for Rs. 34,828 and Rs. 25,902 on 15-11-1967 and 27-11-1968, respectively. In pursuance of the notices issued by the ITO, the assessee filed returns of income for the first time for the assessment years 1968-69 and 1969-70. In assessment proceedings, the ITO partly accepted the assessee's explanation attributing the source of the purchase money to the rental and agricultural income from the properties left by her deceased mother and added Rs. 32,628 and Rs. 25,902 to its income in the respective assessment years as income from other sources. The AAC upheld the ITO's order. The Tribunal found (i) that it was impossible for the assessee to have earned the amounts invested in the properties; and (ii) that she would have got these amounts necessarily from somebody else. It took the view that, although the assessee's explanation was liable to be rejected, section 69 conferred only a discretion on the ITO to deal with the investment as its income and that it was not mandatory on him to deal with the investment as its income after rejecting latter's explanation. The Tribunal, accordingly, deleted the additions. On reference: Held 1. The unsatisfactoriness of the explanation did not and need not automatically result in deeming the value of the investment to be the income of the assessee. That was still a matter within the ITO's and the Tribunal's discretion. 2. Under section 254, the Tribunal had wide powers and was to pass "such orders on the appeals as it thinks fit". Unlike the case of a second appeal to the High Court under section 100 of the Code of Civil Procedure, the Tribunal's power…

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