Law:

Section:

Section 4 of the Income-tax Act, 1961 - Hindu undivided family - Assessable as - Assessment year 1962-63 - G was karta of assessee-HUF, consisting of himself, his mother and his 5 sons - Assessee claimed that one of G's sons started a new business in his individual capacity under name of a firm by investing capital which was gifted to him by his grandmother - However, said son of G had not separated from assessee - HUF - Tribunal found that capital account in business stood in name of firm and firm's name consisted of names of two coparceners of assessee-HUF - Further, guarantee to bank was given by assessee and its karta was also entitled to operate firm's account - Whether on above findings based on materials on record and inferences drawn from such materials, Tribunal was justified in holding that profits from firm's business was to be included in income of assessee-HUF - Held, yes Section 69 of the Income-tax Act, 1961 - Unexplained investments - Assessment year 1962-63 - In addition to facts under heading 'Hindu Undivided Family - Assessable as', Tribunal found that out of capital invested in firm, a part of it remained unexplained - Tribunal accordingly, treated said unexplained investment as assessee's income from unexplained sources - Whether findings of Tribunal were findings of fact which could not be challenged simply because it was an inference from other basic facts - Held, yes FACTS The assessee was at all material times an HUF of which 'G' was the 'karta' of the family business and other members were of his widowed mother and his 5 sons. The assessee claimed that one of G's sons started a business in the name of a firm. The initial capital was said to have been gifted to him by his grandmother. In the books of account, the amount was credited in the name of the firm. Accounts were opened in the same name with three banks. The 'karta' of the joint Hindu family was also entitled to operate the accounts and overdraft facilities were obtained from the banks on the guarantee of the joint family business. The assessee's claim that the business in question belonged to the said son in his individual capacity was not accepted by ITO who treated the…

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